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spk05: Welcome to Center Versus Second Quarter Fiscal 2024 Financial Results Conference Call. My name is Tia, and I will be your moderator for today. Currently, all participants are in a listen-only mode. We will have a question and answer session following management's prepared remarks, at which time participants can press star followed by the number one to ask a question. If anyone needs operator help, press star zero. Please note that this call is being recorded. I would now like to turn the call over to your host, Gary Loffredo, Chief Legal Officer, Secretary, and Senior Advisor for Cineverse. Please proceed.
spk01: Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal 2024 Second Quarter Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal second quarter ended September 30, 2023. is available at the investor section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at Cineverse's website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that can cause the company's business and financial results to differ materially from these forward-looking statements. All the information discussed on this call is, as of today, November 14, 2023. and Cineverse does not assume any obligation to update any of these forward-looking statements except as required by law. In addition, certain financial information presented in this call represent non-GAAP financial measures, and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings releases carefully as you consider these metrics. I'm Gary Lofretto, Chief Legal Officer, Secretary, and Senior Advisor at Cineverse. With me today are Chris McGurk, Chairman and CEO, Eric Opica, President and Chief Strategy Officer, Tony Huidor, Chief Operating Officer and Chief Technology Officer, Mark Lindsay, Chief Financial Officer, and Yolanda Macias, Chief Content Officer, all of whom will be available for questions following the prepared remarks. On today's call, Chris will discuss our second quarter fiscal 2024 highlights, the latest operational developments, outlook, and long-term growth strategy. Mark will follow with a review of our results, and Eric will provide some detail on our business results and operating initiatives before opening the floor for questions. I will now turn the call over to Chris McGurk to begin.
spk03: Thank you, Gary, and hello, everyone. Thank you for joining us today. We made great strides this quarter toward achieving our previously stated goal of dramatically reducing costs, improving margins, and driving towards sustained profitability. We did this by further optimizing our more than two dozen streaming channel portfolio, culling lower margin channels while focusing resources on higher margin, higher return performers, and then by cutting costs, as we finalize the consolidation of the eight key content and streaming acquisitions we made over the past three years. At the same time, we are also transferring a significant number of domestic employment positions to our Centerverse Services India operation, a unique competitive cost and work efficiency advantage that Centerverse enjoys versus everyone else in our space. I believe the results this quarter show significant progress towards our goal of long-term sustained profitability and also demonstrate our willingness to trade off lower margin revenue streams for higher margins and profits in pursuit of that goal. In the quarter, we increased our total operating margin to 64% from 42%. We increased our recurring operating margin to 56% from 30% when excluding our legacy digital cinema equipment business. We decreased our operating expenses by $6.3 million, or 34%. We decreased our SG&A costs by $2.8 million, or 29%, via a reduction of 30 employment positions and tight cost controls. We have also put any management variable bonus compensation on hold until we achieve sustainable profitability. And we have significant additional positions that we plan to offshore to Centiverse Services India over the next few months beyond the 29 plus positions that we have already moved there or identified to offshore. All of that will enable us to hit our goal of $8 million in annual SG&A cuts. Centiverse Services India is a very significant advantage for us, providing a huge cost savings and work efficiency upside that we own versus our competitors. And we intend to leverage that to the fullest extent possible. As a result of all these optimization and cost savings initiatives, which significantly exceeded the revenue impact of culling lower margin channels, we improved our operating profit by $5.3 million to $600,000 this quarter. And we increased our adjusted EBITDA by $3.7 million, or 283%, to $2.4 million. And we also narrowed our net loss to $400,000. That's net loss attributable to common shareholders. That's an improvement of $5.4 million. Clearly, we are on the right track towards sustained profitability. and that remains our overriding focus. Mark Lindsay will next add some color to these results and speak to our cash management activities and planning. Eric Opica will then review all of the initiatives we have in place to drive high margin incremental revenues, including our recently announced deal with technology unicorn Amagi and our upcoming announcements regarding AI partnerships for streaming search and discovery. Mark?
