Sony Pictures Television is taking the Crackle assets that had been under strategic review and contributing them to a new joint venture with a smaller but fast-growing streaming player, Chicken Soup for the Soul Entertainment.
The sale of Sony’s stake in Crackle will result in a new entity, dubbed Crackle Plus, combining Sony library assets and Crackle originals with the ad-supported VOD networks and subscription streaming platform run by Chicken Soup for the Soul. It will have an estimated 10 million monthly active users at launch, putting it in the same ballpark as free, ad-supported services like PlutoTV, which Viacom bought earlier this year, and Tubi. Comcast is also planning a major AVOD service for 2020 across its Sky and U.S. cable footprints, contending that a subscription glut — and billions in brand dollars looking for screen time — mean AVOD’s time has come.
Ever since Sony announced its plan to re-evaluate Crackle’s business last year, speculation had centered on either a sale or some form of partnership. In Chicken Soup, the company has found a partner with an array of existing streaming assets. Part of the new venture will be six owned and operated AVOD networks (Popcornflix, Truli, Popcornflix Kids, Popcornflix Comedy, Frightpix, and Espanolflix) and the SVOD platform Pivotshare, which is white-labeled for hundreds of partners.
Eric Berger, who led Crackle as part of a broader role at Sony Pictures Television, will depart the company upon the close of the transaction.
Shareholders clearly smelled a deal, sending Chicken Soup for the Soul shares up 18% on the Nasdaq. They closed at $9.50, giving Chicken Soup a market capitalization a bit north of $110 million. Sony’s shares on the New York Stock exchange dipped 1% to finish at $42.40.
Financial terms were not disclosed. CSSE will control the majority interest in the new venture, with Sony receiving warrants to purchase stock at various price points.
SPT and CSS Entertainment will each contribute certain assets to establish Crackle Plus and position the new company as a leading AVOD streaming platform. Each company plans to bring its respective audience and its video-on-demand and content expertise to the joint venture.
SPT’s contributions to the joint venture include Crackle’s U.S. assets including the Crackle brand, its monthly active users and its ad rep business. SPT and the joint venture will also enter into a license agreement for rights to TV series and movies from the Sony Pictures Entertainment library. New Media Services, a wholly-owned subsidiary of Sony Electronics Inc., will provide the technology back-end services for the newly formed joint venture.
Ownership of Crackle’s original content library will be retained by SPT but will be made available for licensing to the joint venture.
“Crackle is a valuable asset and we feel confident it will thrive and grow in this new environment with CSS Entertainment,” noted Mike Hopkins, chairman of SPT. “We were drawn to CSS Entertainment as our partner in this venture because of its aggressive, entrepreneurial approach,” said Hopkins. “The CSS Entertainment team have the enthusiasm and strong business acumen to ensure Crackle Plus is poised to maximize the growing opportunities in the AVOD marketplace.”
“This transaction positions CSS Entertainment as a leader in the high-growth AVOD business,” said William J. Rouhana Jr., chairman and CEO of CSS Entertainment. “Creating a new platform that brings together CSS Entertainment’s VOD assets with SPT’s Crackle brand and AVOD assets, establishes a compelling offering for viewers and advertisers. Consistent with our business plan, we plan to build Crackle Plus aggressively and profitably through organic growth and, potentially, acquisitions.”
Sony placed an early bet on online video streaming, acquiring the startup Grouper in 2006 — just as YouTube was finding a mass audience. At the time, Grouper was the second largest independent video sharing community behind YouTube. The studio saw the video service was the perfect complement to its various devices.
Rebranded as Crackle (and then Sony Crackle), the service has launched such hit original series as comedian Jerry Seinfeld’s Comedians In Cars Getting Coffee (now on Netflix); The Oath; and StartUp.
Variety had the first report on the new venture.