The ad-supported streaming market in the U.S. is heating up, and to strengthen its position, Sony Pictures Television is taking some drastic measures with its long-running AVOD Crackle.
Sony is selling its stake in Crackle and forming a joint venture with Chicken Soup for the Soul Entertainment (CSS), the company that runs fellow AVOD Popcornflix. According to Variety, CSS will be the majority owner of the new venture, Crackle Plus, and Sony will get a multiyear deal to purchase Class A stock in CSS.
The deal amounts to a consolidation strategy to help Crackle and Popcornflix both be better equipped to grab a share of the ad dollars expected to flow to ad-supported streaming services. Digital TV Research said that although SVOD accounts for most of streaming video revenues, AVOD revenues will grow $27 billion between 2017 and 2023 and rise to $47 billion to account for 36% of total revenues.
But Crackle Plus will have plenty of competition for that AVOD money. Hulu’s ad revenues are projected to approach $2.7 billion by 2021. Roku is expecting to bring in more than $1 billion in revenue this year, largely fueled by its advertising business. And Viacom is eyeing a $1 billion opportunity for its ad-supported streaming business, strengthened by its recent acquisition of Pluto TV. Amazon also recently launched an AVOD, and NBCUniversal is planning to launch an AVOD next year.
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Sony and CSS’ plan is to combine their assets to take on the field. As Variety points out, Sony will chip in Crackle’s U.S. brand, user base and advertising business. Sony is also providing the platform tech and will be licensing Sony films to Crackle Plus. CSS will provide its AVOD services Popcornflix, Truli, Popcornflix Kids, Popcornflix Comedy, FrightPix, and Españolflix, and its subscription video services company Pivotshare.
Sony acquired Crackle in 2006 when it was named Grouper. In 2008, Sony restructured Crackle and put Eric Berger in charge. Variety said that Berger is expected to leave the company after the deal closes.