Analyst: New Redbox Owner Likely to Combine Digital Properties Under Redbox Banner

Chicken Soup for the Soul Entertainment’s acquisition of Redbox Entertainment finds an established ad-supported streaming service, Crackle Plus, joining forces with Redbox TV, the venerable DVD kiosk rental brand’s upstart streaming video app.

Chicken Soup in 2019 acquired majority ownership in the erstwhile Sony Crackle streaming service from Sony Pictures Television. The company then bought out Sony’s remaining stake in 2020. As of January 2022, Crackle had about 40 million monthly active users.

Last July, Redbox TV reportedly had about 1 million monthly users since its 2020 launch, while the app has been downloaded more than 43 million times.

With Chicken Soup assuming the combined companies’ Wall Street name and ticker presence, Michael Pachter, media analyst with Wedbush Securities in Los Angeles, believes the new owner will combine the companies’ digital properties under the Redbox banner, not Crackle.

Pachter speculates Redbox CEO Galen Smith will continue to run the company’s legacy kiosk business, which cites about 38,000 retail locations nationwide and 40 million loyalty customers.

“They probably want Galen to run the physical business, and they can use the [Redbox] digital channels to augment their other offerings,” Pachter said in an email. “I wouldn’t be surprised if they merge Crackle into Redbox and keep the Redbox name, but no idea right now what they are doing.”

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Reports: AVOD Revenue to Grow 25% in 2020

Subscription streaming video’s counterpart, advertising-supported VOD, continues to gain traction among consumers — and advertisers. New data from eMarketer suggests AVOD revenue will grow more than 25% this year compared to 2019.

The AVOD market, which is spearheaded by The Roku Channel, Disney-owned Hulu, NBCUniversal’s Peacock, Redbox TV, Amazon’s IMDb TV, ViacomCBS’s Pluto TV and Fox Corp.’s Tubi, among others, saw ad revenue skyrocket 31% to $849 million in the most-recent quarter, according to MoffettNathanson Research.

“AVOD advertising benefitted from heightened usage and a mix shift in advertising budgets to OTT platforms, growing sizably in the quarter,” senior analyst Michael Nathanson wrote in a note.

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Speaking Aug. 20 on the DEG: The Digital Entertainment Group Mid-Year 2020 Digital Media Entertainment Report webcast, Nathanson called AVOD the underreported streaming video story.

“That 28% of streaming minutes is where we think the streaming wars are actually happening,” Nathanson said.

With many of the AVOD players owned by major media companies, much of the ad growth would appear to be due to shifting third-party ad dollars from linear TV to connected televisions.

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But with four of the five AVOD platforms owned by major media conglomerates, some of this growth is likely coming from reallocated TV spend. eMarketer contends the 31% rise in AVOD revenue among the top platforms compares with an estimated 28% decline in national broadcast and cable TV ad spending in Q2, according to Nathanson.

Eric Haggstrom, forecasting analyst at Insider Intelligence at eMarketer, believes that while marketers warm to AVOD, much of the revenue revolves around media giants pushing advertisers to proprietary streaming platforms.

“Some advertisers who bought ads in the upfronts are shifting money within the same media company to streaming services,” Haggstrom said.

Indeed, Tubi earlier this year added all episodes of Fox’s “Gordon Ramsay’s 24 Hours to Hell and Back,” in addition to 300 hours of separate Ramsay content, which includes “Hell’s Kitchen,” “Kitchen Nightmares” and “The F Word.” Tubi also added Fox’s music competition show “The Masked Singer.”

“Making this show available on Tubi alongside Gordon’s other series, will only grow his footprint while also further promoting his programs on Fox,” said Rob Wade, president of alternative entertainment and specials at Fox Entertainment.