No, the story is not about how eating chicken soup can cure or prevent Covid-19: it’s a pandemic success story based on streaming media, with a telecoms entrepreneur at its heart.
The almost universal lockdowns spawned a huge need for entertainment, and while Netflix benefited enormously, counting 200 million new subscribers and a 49% rise in share price, it hasn’t been the only game in town, alongside big name competitors Amazon and Disney. Quietly and without much fanfare, a small company called Chicken Soup For The Soul Entertainment has been “gobbling up lesser known streamers, film distribution and production companies,” to quote Matt Schifrin at Forbes. In the last 12 months, Chicken Soup’s o-t-c traded shares soared by 289%— nearly six times as much as Netflix.
Perhaps you have come across some of its products, such as Going From Broke, produced by Ashton Kutcher, which offers reality TV-style budgeting advice to debt-laden Millennials? And there is a film called Willy’s Wonderland, which stars Nicolas Cage. Both of these actors are big names. So how does it operate, and why haven’t we heard much about it?
Chicken Soup isn’t in business to win awards, yet it still has millions of viewers for its programming, thanks to “savvy marketing and an opportunistic collection of streaming networks, distribution and production companies.” It is now a leader in the so-called AVOD or advertising-video-on-demand sector of the streaming entertainment business.
The plan to disrupt subscription services
What is that, you ask? It is advertising-supported channels streamed over the internet to laptops and smart TVs. According to Statista, this mode of streaming accounted for $27 billion in revenues in 2020 and is expected to grow to $56 billion by 2024. YouTube is an example of this that you are most likely familiar with. But Roku TV, ViacomCBS’s Pluto TV and Amazon’s IMDb Freedive are also involved.
The plan, you might say, is that subscribers will get fed up with the cost of subscription services, and will turn instead to free channels supported by advertising, such as Chicken Soup’s Crackle.
In 2020, Chicken Soup made $68 million, which some might say is chicken feed. However, it has just announced that it would be acquiring the assets of Hollywood’s Sonar Entertainment for what sources close to the deal estimate to be valued at $100 million. This will give it access to a catalogue of TV and films containing the top names in the business. Schifrin says: “In all, the deal includes a library of 372 television series and 700 films plus ongoing development deals with the A-listers like Ridley Scott, Jon Favreau, David E. Kelley and Jordan Peele.”
The entrepreneur behind Chicken Soup
Chicken Soup For The Soul Entertainment is the brainchild of William Rouhana Jr, and Schifrin remarks, “Having learned dealmaking during telecom’s Wild West, the structure of the Sonar deal is vintage Rouhana” When Rouhana first acquired Chicken Soup for the Soul in 2008, it was mainly in the business of publishing inspirational paperback books. Now he has leveraged its brand—and cash flow—to get into internet-based entertainment. Rouhani said, “I felt like video on the internet was clearly a very important part of the future. I have believed that since 1993 when I first created WinStar. The whole point of it was to deliver video over our broadband network to people.”
He added, “My plan is to keep building this for a couple more years. As we move into 2022, we will have one new TV series or movie coming to our networks each week. That kind of pace has never been seen before in advertising video on demand nor has an AVOD ever owned the amount of content that we will now own.”
A good entrepreneur story is hard to beat, and this is going to be an interesting one to keep following.