Sony Sells Crackle Majority Stake to Chicken Soup for the Soul
The companies will launch a joint venture, Crackle Plus, to operate the streaming video business.
Sony Pictures Television has found a partner for Crackle.
The entertainment company has sold a majority stake in the online video business to Chicken Soup for the Soul Entertainment, part of the Connecticut-based company behind the inspirational book series.
Together, the two companies will operate a new joint venture, Crackle Plus, that will house the ad-supported streaming service. "Crackle is a valuable asset and we feel confident it will thrive and grow in this new environment with CSS Entertainment," Sony TV chairman Mike Hopkins said Thursday in a statement. "We were drawn to CSS Entertainment as our partner in this venture because of its aggressive, entrepreneurial approach. 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."
Crackle GM and Sony chief digital officer Eric Berger is expected to leave the company after the deal has closed.
Sony's contribution to the venture includes Crackle's U.S. assets, including the brand, its base of monthly active users and its ad rep business. The joint venture will also license TV series and movies from the Sony Pictures Entertainment library, which has long served as the backbone to the Crackle service. Ownership of Crackle originals like Start Up and The Oath, meanwhile, will remain with Sony but be available for licensing back to Crackle Plus. Sony Electronics' New Media Services subsidiary will provide the technological back end for Crackle Plus.
CSS Entertainment, meanwhile, will contribute six of its owned-and-operated ad-supported networks — including Popcornflix and Truli — as well as subscription service Pivotshare to the venture.
"This transaction positions CSS Entertainment as a leader in the high-growth AVOD business,” said CSS Entertainment chairman and CEO William J. Rouhana Jr. "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."
Per the companies, the newly formed group will offer more than 38,500 hours of programming and have a monthly audience of 10 million active users as well as millions of additional users from its ad rep business. Crackle Plus also will have a portfolio of more than 100 networks, including third-party offerings distributed by Pivotshare.
Sony first announced last July that it was seeking strategic partners for Crackle to help grow the platform, which has struggled to keep up in a subscription streaming environment where giants like Netflix and Amazon are shelling out billions for original programming and back-catalog hits. In addition to offering ad-supported Sony titles, Crackle had begun to produce originals like Start Up and Snatch, but its slate remained much smaller than that of other streamers.
Crackle was founded in 2004 as Grouper and sold to Sony in 2006. It first broke through in 2012 with Jerry Seinfeld's shortform series Comedians in Cars Getting Coffee, which moved to Netflix at the beginning of 2018.
In his statement, Hopkins noted that there is a growing opportunity for ad-supported video as consumers become fatigued with the proliferation of subscription offerings. A new boom in the space has led Amazon to launch free offering IMDb Freedive and Viacom in January purchased ad-supported service Pluto TV for $340 million. "With the increased demand for free online video content as well as a need for advertisers to reach consumers, AVOD networks such as Crackle Plus are position for substantial growth," he said.
Through the deal, Sony will receive 4 million five-year warrants to purchase CSS Entertainment stock. Crackle's assets are expected to more than double CSS Entertainment's Revenue.