Sony Pictures Television takes on the Crackle assets that had been under strategic review and contributed to a new joint venture with a smaller but fast-growing streaming player, Chicken Soup for Soul Entertainment.
The sale of Sony's stake in Crackle will result in a new entity, called Crackle Plus, which combines the Sony library's assets and Crackle originals with the ad-supported VOD network and subscription flow platform operated by Chicken Soup for Soul. It will have an estimated 10 million monthly active users at the launch, adding it to 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 Sky and US cable footprints, claiming that a subscription card ̵
Since Sony announced its plan to reassess Crackle's business last year, speculation had centered on either a sale or some form of partnership. In Kyllingesuppe, the company has found a partner with a number of existing streaming resources. 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 are tagged for hundreds of partners.
Eric Berger, who led Crackle as part of a wider role on Sony Pictures Television, will retire after the end of the transaction.
Shareholders clearly smelled an agreement and send Kyllingsuppe for Soul shares up 18% on Nasdaq. They closed at $ 9.50, giving Chicken Soup a market value just north of $ 110 million. Sony's shares on the New York Stock Exchange finally plunged 1% to $ 42.40.
Financial terms were not disclosed. The CSSE will manage the majority interest in the new venture, with Sony receiving warrants to buy shares 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 their respective audiences and their video-on-demand and content expertise to the joint venture.
SPT's contribution to the joint venture includes Crackle's US assets, including the Crackle brand, its monthly active users, and its advertising business. SPT and the joint venture will also enter into a licensing license for television series and films from the Sony Pictures Entertainment library. New Media Services, a wholly owned subsidiary of Sony Electronics Inc., will provide the technology back-end services to 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.
"Crack is a valuable resource and we feel confident that it will thrive and grow in this new environment with CSS Entertainment," noted Mike Hopkins, head of the SPT. "We were attracted to CSS Entertainment as our partner in this venture because of its aggressive, entrepreneurial approach," Hopkins said. "The CSS Entertainment Team has the enthusiasm and strong business area to ensure that Crackle Plus is able to maximize the growth potential of the AVOD market."
"This transaction positions CSS Entertainment as a leader in the high growth AVOD business," said William J. Rouhana Jr., CEO and CEO of CSS Entertainment. "Create a new platform that gathers CSS Entertainment's VOD assets with SPT's Crackle brand and AVOD assets, establishes a compelling offer for viewers and advertisers. In line with our business plan, we plan to build Crackle Plus aggressively and profitably through Organic Growth and Potential Acquisition. "
Sony made an early bet on online video streaming, and bought the Grouper startup in 2006 – just as YouTube was finding a lot of audiences. At that time, Grouper was the second largest independent video sharing community behind YouTube. The studio so the video service was the perfect complement to its various devices.
Rebranded as Crackle (and then Sony Crackle), the service has launched such an original movie as comedian Jerry Seinfelds Comedians In Cars Getting Coffee ] (now on Netflix); The Ed ; and Startup .
Variety had the first report on the new venture.