Philippe Guelton, President at Crackle Plus and head of VOD Networks at Chicken Soup for the Soul Entertainment, joins Cross Screen Media CEO Michael Beach to share how he transformed an AVOD platform into a mass distribution network that works with partners as well as competitors. Learn about Crackle’s rise and how they continue to garner loyalty in a crowded space. Watch our latest Screen Wars Thought Leader Interview here and read the full transcript below!
Michael Beach: Well, Philippe, thanks for joining us today.
PG: Thanks for having me, Michael.
MB: Why don’t you walk us through how you got started in your career and how you ended up where you are today?
PG: I started in magazine publishing pre-internet, and I studied as a financial analyst. I was a business manager of the fashion magazine, Elle. My role was to look at the P&L and make sure that the numbers were coming. Funny enough, I was just thinking the other day that what I’m doing today is quite similar, and the P&L is not that different in terms of structure, because the business model is exactly the same. You’ve got content cost and distribution cost and ad revenue as your main or only driver, and you’re trying to make the best business possible.
From that, I went from magazine publishing to digital publishing, and then to streaming publishing, because we’re publishing content. We’re making public original content as well as content we acquire, and I see it as a logical evolution, but the business is pretty much the same.
MB: Can you give our audience some background on Chicken Soup for the Soul Entertainment and where Crackle Plus fits in there?
PG: Chicken Soup for the Soul Entertainment was created by the brand, Chicken Soup for the Soul, the publishing business which has been around for over 25 years. The self-help books have sold half a billion copies around the world, but the entertainment branch was created for the video and film business. It’s a public company. We have three major divisions. One is a production business, called Chicken Soup for the Soul TV Group, and it produces multiple series for Disney+ and Amazon, as well as unscripted content for Chicken Soup for the Soul or for the Crackle apps.
Second is our content distribution arm called Screen Media. They acquire and license content across all kinds of channels, from theater distribution to DVDs at Walmart. They also license content to other streamers and to most of our competitors. Third is our consumer-facing streaming business, Crackle Plus, which I lead. We have a unique, vertical integration between these three businesses. As we create, acquire, and eventually stream content, the goal is for all that content to pay for itself before it even gets to us. This allows us to build a unique economic model and make more money.
MB: So you create content, you’re a licensor, and you’ve got a home streaming app, and you’re licensing content from other groups?
PG: Yes. Going back to Crackle Plus, we have three or four major streaming brands. We have Crackle, which we acquired three years ago from Sony. It is more of our general entertainment brand, being a combination of content we produce and content we acquire. We also license content. We have a strong partnership with Sony. Today, we announced a huge partnership with the BBC. We work with big studios as well, as we’ve been building our own library of content. That’s where Screen Media comes into play.
Our second brand is Popcornflix, for the younger, more action-adventure type of movies. It has been around for a long time, and it was developed by Screen Media. Our third large brand is Chicken Soup for the Soul. This is our first female-focused streaming brand, and we’re very excited about it, because we feel this is a very underserved market, and we are putting a lot of effort behind it. We have other brands like Truli, which is more of a faith-based brand with a lot of great content creation from multiple providers.
We provide the best product we can. Our mission is to build the best AVOD experience for our users. We are 100% free, 100% ad-supported, and we’ve been putting a lot of effort into our content selection and creation. Right now, we’re also investing a lot in our product because we believe the AVOD experience has not changed significantly since Netflix came out, and we think there are real opportunities to add new functionality and types of engagement with our viewers.
”We believe that full AVOD apps are a much better experience because you can watch whatever you want, whenever you want, wherever you want.
PG: We’ve also been focusing on distribution and FAST channel creation. We see this as an opportunity to make our content known to viewers. And in a very fragmented market, this is a great marketing platform for our apps. We believe that full AVOD apps are a much better experience because you can watch whatever you want, whenever you want, wherever you want. We have thousands and thousands of shows available at any moment, but adding the FAST channel dimension has been helpful for us in terms of getting the word out.
