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spk03: Good day, and thank you for standing by. Welcome to the Chicken Soup for the Soul Entertainment fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-answer session. To ask a question during a session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Taylor Krafchick, Investor Relations. Please go ahead.
spk01: Thank you, operator, and welcome. With me on the call today are William J. Ruhanna, Chairman and Chief Executive Officer, and Chris Mitchell, Chief Financial Officer, to review the fourth quarter and full year 2020 results, as well as provide a business update. Following this discussion, there will be a moderated Q&A session open to the participants on this call. During this call, management will make forward-looking statements. Forward-looking statements include but are not limited to statements regarding expectations, intentions, and strategies regarding the future. Forward-looking statements are based on management's current expectations and assumptions and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from the projected results. Given these uncertainties, listeners are cautioned Cautions not to place undue reliance on any forward-looking statements contained in this conference call. Please refer to the cautionary text regarding forward-looking statements contained in the earnings release, which also applies to the content of this call. Additional risk disclosures can be found in the company's filings with the Securities and Exchange Commission. On today's call, management will make comments on certain gap-based and non-gap pro forma financial information. The non-gap financial measure the company uses is adjusted EBITDA. Management believes that adjusted EBITDA provides useful information in that it excludes amounts that are not indicative of the company's core operating results and ongoing operations and provides a more consistent basis for comparison between periods. The earnings release contains a reconciliation of adjusted EBITDA to net income or loss, which is the most directly comparable gap measure. For further information regarding the company's historical financial performance, we refer you to our filings with the SEC including our annual report on Form 10-K for the year ended December 31, 2020, which was filed today. I would now like to turn the call over to William Ruhanna, Chairman and CEO. Bill, please go ahead.
spk06: Thank you, Taylor, and thank you all for joining us. We posted solid Q4 results and capped an important year for our company. In light of the unprecedented year that we've all been through, I think it's amazing, what our company actually accomplished. If you think about these factors, we lost a $15 million revenue customer when Sony shuttered PlayStation View at the beginning of the year. The advertising business nearly shut down in the second quarter. Nine of our movies and television series were unable to go into production because of COVID. And despite all of that, We finished 2020 with a total revenue increase of over 20% and nearly doubled our EBITDA from the prior year. Ordinarily, I'd wait to thank the people who work for our company until the end of this presentation, but in light of what they've accomplished, I want to express my sincere thanks to them, to our employees and our partners for all their support. They have been through a lot and they have excelled. Our strong 2020 results set the stage for what we believe will be a terrific year of growth in 2021. We're already off to a healthy start to the year from a viewership growth perspective, and we're continuing to ramp our pipeline of original content. We're also continuing to rapidly expand our distribution touchpoints for our AVOD networks, as we announced last week, And we have exciting developments on tap, including the launch of new tech platforms for Crackle and PopcornFlix. We set the stage for next generation viewer experiences, which we hope to deliver as we execute on our plans to build the industry's best AVOD. Before getting into all of the 2021 developments, let me first recap our Q4 and fiscal 2020 financial results and highlights. Chris, who is here with me, will speak to our financial results in more detail. Fourth quarter gross revenue totaled $20.2 million, up slightly from Q3 levels and down from $24.8 million in the last year's fourth quarter. The year-ago figure included $5.6 million of low-margin ad revenue from PlayStation View, which was shut down by Sony in early 2020. Adjusted EBITDA was approximately $2.8 million and reflects our growing percentage of fully owned content and our continued focus on cost-efficient distribution and production. I should note our Q4 revenue in adjusted EBITDA would have been higher, but under accounting rules, our successful and already profitable film, Willy's Wonderland, which we actually delivered at the very end of 2020, is instead being included in our first quarter 2021 results. The good news is that Willie's will be additive to what has been an outstanding start to the new year. More on that shortly. Our crackle plus online network gross revenue grew 35% quarter over quarter. As we benefited from strong demand for our original and exclusive