spk04: Thank you, Chris. For the fiscal second quarter ended September 30, 2023, Centiverse reported total revenues at $13.0 million, which compares to $14.0 million in the prior year quarter. As Chris noted, this decrease was primarily due to the impact on our advertising revenue from the intentional elimination of certain lower margin channels via portfolio optimization and reallocating those resources to higher performing and higher margin streaming properties. which is important to our goal of achieving sustainable profitability in the near term. Subscription-based revenues increased 52% to $3.5 million, driven by the continued success of our enthusiast streaming services. For example, our screen box channel revenues increased over 350% compared to the prior year quarter. Advertising-based revenues declined 28% to $4.1 million, primarily due to our channel optimization efforts and the continued impact of the current economic environment on advertising spend. Non-recurring revenues related to our legacy digital cinema business were 2.4 million, a decline of 7% from prior year quarter. We don't expect any additional future revenues associated with this business other than nominal equipment sales. Direct operating margin for the period was 64%, an increase from 42% in the prior year quarter. When excluding the impact of our legacy digital cinema business, our recurring direct operating margin improved to 56% compared to 30% in the prior year quarter, which is in excess of our previously provided guidance of 45 to 50% for fiscal year 2024. Our improved direct operating margin is a direct result of our cost optimization initiatives that Chris referred to earlier. Selling, general, and administrative expenses decreased 2.8 million, or 29%, from the prior year quarter. Again, this improvement is a direct result of the cost optimization initiatives discussed previously. We expect to gain even greater efficiencies as our offshoring efforts to Centiverse Services India gain momentum over the remainder of the fiscal year. Overall, total operating expenses decreased $6.3 million, and as a result, our net loss attributable to common stockholders narrowed to a negative $0.4 million, or negative $0.04 per diluted share, a $5.3 million and $0.61 per share improvement from the prior year quarter. Adjusted EBITDA improved $3.7 million from a negative $1.3 million in the prior year quarter to a positive $2.4 million in the current quarter. We had $8.6 million in cash and cash equivalents on our balance sheet as of September 30, 2023, and we have $5 million outstanding on our working capital facility. During the quarter, our cash flow used some operations improved by $2.2 million from a negative $5.1 million in the prior year quarter to a negative $2.9 million this quarter. Of the cash usage of $2.9 million this quarter, $4 million was related to investments in our content portfolio via advance and or minimum guarantee payments, the largest being for Terrifier 3. Year to date, our content portfolio spend was $5.3 million. The important point here about cash is that when excluding our content portfolio spend, cash flow from operations was a positive $1.1 million this quarter. We're excited to see the impact that our cost optimization strategies had this quarter and are optimistic about their impact for the remainder of the fiscal year. In addition, we are working closely with our bank to increase the size and duration of our working capital facility. We feel well positioned to be able to execute on our goal of achieving sustainable profitability by the end of the fiscal year. In terms of guidance, we are currently reviewing our previously issued guidance in connection with finalizing our long-range forecast that takes into account the results of our channel optimization efforts, our cost reduction initiatives, and the new revenue initiatives we are launching such as our SAS and managed services technology business. We will report any changes in guidance if warranted once we have completed this process. I also want to point out that we have a 500,000 share stock repurchase program available through March 2024. We believe that we are significantly undervalued with the stock price that is trading substantially below our current book value, and we will assess the need to utilize the stock repurchase program once our trading window opens up. With that, I'll turn the floor over to Eric to discuss the market environment and our growth initiatives. Thank you.
