Chicken Soup for the Soul Entertainment, which runs ad-supported streaming networks like Crackle, reported a mixed bag of first-quarter results, with record viewership during the onset of COVID-19 but also advertising uncertainty.
The company reported an all-time high number of visits to Crackle and Popcornflix in March, though it did not provide any numbers.
The company’s revenue and net loss in the quarter and revenue fell below the consensus estimate of Wall Street analysts. The net loss of 95 cents compared with a loss of 28 cents in the same quarter a year ago, with revenue of $14.1 million rising from $2.5 million.
On the subject of Crackle, CEO Bill Rouhana said “odds are” that Sony will not retain its 49% Crackle stake, though he told Wall Street analysts during a conference call with Wall Street analysts that he was only “speculating.” The window for Sony to decide whether to keep the stake or convert it into preferred stock or common shares in starts May 15 and runs through November.
“There have been some discussions with them about this,” Rouhana said, declining to offer specifics. “Sony is heavily motivated, and has publicly stated multiple times that they are not interested in staying in businesses that are not generating a net income contribution. It will be a while before Crackle Plus, because of the way it’s organized, will do that.”
Sony bought Crackle in 2006 when it was known as Grouper, an early streaming video service. After operating it for more than a decade, it sold majority control to CSSE in May 2019. The deal made CSSE one of the top ad-supported video on demand [AVOD] players in the U.S.
Rouhana said the road map for CSSE regardless of the decision centers on “having to rely less on Sony” in terms of programming. Thanks to shows like On Point and Going From Broke, Crackle Plus has seen viewing of original and exclusive programming climb to more than 14% of total viewing.
Original and exclusive content rose to more than 14% of total viewing across the company’s AVOD and subscription networks, inlcuding Crackle, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix.
Advertising categories like packaged consumer goods, insurance and pharmaceuticals remain strong contributors to revenue, Rouhana said. But the outlook for 2020 based on the initial two months of COVID-19 impact is for more volatility.
Ad rates in May improved on April, the CEO said, but in terms of the overall marketing climate, “we might be seeing an up-and-down kind of world for a while,” Rouhana said, “where we get a bunch of Aprils and rebound with a bunch of Mays. I don’t know if there’s a trend yet but so far it hasn’t been as bad as I thought it could be.”