content, including going from broke spies on point and Robert the Bruce, which accounted for nearly 20% of our ad impressions in the quarter. When looking at online networks, keep in mind that revenue is somewhat artificially reduced by intercompany license payments we make to our distribution and production segment for the content that airs on our networks. These payments totaled $1.7 million in the fourth quarter and $1.3 million in the third quarter, respectively. But adjustments aside, the takeaway for CracklePlus is that we generated strong sequential growth in the quarter and that absent PSU's year-ago revenue impact, we are generating year-over-year momentum as well. In fact, our December 2020 monthly results were up 16% on a like-for-like basis from December 2019. Distribution and production also generated a strong performance, up 12% year-over-year in the fourth quarter, though this performance was lower compared to the third quarter, largely due to the strong contribution from TVOD of the outpost in that period and also Willys. For fiscal 2020, gross revenue totaled $68.2 million, an increase of 20% compared to 2019, despite the previously mentioned factors in my opening comments. including the lack of new productions, PSVU, and the COVID-wracked second quarter. Net revenue was 66.4 million, up 20% compared to the prior year, and adjusted EBITDA was 11.8 million, nearly double the 6 million in 2019. In addition to solid financial performance, we also took several steps during the year to strengthen our balance sheet and enhance our liquidity position, while also putting financial and strategic partnerships in place to support our production objectives. And finally, of course, near year end, we obtained 100% ownership of Crackle from Sony, strengthening our strategic and financial relationship with Sony and facilitating our future growth. So all in all, it was a strong quarter and a productive 2020. but we think we're just starting to show the true growth potential of the company. We continue to make rapid progress on all elements of our AVOC strategy. Our pipeline of original and exclusive content, including television series development and content acquisitions via screen media, have positioned us to air two to three new titles per month on Crackle+, and we believe we are in a position to eventually accelerate that to as many as one new title per week. We believe no one in the AVOD business is delivering original and exclusive content at a rate approaching that. With our content engine ramping, we have been increasingly focused on growing viewership. The biggest part of that effort has been expanding our roster of distribution touchpoints, including linear and cable distribution partners, digital partners, and smart TV manufacturers. After exceeding our initial targets, we announced last week an accelerated and expanded distribution rollout with plans to reach to a total of 64 consumer touchpoints and more to come as we expand our roster of networks. These touchpoints include devices like Fire TV, Roku TV, Apple TV, cable platforms like Xfinity Flex and Cox Contour, distribution platforms like Fubo, Plex, Zumo, and Philo, as well as Vizio, Samsung, and Vued. We are especially focused on that last group, and we are expanding our presence on smart TVs, including a Crackle-branded button on an expected 2.5 million Vizio SmartCast TV remote controls in 2021. Based on our experience to date, We believe that each distribution partnership has the ability to add up to 500,000 new monthly viewers over time. As these initiatives take hold, the big goal for 2021 is to enhance the experience we deliver to viewers. After acquiring the tech backbone to our networks from Sony about a year ago, we began developing new platforms for Crackle and PopcornFlix that will be introduced this year. Over time, we'll innovate on these platforms to drive new personalized viewing experiences, including homepage optimization and targeting. Ultimately, our goal is to transform CracklePlus into a home for viewers with networks and premium content serving their interests across the programming spectrum with a great solution for advertisers from enhanced audience segmentation and attractive new formats to reach our growing viewership. These strategies are all part of our mission to build the industry's best AVOD. And while a variety of players are moving into ad supported streaming, we think we are in an ideal position to create a distinct, compelling experience for viewers and advertisers. We're a pure play VOD business, a pure play AVOD, unencumbered by legacy media models, And we are the only Avon delivering a substantial amount of original content. We are not just another distribution point in many distribution points for a diversified media company or a place to repurpose investments in content from old linear networks or a spot to sell products on some e-commerce platform as our competitors are. We're positioning our networks for what we see as an escalating migration of traditional TV dollars to digital platforms. We have the brands, the distribution, and the content to attract viewers and advertisers, and we are gaining momentum. Speaking to that momentum, we're off to a great start. Crackle has