spk10: Good afternoon, everyone, and thank you for joining us today. I'd like to start off by sharing our financial progress, particularly in the streaming sector. Our digital and streaming revenue declined by 7% to $10.6 million. This stems from our strategic digital licensing and expansion of our subscription base, which was offset by a decline in ad revenues and, as previously noted, the culling of multiple lower margin streaming channels. Subscription revenues have seen a considerable increase to 3.5 million, up 52% over the prior year. We reached 1.24 million subscribers thanks to our target acquisitions for ScreenBox for our channel and the Dove channel's expansion. This progress underscores the strength and appeal of our enthusiast streaming services, and we're going to continue to focus on smart growth by optimizing retail pricing for our services, expanding distribution, and pursuing bundling partnerships. Beyond that, we continue to rationalize content spending. You've seen the major streamers reduce content spend across the board, and we're no exception. Going forward, we have shifted away from capital-intensive all rights acquisitions and productions to lower cost acquisitions and minimum guarantee and revenue sharing deals. This approach will greatly reduce our need for content investment spend, and given our other efforts noted, we'll see minimal impact to top line revenue while boosting profitability. Ad-based revenues. experienced a dip to 4.1 million, a decrease of 28% in the quarter year over year. This decline aligns with the insights Chris and Mark shared earlier. We've streamlined our channel portfolio, prioritized higher margin channels, and concluded the wind down of several underperforming ones. Despite the challenges in the ad market, including a prolonged tech migration with a major fast partner, we've navigated these waters with strategic finesse. And our partner's marketing make goods have helped us bounce back with that partner reaching pre-transition revenue levels on that platform by quarter end. If we consider some of these factors, our year-over-year impact as it relates to market softness was on our estimation between 10% to 12% year-to-date. What we're seeing in the market is a shift from an open marketplace, pure programmatic buying from agencies and brands, and this has been due to efforts on supply path optimization to buy directly from content publishers like Cineverse. We think this is great for us and in the short term will eliminate many middlemen and resellers. Our short to midterm outlook is much greater sales due to three key initiatives. First, shifting all of our open market inventory to PMP and programmatic direct deals. We estimate this will increase revenues on our existing inventory by up to 30% at higher fill rates. Second, our direct sales efforts. In this quarter, we expanded our ad team and that team is fully up to speed. in market and focused on building relationships and responding to RFPs for next calendar year. Given most of the major brands and advertisers are planning out nine to 12 months, we expect to see robust results from these efforts starting at the end of this fiscal year and ramping heavily into our next fiscal year. Combined with robust political ad spend in the market and expected heavy shift from cable and satellite to connected TV, next calendar year is looking to be a breakout year on ad sales. Our strategy has evolved. We're moving away from the pursuit of high top-line revenue and KPI growth at the expense of profitability. Instead, we're focused on efficient, profitable growth. Our target areas are those that we can leverage our competitive edge and scale with minimal growth capital. Digital aggregation and licensing is a prime example, taking advantage of our extensive library and technology. We're pivoting towards a more balanced licensing strategy, as noticed, which we believe will unlock significant revenues from our library in the upcoming quarters. For our own streaming channels, our strategy is to focus on niche markets where we can lead, such as horror, thriller, faith and family, and Asian content. We've been consolidating assets and optimizing our team structure to better align with this vision. Matchpoint technology remains a cornerstone of our strategy as the streaming market evolves. We're one of the few platforms capable of supporting the industry shift the various business models and distribution points. Our competitors offer only a fraction of what MatchPoint can do, and we're excited to expand on those capabilities. In the spirit of our partnership with Amagi, we've committed to bringing our innovative MatchPoint suite and content services to an even broader market. Our shared history with Amagi since 2017 has set the stage for a strategic collaboration that we think will redefine the streaming technology business. As we gear up for major technology conferences and finalize our market strategies, we're confident that this synergy will drive significant revenue growth and solidify our position as innovators in the streaming infrastructure space. We believe that the Amagi partnership could provide low eight figures of annual revenue once fully up to scale based on our internal forecast and discussions with Amagi. We believe there are substantial customers in immediate need of our solutions and expect to move quickly in the new year to take advantage of that