Sony is looking to take on a partner in Crackle, its ad-supported streaming service, in order to make it more competitive in a saturated marketplace.
Mike Hopkins, the former head of Hulu who joined Sony Pictures last fall as chairman of its TV division, disclosed the strategy to employees in an internal email. (See the full email below.) Hopkins said working with a partner could help “drive scale.” A complete sale of the property is not the initial plan, but insiders indicate a willingness to entertain an offer for the entire business.
The notion of taking on a partner has been contemplated at earlier moments during the decade-plus that Sony has owned the service, which was known as Grouper when the company bought it in 2006. In 2014, when a trove of internal documents were revealed as part of the infamous hack into the studio’s computer systems, an email exchange indicated some executives had considered selling off 49% of Crackle. At the time, such a deal would have valued Crackle at $200 million. The original purchase price was $65 million.
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Sony Crackle in recent years has sought to up its game with original series like The Art of More and the initial seasons of Jerry Seinfeld’s Comedians in Cars Getting Coffee (which recently moved to Netflix). It has been an an uphill climb, though, given the competition between dozens of streaming services, especially on the subscription side. While Sony Crackle remains a rarity as an ad-supported platform, executives have suggested they are sticking with the strategy. Hopkins said in his email that Sony Crackle is getting “more and more traction as advertisers seek high-value online advertising opportunities.”
Here is the full text of the email from Hopkins:
I have some news to share. As we build and grow our direct-to-consumer businesses, I want to make you all aware that we have begun the process of exploring potential partnerships for Sony Crackle to drive scale and position the streaming network to be more competitive.
Crackle is a tremendously valuable asset for us, and with premium AVOD getting more and more traction as advertisers seek high value online advertising opportunities, we feel there is room for greater growth for our OTT business. With the right partner – one that could bring additional content or users or leverage existing assets for advertising and promotion – we feel we can expand Crackle’s audience and significantly increase revenue.
In the meantime, a small group is working on the potential partnership so that the rest of our teams can operate business as usual, focusing on their day-to-day work and commitments to help ensure Crackle remains the premiere AVOD platform.
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