seen big viewership increases in the first quarter, an early sign that our distribution expansion is yielding results. we're continuing to deliver successful and exclusive programming, such as Willy's Wonderland, which premiered on premium VOD at a $20 price point in mid-February and reached number one on Amazon and broke even after just one month. We've also seen some early positive momentum with Playing with Power, the Nintendo story, a documentary series about Nintendo's foundational role in giving rise to the video game console business. and how they would eventually take the global video game industry by storm. We have a very strong content release pipeline at ScreenMedia, as well as some great new and original content for Crackle+. So we're positioned to report a strong first quarter to you in about six weeks, including year-over-year growth in viewership and the benefits of Willys. But keep in mind, Q1 tends to be seasonally weaker, because of the ad business, especially compared to Q4. And we will be comparing year-over-year revenue that will have the last vestiges of PS view in it. So that will not have a material impact on our profitability comparisons. As we move into Q2, we expect to begin benefiting from the new programming hitting our networks. We'll be producing nine new series or movies this year, with more on the way. and we'll be acquiring as many as 20 new films. Going from Broke, season two, The Uncommon History of Very Common Things, and The Uncommon History of Very Current Things have kicked off our production this year. Among our film acquisitions are Street Gang, How We Got to Sesame Street, which recently premiered at Sundance to rave reviews, Till Death, starring Megan Fox, and other projects scheduled for this year, including Eat Wheaties, starring Tony Hale and Elizabeth Banks, and Best Sellers, starring Aubrey Plaza and Michael Caine. It's a great lineup. On the strategic front, you'll hear about the rollout of new platforms for Crackle and Popcorn Flix, and we are also working on our next Avon launch. And throughout the year, we're anticipating viewership gains resulting from our rapid distribution growth that I highlighted earlier. All in all, 2021 should be a major milestone year in which we expect to exceed $100 million in revenue, which would represent nearly 50% growth over 2020 and more than 300% over 2019, meaning that we will have grown revenue by more than three times in less than two years since first acquiring our interest in Crackle+. In summary, we're extremely pleased to be in the position that we are in after the extraordinary challenges we all experienced in 2020. Our ability to deliver a strong growth year despite those challenges gives me great confidence in what we plan to achieve in 2021 and beyond. We look forward to keeping you posted on our progress. I'll turn it over to Chris.
spk08: Thank you, Bill. Our financial results for the fourth quarter and full year 2020 reflect the successful execution of our online networks and distribution and production business strategies. Bill has already discussed the overall highlights, so I will focus on a review of our results and balance sheet. The fourth quarter. Starting first for the results for the fourth quarter, we reported gross revenue of $20.2 million compared to $20 million in the third quarter of 2020, which was roughly flat sequentially, and compared to $24.8 million in in the year-ago period, or a decline of nearly 19 percent year-over-year. Net revenue was 20.2 million, up nearly 5 percent sequentially, and compared to 24.4 million in the prior-year period, or down roughly 17 percent on a year-over-year basis. The year-over-year decline in both gross and net revenue reflects the approximately 5.6 million and gross quarterly revenue Crackle received in the year-ago period from Sony's PlayStation View service, which Sony decided to shutter at the beginning of last year. Despite the impact to the revenue number, the impact to our adjusted EBITDA was immaterial given the PS View business had very low margin revenue. We would also like to note that Q1 2021 will be the last quarter in which we will have PS View in our prior year comparisons. Our adjusted EBITDA totaled $2.8 million in the quarter compared to $5.8 million in the year-ago period. As Bill noted, Q4 revenue and adjusted EBITDA would have been higher, but Willie's Wonderland revenue is being pushed into next quarter's results. While we actually delivered the film at the very end of 2020, we did not recognize the revenue in the fourth quarter. That said, Willie's has gotten off to a great start and will be additive to our first quarter revenue and adjusted EBITDA. Our online networks business, or Crackle Plus, generated gross revenue of $10.8 million, up 35% from $8 million in the third quarter of 2020, and compared to $15.9 million in the year-ago period. On a comparable basis, excluding intercompany revenue, and after the deduction of $5.6 million of revenue from the since-shuttered PlayStation View, the year-over-year gross revenue grew from $10.1 million to $10.8 million. an increase of 7%. We sold out our advertising inventory in Q4 as campaigns from larger advertisers remained strong and our content resonated with