MB: How do you decide what content you want to keep exclusive versus content that you’re willing to license out to a competitor, or frenemy, and vice versa?
PG: I think this is a great question, and it’s not easy to answer. I think what you want to keep exclusive is the seasonal content. Let’s say, we have our new Christmas movie coming out every year, and we definitely want to keep an exclusive window for that before we license it to someone else. We have our Crackle Originals. They’re usually exclusive to us, and they stay exclusive for a long time. We have yet to license any of them to anyone else. We launch at least one or two of them every month right now.
We also have acquired exclusive shows. We just announced that we’re going to have Sherlock, from the BBC, as an exclusive for three years on Crackle. We think it’s a show that attracts a lot of fans, and we want to keep it for a long time exclusively on Crackle. Then, we license content from Sony and others, where we might be willing to share their windows with other frenemies, as you say. So, we’re in a unique position. We are a company that licenses content out to others, and whenever is possible, we try to keep an exclusive window for our own platforms first.
MB: Is your business model ad-supported, subscription, or a combination of the two?
PG: We don’t sell subscriptions. We’re fully ad-supported, and our intent is to stay that way.
MB: That’s great. Looking at the streaming space, it has gotten extremely crowded. I always look at Crackle as one of the early apps in this space. Where do you fit in the market? Obviously, you’re in the ad-supported bucket. Who are your core competitors?
PG: We have a lot of competitors. We compete with anyone that takes time away from our viewers, and SVOD is one of them. On the AVOD front, there are the usual suspects, the Tubis and Plutos of the world, and the TV OEMs who have been very active in building their own experiences. You used the word frenemies, and that’s what it is, because we pretty much work with everyone. If we don’t distribute our own content, we have it distributed on these platforms. We believe that we have amazing brands. When you think of Crackle, while it definitely is not at the scale of some of the multi-billion dollar media companies out there, it comes first as the most recognized AVOD brand in every consumer survey. That’s a huge advantage.
I would say it’s the same with Chicken Soup. Even though we just launched it, we know it’s one of the most safe and beloved brands of the female media world. I think that’s the first thing we have to offer: Very well-known, safe brands where people know what they’re going to get. Second is content. As part of the AVOD market, we’ve been ahead of the game in terms of originals, for example. Until recently, a lot of our competitors claimed they would never do originals.
Sony, way before we bought Crackle, was very active in creating original content. Recently I counted over 110 original movies or series coming up next year, and all are going to be exclusive to our platforms. Providing unique content not available anywhere else is key. At the same time, having the Sony library, the BBC content, and working with Lionsgate and others. Because we want to give our viewers a rounded experience, and the ability to entertain themselves with the content they prefer.
”We have this joke where we say we are not charging the consumers, we actually pay them to come and watch content on Crackle.
PG: As I mentioned, the product is a key element. We’re going to be the first AVOD platform with a loyalty program. We have this joke where we say we are not charging the consumers, we actually pay them to come and watch content on Crackle. I think there’s not a single business out there that doesn’t have a loyalty program and reward their most loyal consumers. We are very excited about that, and plan to launch it later this year.
I would also say that one of our strengths is advertising. We have an amazing advertising team. They are so good that we have way more demand than supply, and we’ve been expanding our offering to other premium media platforms. We represent a number of prestigious streamers in the marketplace, and that helps us in terms of scale. When we think about our scale in the advertising market, it’s not just our owned and operated brands, it’s also a portfolio of partner brands. Having a portfolio of brands, you’re able to attract a broader number of advertisers and partners. We’ve been very active in the creation of brand-new content, being very flexible when working with advertisers. I think we have a lot of strengths. We’re still seen as an underdog, but we’re working really hard, and we are looking forward to surprising the market.
MB: You talked about the demand outpacing supply in the advertising. Is most or all of your advertising direct-sold, or do you work with supply-side platforms?
