Sony's Berger: 30% of Crackle users don't pay for TV

with Eric Berger, Executive Vice President of Digital Networks at Sony Pictures

Berger (Image source: Sony)

Eric Berger joined Sony in 2006 as vice president of mobile entertainment and since then has taken over management of the company's multiplatform video entertainment network, Crackle, after being named to his current position. Berger also plays a key role in managing ad-supported digital businesses and partnerships with companies including YouTube and Hulu. FierceOnlineVideo's Mariko Hewer caught up with Berger on "content snacking," Crackle's business model and the typical Crackle user.

FierceOnlineVideo: Sony executives have previously discussed the topic of "content snacking." When did you start seeing it happen, and what are you doing to promote it?

Eric Berger: People use the word "snacking" differently. Some people use it for short form; what he's talking about is long-form content being popular on mobile devices. We've been big believers for a long period of time that people are interested in watching full-length movies and full-length TV shows on their smartphones and tablets. What we do see sometimes is that they will come in and watch part of that show and then they can pause and resume and watch more of that show at a later period of time, either on that device or on another device. They have the ability to chip away at a long-form piece of content. The misconception in the marketplace is that people only want to look at short-form clips or episodes on a mobile phone.

FierceOnlineVideo: Can you talk about your mobile channel specifically? Do you have any usage or customer numbers to report? How do you see the mobile channel evolving this year?

Eric Berger: We've had about 15 million downloads of our mobile applications so far, and it's really growing quite rapidly; we're very pleased with it. We're on iOS and Android; we're also on Windows Mobile; we also have a custom app for the Kindle and a custom app for the Nook. So it's an area that we believe in strongly and that is growing quite quickly. Another thing that's very interesting for us is not just mobile as second-screen application but two screens working together. We've had airplay functionality for some time on our iOS apps so people can pull up and navigate the content they want on our mobile application but see it on their large-screen TV.

FierceOnlineVideo: Can you talk about Crackle metrics like users or revenues?

Eric Berger: What I can tell you is we have a nice split across all platforms, which is key for us. The whole connected TV space is a very big piece of the pie and growing for us. We have about 12 million uniques for Crackle overall, and almost half of that is on connected devices, and that's a really big growth area for us. So on the connected devices it's not only the mobile and tablet, but in the TV space it includes game consoles like the Playstation and the Xbox, streaming boxes like the Roku, and smart TVs which include Samsung, LG, Toshiba, Vizio and the Sony Bravia.

FierceOnlineVideo: Who is the typical Crackle user?

Eric Berger: Our target is men 18 to 34. What's different about Crackle versus some other video services in the marketplace is that it is much more like a network, meaning it is targeted and programmed to that demographic like you would see in a traditional network. This is a cohort of people that obviously over-index on the use of electronics, they're very well-educated, they're in higher income brackets, they have a higher propensity to have and use game consoles, and so it's an attractive audience from an advertising perspective.

FierceOnlineVideo: Crackle offers several TV series, such as Seinfeld and The Three Stooges, on its platform. Why would a U.S. viewer use Crackle to watch one of those shows instead of watching it on TBS or a TV station that airs the program in syndication?

Eric Berger: It's a couple things. First of all, it's all on demand, and it's on all devices without any sort of authentication. So if you're a pay TV service provider, you can't get everything anytime and anywhere. Increasingly you'll see people authenticate in with their cable or satellite provider onto select devices, but not everything is available and not everyone is there right now. The content that Crackle [offers] is anytime and anywhere. There also [is] a lot of content that is digitally only available on Crackle on these connected devices… Seinfeld right now is only available on Crackle in a way that is unauthenticated. [For original content], we have a show called "Chosen"… that show launched in January and was very successful and we just announced a new season. Another example would be Jerry Seinfeld's "Comedians and Cars Getting Coffee." We did 10 episodes of that show last summer and fall, and again, due to the success of that show we've just announced 24 new episodes.

FierceOnlineVideo: What percentage of Crackle's audience do you expect includes cord cutters or online video viewers who have never subscribed to cable or satellite TV?

Eric Berger: It's a little bit fluctuating, but we believe it's about 30 percent or one-third of the audience who do not have a pay service. A lot of people talk about cord cutting, and that's the metric that the people focus on, but we always talk about the cord nevers—that's the cohort to watch for this type of content.

FierceOnlineVideo: How much competition do you expect that Intel will pose for Sony with the online video product that it plans to launch later this year?

Eric Berger: I would say that's a little bit different. My understanding of Intel is that it's more of a competitive service to pay TV providers, to cable and satellite. They're aggregating traditional linear networks onto a box that consumers purchase and put in their homes. I would think of Crackle as a content service that consumers can have. Whether [they] have no pay TV provider, or whether [they] have Intel or whether [they] have a service like Comcast or DirecTV, Crackle can work for [them] in any of those three situations, providing unique content experience that's available anytime and anywhere. It's a complement to any of those options.

FierceOnlineVideo: There have been reports that Sony is also developing a virtual cable platform. Are you involved with those efforts? Doesn't Sony already offer a virtual network through its PlayStation Network?

Eric Berger: I'm not involved and can't really comment.

FierceOnlineVideo: Sony has said that about one-third of Crackle's traffic comes from mobile devices, one-third of users access it from computers and another third watch TV shows and movies from Crackle on connected TV devices like the Roku. How do you expect Crackle's traffic sources to change in the next few years?

Eric Berger: The connected TV space is a very big growth area for us; that's the smart TVs and the gaming consoles and the streaming boxes. That's one of our fastest growing areas as consumers discover that they can have this anytime, anywhere, on-demand experience on a large screen. That said, mobile is growing quite rapidly as well, and more and more usage of tablets of smartphones for services like Crackle is happening every day. Those are both very strong growth areas for us.

FierceOnlineVideo: Will Crackle always be a free, ad-supported service? Would you consider distributing premium content, or charging viewers monthly fees to watch commercial-free content?

Eric Berger: No. We're big believers in advertising and our plan is to stay a fully ad-supported model that is free to consumers. We have a lot of success on the ad side; brands and agencies have been very happy with our ad completion rates, which are in excess of 93 percent. It's a very strong advertising platform. In addition, we're taking a leadership role on these new platforms on the advertising side. It's worth noting that, for premium content such as ours, full-length movies and TV shows, we are the only provider that is completely ad-supported on all platforms and therefore the only ones that are truly frictionless to the consumer and advertiser. On every other service you need to authenticate either through your pay TV provider or you need to be a subscriber to have access to premium content on mobile and connected TVs.

FierceOnlineVideo: Microsoft is looking at producing original TV series through its Xbox Entertainment Studios, including programs that would allow viewers to interact with content. How much potential do you see for Sony to develop similar original interactive content?

Eric Berger: Certain things lend themselves well to interactivity versus other things. And when it's forced, it's not natural to the consumer. We look at properties individually, and if and when we find properties where interactivity lends itself to the property, then we think it's great and the platform will work for that.

Sony's Berger: 30% of Crackle users don't pay for TV