viewers. Our CPMs also continued to improve, reflecting our strong content offerings and our ability to better target demographics. Our advertising inventory continues to sell through at near capacity, highlighting the opportunity ahead. and we see the benefits from our investments and viewership growth. Please note that going forward in 2021, we will be reporting our online networks and distribution and production as a single consolidated revenue line, which will eliminate the need to call out the intercompany adjustments. We will, of course, continue to provide the investment community with color around respective performance of the networks and our distribution and production activities. Distribution and production generated gross revenue of $11.1 million in Q4, an increase of $1.1 million compared to the year-ago period, or nearly 12% despite the shift of revenue from Willy's Wonderland out of Q4 2020 and into Q1 of 2021. Gross profit for the fourth quarter 2020 was $5.8 million, or 28.5% of net revenue, compared to $4.5 million in the third quarter or 23.3% of net revenue, and compared to 7.6 million in the year-ago quarter, or 31% of net revenue. If you were to add back the non-cash film library amortization expense, gross profit in the fourth quarter would have been 12.4 million, or 61.4% of total net revenue, as compared to 14.5 million, or 59.4% of total net revenue in the year-ago period. Our adjusted EBITDA for the fourth quarter was $2.8 million compared to adjusted EBITDA of $5.9 million in the same period last year. Operating loss for the fourth quarter 2020 was $9.9 million compared to an operating loss of $10.9 million in the prior year period. Summarizing the full year 2020, gross revenue was $66.4 million compared to $55.4 million in the full year 2019, an increase of nearly 20%. Online networks generated $35.3 million in gross revenue compared to $41.7 million in 2019. On a comparable basis, excluding intercompany revenue, and after the deduction of $0.3 million and $15.9 million of revenue from PlayStation Vue, the year-over-year gross revenue grew from $25.8 million to $35 million, an increase of 36%. Distribution and production in 2020 generated gross revenue of $38 million compared to $16.6 million in 2019, an increase of 129%. Gross profit for the 12 months ended December 31, 2020, was $14.2 million, or 21.4% of net revenue, compared to $14.9 million or 27% of net revenue for the year-ago period. Excluding $23.6 million of non-cash amortization of the film library in the company's traditional distribution business, gross profit would have been $37.8 million. The comparable gross profit for 2019, excluding non-cash amortization of the film library, was $24.6 million. Operating loss for the 12 months ended December 31, 2020, was $44.3 million compared to a loss of $26.1 million for the year-ago period. The company experienced significant acquisition-related amortization for part of 2019 and full year 2020, which will be decreasing meaningfully as certain intangible assets have been fully amortized. Adjusted EBITDA for the full year 2020 was $11.7 million, or 18% of net revenue, compared to 6 million or 11% of net revenue for 2019. Looking at our balance sheet and liquidity position as of December 31st, 2020, the company had cash and cash equivalents of 14.7 million compared to 9.2 million at the end of the third quarter of 2020 and 6.4 million at the end of the year-ago period. The 14.7 million year-end cash balance reflects our strengthened balance sheet and enhanced liquidity position resulting from additional equity and long-term debt following the closing of our public offering of notes in December of 2020. In closing, 2020 was a uniquely challenging but ultimately successful year for us. We were able to respond quickly to the pandemic impacts on the business, maintain our financial health, and execute on our strategy. We delivered an increasing amount of original and exclusive content as we were fortunate to have completed much of our content for the year and therefore were not immediately impacted by industry-wide production shutdowns. This dynamic was important for us given the large influx of viewers across the streaming landscape during stay-at-home restrictions. We continue to diligently manage our P&L and cash flows while enhancing the flexibility of our balance sheet. At the same time, our improving crackle results and viewership growth combined with our discipline expense management, puts us in an excellent position for 2021. Thanks for joining. I'll now turn it back over to Bill.
spk06: Bill Walsh All right, operator, we'll take questions.
spk03: Bill Walsh All right. As a reminder, ladies and gentlemen, to ask a question, you will need to press star one on your telephone. And to withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. And our first question will come from the line of Thomas Fort from DA Davidson. Your line is open.
spk02: Great. First off, congrats on the quarter and the year. So one high-level question and one follow-up. So, Bill, at a high level, without debating the individual deals, meaning Quibi and this old house, do you see Roku's entry in into content in that manner as validation of your business model and why?