PG: We have the majority of our business sold direct. And between the direct business and the supply side platform business, there is the category of programmatic direct, which is leveraging the programmatic pipes, but selling direct to interested clients who have been more careful about the context of where their ads are running since COVID. And it’s very important for them to have the knowledge of knowing where and what kind of content they’re running against. Also, a lot of the dollars that are coming from television have been traditionally placed direct and directly with the agencies and clients. So, we are very active during the upfront and new fronts. That’s a big part of our business.
MB: What is a typical advertiser you look like? Are they buying television advertising already, or are they unique to streaming?
PG: No. For the most part, they’re the top advertisers. Like pharma, or insurance companies. It’s P&G, packaged goods, QSR. Most of them are your typical TV advertisers, and you would recognize most of those campaigns from traditional TV. We also work with local networks, but for the most part, you’re thinking about the big TV brands.
MB: I’m fascinated by how you view the economics of the streaming model and how you decide how much to spend on original or licensed content. What’s your big picture take on that?
PG: We’re obviously in the business where all our costs are really revenue share. It really is about how much is going to go to the distribution platform, how much is going to go to the content creator, our integration with the rest of the company in terms of creating our own content or acquiring libraries only to own them… Screen Media, our sister company, acquired Sonar Entertainment last year. We just acquired 1091, which brings a ton of content in very niche and important areas. Rule No.1 is that you may want to own most of your content, so that most of that cost is actually being paid to yourself, and the money stays within the company.
Rule No.2 is working with brands to help fund the content. We have become better and better at selling brand integrations into our original content. For example, the show Going From Broke, which we’ve created with Ashton Kutcher as executive producer, is fully funded through brand integrations. So, when the show comes to Crackle, every dollar sold is profit.
We also partner within co-productions. We co-produce content with A&E on some projects, and because we have our licensing arm with Screen Media, we’re able to resell international rights for that content. Again, the whole concept of being integrated is to lower the cost or fund the cost of content as much as we can. Of course, once in a while, we’ll splurge on content that we feel is going to make a difference. That’s where we’re looking for a balance between owned content and licensed content.
MB: With the more traditional side of the business, do you like 360-type deals with content creators for print, books, video and everything?
PG: With the launch of the Chicken Soup for the Soul Network, we’re going to have many more of these opportunities. With Crackle it was a bit difficult because there was less of a connection between the publishing and the Crackle brand, but Chicken Soup for the Soul started production three or four years ago, before we had the platform to launch that content. A lot of the themes of the shows were inspired by the books themselves. The company still produces 10 to 12 new books every year with different topics and different subjects. There are over a hundred different titles that are in print right now. That means there are many different topics and subjects, ranging from teenagers to pets, to every aspect of life that you can imagine.
With the Chicken Soup for the Soul originals, we’re trying to recreate the idea that we want to make the world better one story at a time, which is the mission of the original brand. And we are doing that through partnerships with influencers and hosts and content creators who embody those values. Our goal with Chicken Soup for the Soul is to recreate this safe place where you’re going to see known faces and warm and accessible hosts for some of our unscripted content. That is going to feel very, very consistent with the whole brand, even if it’s a different medium altogether. It’s not just taking a story from a book and turning it into a movie or a series. It’s about bringing the values of the brand and serving the fan base of the books, while broadening that reach to every woman in the country. We can serve every age and with very diverse content, which is one of the top values of the brand.
MB: I love that. If my target focus group is correct, that’s your successful offering. Their traditional media area has shrunk over the years, but to me, the items that are there and prominent have a huge audience, and Chicken Soup for the Soul is prominent there.
PG: Absolutely. With cable going where it is going, we see personalities coming to us from the TV world. There is a lot of great talent looking for new platforms to create and distribute their content, as well as content creators from the digital world, who may not be able to get a show on HGTV or Food Network, but they certainly have amazing content, and they’ve been building very strong relationships with their audience. They’re beloved by their fans, and they’d love to be able to build their ideas on a more premium platform.
