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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 resulting new entity, Crackle Plus, will combine Sony library assets and Crackle originals with the ad-supported VOD networks and subscription streaming know-how at Chicken Soup for the Soul. It will have an estimated 10 million monthly active users at launch, putting it in the same ballpark as PlutoTV, which Viacom bought earlier this year, and TubiTV. Comcast is planning a major AVOD service for 2020 across its Sky and U.S. cable footprints.
Since Sony announced its plan to re-evaluate Crackle’s ad-supported 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 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.
Shareholders clearly smelled a deal coming, and sent Chicken Soup for the Soul shares up 18% on the Nasdaq. They closed at $9.50.
Eric Berger, who led Crackle as part of an overall role at Sony Pictures Television, will depart the company upon the close of the transaction.
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.”