spk06: Well, of course. First of all, thanks, Tom. And second of all, of course. It is absolutely validation. And, you know, their disclaimer that they just happen to do these two content deals somehow by accident or something is hard to really accept. They know that Building a network requires original and exclusive content to build loyalty from consumers, to get them to come to you first, to get them to come back. And so they're going to have to learn how to be in the content business. But as I have said many times, we've been at this for years now. We've developed the systems that allow us to create a very steady flow of content in a low-risk way. And by the way, I don't know if you all picked up in the in the original remarks that we are aiming to pick up the pace at which we bring original and exclusive content to our networks to as many as one a week by the end of this year. That will make us pretty unusual in the VOD space, not just in the ABOT space. So we are starting to ramp this up even further. This is an absolute must in our business. And look at the numbers. The 20% of the ad impressions that are originals and exclusives generated over the course of 2020 from about 150 shows out of over 10,000 tells you that viewers are looking for that kind of content, content they can't find anywhere else. So there's no doubt that they know about this, Tom, and there's no doubt that they have to learn more about it. I won't debate the deals because you asked me not to, but you already know I don't think they were very good.
spk02: Okay, excellent. And then for my follow-up question, it seems to me, given you talked about being sold out on inventory, that an easy way for you to generate growth on top of growth in calendar 21 is by increasing pricing or CPMs. How should we think about your pricing power?
spk06: You know, I think there has, I think as I've said, there's a pretty big range now of possible CPMs that we can charge depending on our ability to target. I think there is pricing power. I don't think we've hit the point yet where it's dramatically one-sided in our favor. But I do think there's pricing power mostly from the ability to continue to get better and better at targeting. And, you know, the difference between a really targeted ad and a less targeted ad is, you know, you get twice as much for the really targeted ad on a CPM basis. And we're getting better and better at delivering those. Over time, and especially with our new platforms that are coming in the middle of the year, we're going to get even better at that. And there are a number of other things we plan to do this year, especially in the nature of increased data capabilities that I think will enhance that even further. So I look at CPMs as moving upward without a doubt. as there's more demand per OTT than there has ever been. I look at the scarcity as a good thing and a bad thing because we should have more viewership so that we have less scarcity, but we're working on that, as you know. And I think pricing power is moving in our direction kind of inevitably, Tom, because there's just way more demand coming into the space as advertisers follow viewers. And unlike anybody else, The one other thing that we have that makes us unique is that we are not trying to force feed advertisers some package of stuff that includes broadcast and cable ads that they already have enough of in order to get OTT ads. We sell only one thing, AVOD ads. And I think advertisers like that about us. They know they get treated a certain way. We're not trying to get them something they don't want. We have a great relationship with our advertisers. I looked at the list of advertisers for 2020. It's just so impressive.
spk02: Thank you, Bill, and congrats again on a wonderful year.
spk03: Thank you, Tom. Our next question will come from Dan Kernos from the Benchmark Company. You may begin.
spk08: Thanks. Hey, Bill, let's talk about the advertiser equation for a second. You know, maybe just in terms, you actually brought up sort of data capabilities targeting. Can we talk a little bit about demos here? Look, there's going to be some, what, $7 trillion in stimulus money that's coming in the back half of the year. You've got a publishing environment that's facing a cookie cliff, and obviously CTV, OTT, FAST, et cetera, are all areas that are audience-based targeting. So can you just talk about some of the conversations that you're having with advertisers now around what you're bringing to the table, maybe how you're thinking about the content that you are providing that you're launching that's maybe trying to drive more targeted demo that you can bring increased impressions in some of the categories that advertisers are looking for.