opportunity, starting with CES. Our efforts on driving increased match point sales and partnerships go beyond the large enterprise customers targeted in that deal. We're going to continue to offer companies managed channel services like we're doing today with American Public Media, Comedy Dynamics, Bob Ross Inc., Real Madrid, all three media, and most recently, Dog Whisperer and Nine Story. These partnerships provide us high-quality brands at typically far lower risk than launching our own speculative channels with no existing brand identity. I also wanted to address the timeline on channel launches in general, as well as provide an update on key forthcoming channels. As the fast market has matured and competition for valuable placement on platforms has increased, the amount of time it takes to get channels up and on platforms has gone up from around two months to up to nine months, depending on the platform. While this is far quicker than it ever was in the cable ecosystem, it does mean there'll be longer periods between the channel's announcement and launch. Additionally, when we partner with a third party, we're dependent on those parties to produce and secure content, caption the content, or remaster it to be suitable for broadcast and streaming. We don't control those elements, and sometimes this can lead to delays. So these elements need to be kept in mind as we announce channel deals. As it relates to our current portfolio, we expect Dog Whisperer to launch within the current quarter, the GoPro channel, is predominantly new original programming, which is great for securing carriage and advertising conversations, but longer-term production delays from a partner have pushed the launch into fiscal Q4, calendar Q1. We also expect launches of MeatEater and Entrepreneur in fiscal Q4, calendar Q1 as well. As it relates to Sid and Marty Croft's channel, we're currently in the process of remastering and restoring the content in 4K. Keep in mind, this is an extensive progress as the content was in standard definition. We are pushing to have this channel live in fiscal Q4, calendar Q1, but that will be dependent on distribution conversations happening today. With MatchPoint, we're also targeting the small and medium business segment directly, and I've recently hired a new head of sales for MatchPoint with over a decade experience targeting the exact arena we're covering. Beyond that, we're developing new products and capabilities to allow media companies to better monetize their content and streaming services by utilizing the power of AI. This ranges from making difficult, labor-intensive, and repetitive tasks scalable and cost-effective, like captioning, metadata enrichment, and quality control, to next-generation technologies that can help companies prepare their content for licensing to large language models, drive deep engagement with consumers, and even create new content from existing libraries using AI. We expect to announce the latest fruits of our AI R&D efforts, which we've been developing for this past year over the next few weeks and months. The important thing to take away from this is that our underlying technology platform facilitates rapid, high-quality processing of video to tackle the biggest challenges the world's tech giants are trying to solve with AI. So we're not only planning new product launches, but also expanding our engineering team to support these initiatives in India. The future looks bright with Matchpoint and Cineverse, and we're eager to share more about our progress in the coming weeks. With that, operator, let's open it up for Q&A.
spk05: We will now begin the QA session. If you would like to ask a question, please press star followed by one or your touch-tone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to generate in queue. The first question comes from the line of Brian Kintzler with Alliance Global Partners. Please proceed.
spk08: Great, thanks, and congratulations on all the restructuring and what it means for the much stronger fundamentals that it looks like already in the quarter. Sorry, it was a lot of information to write down. If you could share, if you provided it, the gross margin of the business, excluding the legacy business, And what was the operating margin or EBITDA margin, if you will, for, again, the business that excludes legacy?
spk03: This is Chris. Thanks for your comment. But I'll let Mark Lindsay go through those numbers for you. Mark?
spk04: Thanks, Chris. Yeah, yeah. Thanks, Brian. So the gross margin before excluding legacy was 64% this quarter and 42% prior year quarter. Excluding the legacy business, it's 56% this quarter and 30% in the prior quarter.
spk08: 30% is EBITDA or operating margin?
spk02: That's direct operating margin.
spk08: Got it, okay. And then if you could, I think it's a good time, given your announcement with Amagi and the partnership that's planned to roll out, if you could highlight the revenue model. Is it selling subscription to the Cineverse streaming content to platforms? Is it they're able to use your MatchPoint services to curate and transfer content? And then the second part of that question, you mentioned low-aid figures in terms of revenue contribution. in your prepared remarks, does that suggest you expect to close next fiscal year with about $10 million of revenue, or is that too quick and steep to have it by then?
spk03: Eric, do you want to take that one?