MB: The theme for this season of our podcast is around business models and investing, and I know that you do quite a bit of angel investing. What’s your thesis, and what companies are you looking for as an investor?
PG: I’m not as active as I used to be, since I’m too busy. I’m not a very good investor. I tend to invest in what I like instead of thinking more rationally about business models. I’m usually attracted to the service and the experience provided to consumers, instead of the power of their technology. Most of the companies I’ve looked at over the years were very close to the media world. Probably the most impressive that I’ve seen, and I had a chance to be involved with, is Muck Rack, which has become one of the top PR platforms but is also a great way for journalists to build their portfolio and elevate their visibility.
”… it's about leveraging content creation, recognizing the talent of people who are in the media market, helping them, elevating them, and giving them a platform where they can make a living.
PG: I think it’s a brilliant way to connect the dots between content creators, influencers, and people who have the money to fund fun things, and all the big brands who need to do PR. For me, it’s about leveraging content creation, recognizing the talent of people who are in the media market, helping them, elevating them, and giving them a platform where they can make a living. I’m not sure that I’m a great investor, but that’s the stuff that gets me excited.
MB: We just recorded an episode with Troy Young, and his stance was that you got to look at these influencers like they’re media brands. Are you doing deals with influencers for content on Crackle Plus or Chicken Soup for the Soul?
PG: We’re working with Tia Mowry and the Kin Community team, who are going to create a new original series for Chicken Soup for the Soul. That’s just the tip of the iceberg. We’re doing a lot of deals like these and forging ties with influencers who have proven themselves in creating high-quality content and are looking to expand their audience. We’re working very hard on it.
MB: I’m fascinated by that. To wrap up. Give me one prediction for a year from now that is under the radar for most people.
PG: I would have to say that Chicken Soup for the Soul Entertainment is going to become a billion-dollar company, it is going to be acquired by a media group. Nobody’s talking about that right now, but who knows? It could happen.
MB: If our audience was trying to get caught up in what we’ve talked about today, what would be the best areas for them to read and what people should they be looking for?
PG: The Screen is a great place to go, which you’re familiar with. I’m amazed at how you’re able to pull all this data out of seemingly thin air. It’s really terrific to be able to understand the trends of the different parts of the industry. I really enjoy following Evan Shapiro. He’s introducing himself as a cartographer of the streaming world, but I think he also has great insights in terms of the different players and the trends, where we’re going, and what people should be thinking about.
MB: Well, Philippe, I appreciate your time. I know our audience is going to love this talk.
PG: All right. Thanks for inviting me today.
MB: Thank you.
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Philippe Guelton is the president of VOD networks and oversees all of CSS Entertainment’s properties that monetize video content directly to audiences. This enables the company to improve efficiency and flexibility by consolidating all VOD operations including Pivotshare, Popcornflix, and Truli, and lay the groundwork for future acquisitions.
Mr. Guelton was formerly the chief executive officer at SheKnows Media (now She Media), a mission-driven digital media company with a reach of 60+ million monthly unique visitors and over 350+ million social media fans. Penske Media Corporation acquired SheKnows Media in 2018. Previously, Mr. Guelton served as president of Thrillist Media Group, a leading men’s lifestyle digital brand now part of GroupNine. Mr. Guelton was also chief operating officer at Hachette Filipacchi Media U.S., where he oversaw print and digital platforms for brands such as Elle and Woman’s Day. Prior to that, he led the acquisition and was the chief executive officer of Japanese publishing company Fujingaho (now part of Hearst).
Cross Screen Media is a marketing analytics and software company empowering marketers to plan, activate, and measure Connected TV and audience-driven Linear TV advertising at the local level. Our closed-loop solutions help brands, agencies, and networks succeed in the Convergent TV space. For more information, visit CrossScreenMedia.com.