spk06: Okay. That's a lot of questions all in one, Dan. That was a lot of stuff masquerading as one question. So let me try to take it apart as best I can. So You know, there are some natural demographic things that advertisers seek, obviously, male, female, age, income. We're able to give them a pretty good view of most of those statistics for many of our viewers, but certainly not all of them. And we've got to get better and better at that. The number one thing that we need to do is to continue to enroll people when they come to our Crackle Plus networks. And part of what we will be doing in our new platform is making it easier for people to enroll, and we'll be driving more of that. But I don't want to preview too much of that new platform until we get a little closer to it. So that's one thing, just basic demos. The other thing is advertisers like to be associated with certain types of content. And as I've told you in the past and many others, They like original and exclusive content. They like the idea of being associated with it, so they'll pay more for that. Obviously, they have to have at least premium content, and that's, you know, where we are. We're positioned as a premium content business, and there's a scarcity of that in the world. It's not like you can create premium content the way you can create a webpage. So it's a scarce resource. It can be targeted, unlike broadcast, which is very tough to target the way we can target our ads. And then there's the impact of technology, Dan, on the way we deliver ads. So that's the other thing we can do. The Freeview ad, which I think most of you know, where you get the opportunity to decide whether you want to interact with an ad and watch less ads as a result. It gives an advertiser more information. It gives the viewer a better experience, and it makes us more money. That you can't do in broadcast. You can't do that in cable, but you can do it in digital advertising. There's quite a bit more of that sort of ability to use the technology to deliver more relevant ads, better ads, and therefore more valuable ads. So I gave you a lot of stuff in response to that very broad question. If there's something else you want to know, You get one follow-up. How's that?
spk08: All right. Winner, winner, chicken dinner. So maybe just on the content side, Bill, and I guess, you know, well, I'll risk a two-part follow-up, and I'll try to limit it to two. How do you, you know, we had the question about content acquisition by other AVOD players. A lot of stuff's going behind the paywall, right? You guys are in a unique position, given some of your – some of your production relationships. So how do you think about content costs if perhaps some of the larger guys are taking some of the bigger deals off the table and leaving some of the smaller players to go after perhaps less available options? And then the follow-up to that would be you're combining your business lines. I'm just wondering if we should be thinking about that as messaging that you know, there's maybe more flexibility in how you monetize your content going forward.
spk06: So we still have that same risk, you know, adverse approach to obtaining content, which we've spent years developing both on the acquisition side and the production side. In terms of the competitive question or the access to good content question, you know, For a variety of reasons, we seem to be seeing better and better stuff. If you took a look at the list of things I read about the screen media acquisitions for this year, they're increasingly very good, much better, more talent, more star-driven, more marketable, just better and better stuff coming to us, being acquired by us, and then being distributed by us. You know, I don't think it's actually an accident that we've now had two really very successful movies, one in The Outpost and now the second one, Willy's, you know, within a few months of each other. That's something that never happened before in the history of screen media. We've got some good momentum on the acquisition side, and it's getting better, not worse. We have more access than we've had before. in part because the studios are just doing less and less in terms of any kind of independent movie type stuff or smaller movies. On the production side, there's an increasing need globally for international broadcasters to get great programming. The streamers have taken 100% of rights globally. So Disney, HBO Max, Netflix, they insist on owning 100% of their rights globally on projects. And that's starting to cut off international broadcasters from a flow of quality scripted and unscripted programming that they used to be able to get by combining with U.S. networks and helping create things. That puts us in a great position. That puts us in a position with a growing domestic U.S. network that's not affiliated with a broadcaster who would try to take all the rights away of being able to partner with international broadcasters in order to create higher and higher quality programming. And I think what you're going to see as we roll out, I think we have nine or 12 production scheduled for this year. As we roll through those, without changing our risk profile, what you're going to see is the impact of being able to attract more broadcast partners is going to significantly increase the ability to create great programming. Now, the other thing that's really affecting our ability to create great programming is talents. talent, the fact that talent is being cut off from participation in streamer productions as well. So if you're a talented person like a Brad Turner, the guy who created 24 and Homeland and who works with us on a number of different projects, some of which you'll see coming up, you don't want to be working just for a service fee. You want to have some true opportunity to make money if your show is successful. And we still provide that opportunity to talent. And so we're seeing an increasing incoming interest. Now, very talented people, if they're really smart and most of them have great, you know, great managers and the like, we'll do some combination of working for a streamer for a big fee and investing in their future by working with someone like us who can help them have a piece of the action. So on both those fronts, both on the international demand side and on the talent need side, we have good dynamics right now in attracting better and better programming without taking any kind of increasing risk, Dan. And that's the dynamic we like.
