Founded as Grouper in 2004, the Sony owned Crackle has taken a long and eventful path to its current status. Finding itself far behind competitor YouTube in terms of pure user numbers, the company (then grouper) began differentiating its product by changing its architecture. Originally a downloadable program, grouper became browser based and added a desktop video editor and a closed P2P content distribution element to its arsenal. With perfect software for a major distributor but a lack of users, Grouper was a prime target for acquisition and was bought by Sony for $65 million, approaching $120 per user by some estimates.

Reportedly Grouper turned down a $10 million second round of financing to gain the content support of the major media company. President of Grouper, David Samuel, was no stranger to acquisitions, having sold his old company, Spinner.com, to AOL in 1999 for $320 million. Grouper was set to become a distribution platform for Sony’s vast video catalogue, a streaming video site for lower quality video and a place where fans could make mashups of Sony Content.

Grouper was quiet for a while after its acquisition, however, it was reborn Crackle after a complete overhaul of its website in July of 2007. Crackle is now a destination video site for professional producers and anyone hoping to become one. Crackle consists of 12 channels which range in flavor from animation to news. Crackle is ad supported.

Although Crackle still lacks in user numbers, it has an incredible asset in Sony and its expansive media empire. Few other startups can match what Crackle can now offer.