spk10: Sure, sure. So to go through both parts. So first on the, you know, what are we actually selling? So, you know, we're tentatively calling this fast kit. Essentially, if you kind of look at the marketplace today, there's a large number of video service providers. This is going to be hardware manufacturers, telcos, anybody who really was at the musical chairs of when Tubi and Pluto were for sale and missed out or just don't have the resources or assets to launch a scale streaming platform like the Roku channel has or others. So we're teaming up with Amagi to essentially offer this as a turnkey where you can get the applications, the backend infrastructure. Amagi has 800 plus fast channels. We have 70,000 hours of programming. And then both of us have monetization capabilities. It's really allows companies very rapidly and turnkey to get into the market save years of effort to do so. And by the way, we look at, you know, we evaluated the market. There are many, many companies that, you know, the amount of monetization they have in this space relative to what they should have due to their market share, there's quite a large addressable market here. And you combine that with, you know, Amagi's 800 plus customers, There's a very, very large market. So the idea here is to have Amagi's, you know, 25 to 30 person global sales force that's already engaged in, you know, nine figures of revenue or more we estimate across the board to really start bolting on much bigger meaningful services in this partnership. So that's number one. In terms of the model, you know, as you can imagine with sort of these bigger enterprise deals, You know, it's going to be dependent on what services the partner needs. Some partners may want to do their own content acquisitions, may want to develop the front-end in apps but need back-end infrastructure or vice versa. So it's really going to be tailored by partner. I would expect this to be similar to Amagi's model of, you know, SaaS-based consumption. It'll be, you know, our model and a deal with Amagi will be in market on a similar basis. you know, consumption-based model based off of what these partners decide to utilize. And then the last part of the consumption. Exactly, exactly. So, well, no, they'll be direct build for a variety of services, right? For content-based deals, they'll probably be a revenue share-based model as well. So, Third, in terms of, you know, our look at the market, you know, clearly, as you remember, or I think we've talked about previously, the sales cycle on these, you know, you're talking about people launching and building applications, bringing them to market. So, you know, you're looking at, you know, we typically see a deal cycle like this of typically a quarter or two, depending on the partner and how complex of a deal it is. and then the implementation is going to come after that. So we think the next fiscal year will really be about ramping up to that number, and that's sort of the number we expect the steady state to be at once this business is ramped. So we're hitting the ground running in our fiscal Q4 here. My expectation is that a lot of people in the market are going to want to be able to take advantage of a very heavy ad market this year. So we'll probably have lots of engagements, you know, towards the middle of the year to try to capture, you know, Q3, Q4, calendar Q3, Q4 ad revenue. So I would expect us to see, you know, some results in the fiscal year next year. Will we realize the full eight figure amount It'll probably be a longer ramp to hit that, but I think we'll start to see some material efforts coming by mid next year.
spk08: Great. And then separately, you touched on having your direct ad sales team, I think, in place is what you said, Eric. Can you talk about the progress? Has there been a contribution? How long does it take before you see the impact of that team building relationships and driving higher margin ad sales?
spk10: Sure. Sure. So it's really a three stage process, right? Stage one is, you know, today, uh, or prior to just even a few months ago, we were predominantly open marketplace programmatic. In other words, anybody and everybody could buy and sell our inventory. Um, and that, um, what, one of the things we've been doing since, um, since mid to late summer is transitioning from that. Uh, we'll call that the low end of the CTV market. upstream to programmatic direct and private marketplace deals with agencies, brands, and DSPs. So we've been in the process of going through that since mid-year, and we've made an incredible amount of progress on that. I think that's the first step. It's hard for a direct sales team to go out in the market and sell if they can buy it open programmatic, right? So you have to sort of move everything upstream in the stack. That's what we've been working and focused on. Simultaneously, we've hired up our direct sellers team. And as I'm sure you know, the cycles for direct sales, most of the brands and agencies are working six to nine months out. There is some... We'll call it scatter opportunities in the back half of this year in early Q1. But I think we'll really start to see the fruits towards the end of our fiscal Q4 efforts on this. We ran a few campaigns. We did Ancestry, Jack in the Box, and a few others over the last quarter or so. But we've got RFPs flying out the door pretty constantly at this point now. So I expect next year to be pretty robust.
spk08: Great. One last question. I'll get back in the queue. I think you were very clear on your plans for content acquisition costs to come down like everyone else in the industry. Are there any known significant cash content costs you see in the near term that you can call out? And should we expect the cash flow cost outside of the P&L to be nominal or there'll still be some bits and pieces here and there of cash content costs?
spk03: We went through our rate of high-profile spending over the last quarter. As Eric mentioned, with Terrifier and the spending we did on Sid and Marty Kroff and Dog Whisperer. And I think you're going to see a real mellowing of our spend continue for at least the next six months. Great. Thank you.
spk05: Thank you. The next question comes from the line of Dan Kouranos with Benchmark Company. Please proceed.