spk08: Perfect. Thanks for the color. You've left the door open for someone to ask the international monetization question, but I will step aside. So thank you.
spk06: Thanks, Dan.
spk03: Our next question will come from Jason Carrier from Craigham. You may begin.
spk09: Great. Thank you. Bill, you mentioned back in the fall you had already pre-sold a lot of inventory heading into Q4, and just given how rapidly ad spend came back online, kind of curious if you feel like you left any opportunity on the table there, and I know part of that was strengthening relationships, but Wanted to just get your puts and takes on that, you know, as we sit here today. And perhaps this is a little bit of a question of kind of the direct sold inventory versus programmatic. But any color you can provide on that, that would be great.
spk06: Yeah, I don't think we left much on the table, Jason. There was, you know, there were higher CPMs as the year went on. There was way more demand. You see, you know, I mean, if we all go back to Q2, you guys may remember that we were all worrying that the world would never come back to normal. And of course, as we went through Q3, we did better. And of course, Q4, we were up another 35 or 36% over Q3 on the apples to apples comparison. And then by the end of the year, we were ahead by 16% year over year in December over last year. So that rebound that was taking place We're talking about revenue. So, you know, I think we got, you know, the revenue we should have gotten out of the year. But the one great thing was we blew all the way back through what was last year's level and ended up exiting the year at more than where we were last year, not just getting back. So I feel like we did okay on that. You know, it is true. We just have a lot of demand. We do have more demand than we have supply now. I will tell you a funny anecdote. Last week, Crackle wrote about $2 million in IOs, the single biggest week our sales force has ever had. So the demand is truly there. We just got to keep growing our viewership, and that's why our focus is very much on these distribution platforms, beginning to do more marketing, which you saw a little bit of a reflection of in the Q4 numbers. And also, you know, making sure that we continue to increase the flow of original and exclusive content, because that's a critical part of what drives viewership.
spk09: So maybe we can unpack a little bit of that more. Several times you've called out the strength of what you're seeing in Q1, both from a viewership standpoint. You know, clearly last week being a record for Crackle, I think you called out earlier in the quarter, that you're seeing very nice increases in ad prices early in the year. What are the key factors that are driving these substantial increases early this year?
spk06: You know, I don't really know. I think it's just the continued migration, Jason, into the space. You know, I saw some numbers recently that the first quarter was down in advertising spend this year, but we didn't see that. I think it was down something like 7% when I looked at some numbers recently. It hasn't shown up in our business. But I think this is that continuing migration, following the consumers. The consumers, there are more and more of them with us. If you're an advertiser, you've got to go where the viewers are. I think that's the number one driver, without doubt. Got it.
spk09: Great. Thanks for the time, Bill. Appreciate it.
spk06: Thanks, Jason.
spk03: Our next question will come from Austin Moldell from Canaccord. You may begin.
spk07: Hi. Thank you. Can you just speak a little bit about your outlook for your ad rep partners and if there's any expectation there to I don't know, sign more or have more inventory from the existing ones come your way?
spk06: Yeah, that's a good question, Austin. I think that is one way we can help satisfy the excess demand. We do have Funimation and Crunchyroll, who we represent in the ad rep space. Crunchyroll had a good couple of weeks. And it's funny, they're supposed to merge, and I guess most of you know that they're under investigation by the antitrust department as to whether that's a good merger. I didn't know that anime was a protected category from a competitive point of view, but apparently it could be. So, you know, we do have a couple of good ones. We've talked to a number of others, but we need a certain category size ad rep partner to make it worth the effort. The PlayStation View deal was a terrible deal from an economic point of view, and we just won't do one like that again with that kind of low margin. So we have some pretty exacting requirements if we're going to have our sales force and our resellers go to work for somebody else. It has to be a certain scale and scope, and we need to know that there's going to be some longevity to the relationship. So it's hard to find ones that actually fit that bill unless you just go buy them. So, you know, my view is that might be the better approach to filling the need to the extent we need to fill it in non-organic ways.
spk07: Thanks for that. Is there any expectation that as the world opens up again, you might see you know, declining usage numbers that might impact, you know, your comp this year?
