Sony’s Crackle streaming-video service, which needs to expand its reach to compete in the connected-TV market, debuted on Xbox Live video network today. The move gives Sony’s ad-supported channel access to most of Xbox Live’s approximately 40 million subscribers, spread across the U.S., Canada, the U.K. and Australia.
Crackle believes it has found an opening in the connected-TV market with its focus on longer-form video targeting men 18-34 – mostly movies and TV shows in the Sony (NYSE: SNE) library, foreign-made anime content, and an extensive library of original series. Eric Berger, executive VP of digital networks for Sony Pictures Television, says that unlike subscription services like Netflix (NSDQ: NFLX) and Hulu Plus, Crackle lets viewers watch one-off feature films like Talladega Nights, TV shows like Seinfeld, and a range of originally produced Crackle series for free with ads.
Berger also believes Crackle is differentiated from what companies and YouTube (NSDQ: GOOG) are doing with original content. “YouTube just put $100 million in the marketplace [to create original series], and it’s fantastic, but it’s still mainly short-form content,” he said.
But nearly five years after paying $65 million to purchase Grouper – the site that would become Crackle – Sony still hasn’t released revenue figures for its streaming operation, which has gained notoriety for spending as much as $1 million to create original digital series.
While Crackle doesn’t provide revenue figures, Sony says the site got 227 million visits across all channels last year, up 54 percent over 2010. Berger says Crackle averages about 10 million unique viewers a month. This is about double what the streaming service averaged in 2010, according to comScore (NSDQ: SCOR). But Crackle wants to compete with channels like Hulu for advertisers, and Hulu averages more than three times as many viewers.
For Crackle, the primary challenge remains finding new distribution channels. Thanks to their shared corporate parent, Crackle already had distribution on Sony’s PlayStation network, as well as through internet-connected Sony Bravia TVs and Sony Blu-ray players. The company also announced a carriage agreement with Roku last year. That’s on top of online distribution through the main Crackle.com site and through a dedicated Crackle YouTube channel. On the mobile side, Sony says that over 7.5 million users of Android and iOS devices have downloaded the Crackle mobile app to date.
Gaming consoles are important to a site like Crackle because they have much greater penetration than so-called over-the-top set- top boxes. The U.S. adoption of PlayStation Network and Xbox Live is well over 50 million, versus about 15 million for non-gaming set-top devices like Roku, Apple (NSDQ: AAPL) TV, Boxee.
Crackle will split advertising revenue with Microsoft (NSDQ: MSFT) under the new deal, but neither side would discuss the details. Crackle joins Xbox Live at a time when Microsoft is greatly expanding the service’s program offerings. It is trying to evolve its Xbox 360 into a singular set-top box to serve all programming needs worldwide. To that end, it has signed on U.S. cable channels including ESPN (NYSE: DIS), Bravo, SyFy and HBO, U.S. cable service providers such as Verizon FiOS and Comcast’s Xfinity TV, and foreign broadcasters including the BBC in the U.K., and Canal+ in France and Spain. In all, it said in October that it would add around 40 new cable and satellite providers, and individual channels to stream live TV and VOD programming through Xbox 360 in 20 countries.