spk09: Thanks. Good afternoon. Chris and Eric, you know, the whole channel portfolio balancing, let's just call it, that's not new for you guys. I know, Chris, you've emphasized that in the past as have you, Eric. So this is not I think the order of magnitude is maybe a little larger than we might have thought in the quarter. But the way that Eric outlined it, you know, once we get into fiscal Q4, there's stuff coming back online. And obviously the profitability of the portfolio has significantly improved. So I just want to make sure I have kind of the math. I mean, it feels like a $2 million-ish incremental call on, obviously, correct me if I'm wrong on that, on the revenue side. But I'm just trying to get a sense between all the initiatives you have planned. Because if you strip out the legacy revenue you announced on the quarter today, you know, and then take out the base distribution business, You still have about $10 million in, you know, roughly, anyway, revenue between subscription advertising and some licensing and digital in there that you intend to grow off of. So I guess I just want to get a sense for, you know, how much you think that business grows by before we kind of layer on all of the software, SaaS stuff that I do want to talk about afterwards.
spk03: A couple of things. This is Chris. First of all, the channel portfolio optimization, even though I've talked about it in the last couple of calls, what you're seeing this quarter is you're really seeing the bulk of the impact really hitting the P&L because we cut some channels in the middle of last quarter and the whole thing. I've been talking about it, but the impact on our financials, you could say, is more impactful this quarter and new. That is a new factor. We're not going to be able to answer your question on this call. As Mark Lindsay said, we're going through a process now of looking at the impact of all of our channel optimization activities and turning it into a long-range forecast and layering in all these new revenue upsides that Eric talked about. And we're in process of that right now. And I think it's probably a conversation that would be better had, you know, offline. I don't know if Eric or Mark want to add anything to that, but, I mean, that's my team thing at this point.
spk04: Eric? No, nothing to add. It's too early. Go ahead, Eric.
spk10: Okay. Yeah, yeah. I think the only thing really to add is, you know, obviously the timing of, you know, the bulk of the channel portfolio that we have launching is happening in Q4. I think, you know, we're still locking that, you know, this is one of the challenges of the fast market today is, you know, think of, you know, these channels are probably getting or trying to launch, you know, another dozen to two dozen channels in Q1 and optimizing the timing and planning of each. So we don't know our exact launch dates yet, if it's going to be early in the quarter or later in the quarter yet. We hope to find out soon, obviously. We've got the channels ready to go. We've been testing them and they're ready to be launched. It's just a matter of us locking the timing. So it's hard to say definitively how much those are going to impact the quarter and, you know, what that's going to be as it stands today. But we're going to know pretty soon on that front.
spk03: And the other thing, Dan, is we've got a couple of tech deals that we're hoping to announce in the next couple of weeks that we haven't talked about, we can't talk about on this call that are also going to have an impact. And that's why we're being very careful and we're trying to be very strategic in looking at our long-range forecast. And hopefully in the next few weeks, that'll come together. The one thing we are 100% sure of is that we're going to continue to rip costs out of the system. Centiverse India is a huge upside for us. I mean, we're basically transferring jobs over there at 10% to 15% of the domestic cost. And we're getting better workflows and efficiencies out of it. And again, I said this on the last call, that's a trusted operating division of the company we're not outsourcing it to a third party we're offshoring it to our own division that's performed pretty tremendously so we're expecting significant additional savings that are only going to improve our margins further and that's kind of the foundation of the plan that we're we're in the process of putting together um fair you know look i i'm just trying to understand the baseline right look your eyes you're obviously making
spk09: a healthy profit and tech pivot here. And it doesn't mean that you're, you know, moving away from the streaming and or advertising business piece of it. I just wanted to sort of get a sense. So now we have, this is the new baseline. So there's not much more to come off based on what you've said. And then at a more profitable base now, There will be upside to that from whatever happens with the advertising changes that Eric referenced in terms of the ad sales model as well as new channels, timing TBD on all of that stuff. And now, as you referenced, Chris, there's, you know, obviously the Amagi deal to me is sort of a preface for a broader tech push, I would assume, is coming. And so, you know, does Amagi in particular... Do they add tools to the kit? Do they give you expanded capabilities? And just in general, how do you think about sort of reinvesting or expanding your tool belt when it comes to leveraging the MatchPoint technology?
spk03: Eric and Tony, you want to take that?
spk10: Sure, sure. So I'll say generally, and Tony can talk more specifically about what Amagi brings to the table, but I think the biggest game changer for us is you have arguably the largest infrastructure player in the streaming market and fast market today with a very large global sales force selling our product. They can take it to market much faster than it would take us quite a long period of time to hire up a comparable sales force for what Amagi has. And then the second piece is what Amagi brings to the table in terms of assets beyond the Salesforce, the portfolio of 800 plus channels that they can bring to bear in the market and the huge customer relationship base that they have. We have a pretty decent customer relationship base, but theirs is oriented to much larger enterprises than we are today. So those assets really accelerate all of the efforts. It doesn't mean that we're not internally focused on, you know, the small and mid-market segments to complement that. But I feel like, you know, they'll push a revenue drive much faster than we'll incrementalize from the small end.
spk02: Just to add to that, I think one way of looking at it is most of the big media companies have been investing in fast. That's where the immediate opportunity is. But now as all the big studios have released their own standalone services, having applications available to the consumer has become an important part of everyone's strategy. And that's the area where we have a head start. We've developed Matchpoint over the last eight years specifically for servicing apps and video on demand. And that's where we see the rest of the industry moving, using fast as kind of the entry point, but really expanding into next generation services where it's an app or larger catalogs of direct video on demand content.
spk09: And last one for me, just, you know, now that the actor strike is. over, you know, everyone thinks that content spend will start to increase next spring, you know, at a, albeit it will take some time to ramp and perhaps with a slightly less quantum than in the prior years where the streamers got a bit giddy. I'm just curious how you think that factors into any of the initiatives you have, whether it's on, you know, sort of the more traditional streaming side of or on the match point side, does that act as somewhat of a catalyst to the market or does it change how you might address, you know, if you think the market evolves in its advertising focus, which Eric, yes, admittedly right now is more direct PG, but may return to more open PMP in a more, you know, healthy environment with better visibility, barring whatever happened to the economy.
spk00: Eric, you want to take that or Yolanda?
spk10: Sure, I could take it. So I think for us, as it relates to our business, excluding Terrifier and a few other projects that we have going on, we're going to be in the market for you know, finished product. So I think, you know, number one, it's not going to, you know, I think the good news is I think we already had a waiver for Terrifier 3 even before the strike ended. So we were going to, you know, production was going to begin on that regardless of the strike. And, you know, we're not, we're really long-term not in the big theatrical movie game. So for us, you know, go forward, we'll be, we're really going to be focused on, you know, acquisitions and pickups and less on the production side. We think, you know, we can get a lot of value, you know, with a much smaller outlay licensing titles rather than investing in, you know, heavy, heavy titles, obviously with the exception of, of, you know, some of these really key, you know, terrified is a no-brainer. There's other things that we're working on that we've committed to that are great investments. But we think that's going to be a much smaller piece of our business going forward anyways.
spk06: Eric, I just wanted to add that the, yeah, the strike allows for our new releases for talent to be able to promote them.
spk07: and to affect their social media. So everything Eric just explained is absolutely correct in terms of our content strategy, but it really unlocked that valuable talent promotion tool.
spk03: You know, I also think, Dan, kind of philosophically, you know, we've positioned ourselves as an artist-friendly, independent studio that puts the artist first. And I think Terrifier was an example of that to the industry where we released you know, an unrated, uncut movie because we wanted to bring the director's vision to audiences in the U.S., and people noticed that, and that's been our philosophy. And if anything that these strikes emphasize is that the major studios don't particularly put artist-friendly at the top of their list of things that they want to be known for, okay? So I think, you know, in a weird way, the strikes actually helped our position in the industry because we were waving the flag for paying artists and treating artists the right way and bringing their labors of love to audiences around the world all along. So I think from a philosophical standpoint and a positioning standpoint, it helps us as well.
spk09: Okay. I appreciate all of the call, guys. Thanks very much.
spk03: Thanks, Dan.
spk05: Thank you. There are no additional questions left at this time. I will hand it back to the management team for closing remarks.
spk03: Great. Thank you, operator. Hey, this is Chris again. Thank you all for joining us today. And feel free to reach out to Julie Milstead with any additional questions you might have. We look forward to speaking to you all again on our next quarterly call. Thank you very much.
spk05: That concludes today's conference call. Thank you. You may now disconnect your line.
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