spk06: So I don't think on a comparable basis that's an issue, but obviously we are in a seasonal business, right? I mean, besides advertising demand, which is seasonal, Q4 is the highest, Q1 is the lowest, you also have what's called the spring and the summer, and people go outside and they watch less TV, right? So there are kind of natural waves to our business that have nothing to do with COVID or not COVID. So I think we're going to have the normal natural waves that we have. But overall, I still believe, and I think the evidence is with me, that the amount of people who have moved to OTT viewership just overwhelms those natural waves. And so year over year, the growth continues. And I think that's really the way it's going to keep going. That doesn't mean that I don't think more people will go outside and therefore watch less television when they can. Of course they will, but they do that every year. There's really a big pie out there that needs to be split, and we're just going to have a bigger piece of it than we had before.
spk07: Okay. Thank you very much.
spk06: Thanks, Austin.
spk03: Our next question comes from Mike Grondo from Northland. You may begin.
spk10: Yeah, howdy, Bill. Hey, the first question is just on the 41 touch points you've hit, what are a couple that really stick out to you recently in terms of adding viewers? And what are a couple, as you get to your goal of 64 consumer touch touch points that you really are excited to get to?
spk06: Okay, so I'll answer that question. But I'll answer it slightly differently. For example, Plex has been an incredible standout. And they were one of the first ones we added, they've been amazing. And you guys might note that we recently added them as an ad rep partner to go back to Austin's question from a minute ago. They fit the characteristics of somebody we have a good relationship with, a long-term probable relationship. We're already doing other things with them. So that's been a standout. Plex has been great. I don't want to give anybody the wrong idea because I know this is a controversial name, but our Fubo rollout has gone really well as well. That's been another one that's really, I've been sort of, actually I've been very surprised at how good it was. It's gone very, very well. By the way, there have been a couple of stinkers in there too. But I'm not going to tell you who those were. But we'll get those to work. We'll market them. We'll do what you do to make sure that you get the right amount of business. Some take longer than others to develop. So those two have stood out. What was the second half of your question, Mike?
spk10: Just of the incremental, when you go from 41 to 64, what's one or two or three that are really important to you in the next wave?
spk06: yeah so some of them smart tvs num number one place across the board that we are really excited about you already saw what we did with vizio you'll see further evidence of us working with them closely we we think they're terrific um that wasn't a plug for them as a public company they really are a good partner to us uh so vizio has been great uh you know we have a we'll we'll We're working very hard on the Samsung relationship, LG. There'll be further developments there. And those are the ones that excite me, Mike, because that's, as you probably remember, that's my view of where the future of smart TV viewership is going to overwhelm, in my mind, things like the Roku stick and the Fire stick because When you open up a smart TV, you know, you throw away a fire stick or a Roku stick. If you're a consumer, you don't need it anymore. So we are really trying to be very, very aggressive in the way we take territory, so to speak, on the smart TV offerings and get involved with the smart TV providers. That's the number one. That's the one that excites me the most, those people.
spk10: Got it. Got it. And then lastly, Just on Willy's Wonderland, any sort of range for revenue that you can give us? We know it slipped from 4Q to 1Q, but it sounds like it's done really, really well. How do we think about that?
spk06: Well, first of all, don't use the past tense because it's still doing really, really well. It has done and is continuing to do really, really well. It's very popular. I'm not exactly sure why Nicolas Cage... battling possessed animatronic beings notice i can say that better now after the 12th time of saying it uh is is so interesting to people but they like it it's actually done reasonably well even in theaters which is something we generally shy away from but it had a great per screen average we made some nice money on it supplemental money it's doing very very well in the premier VOD, but it's going to EST now, and it's going to drop to a lower cost coming soon. I expect that to continue to generate a lot of incremental revenue. You know, when it's done, it's probably going to give us three to four times what we spent on it. And remember, we own that in partnership with the landmark company, which we are a majority shareholder of. So that one's a good one. It's a really good one.
spk10: Got it.
spk06: Great. Congratulations.
spk03: Thanks, Mike. And our next question will come from Brian from Alliance Global. You may begin.
spk05: Hi, everyone. This is Jacob on for Brian. Can you quantify the number of users that have watched Crackle content for the first time through the new Vizio remotes and what percentage of total impressions are coming through this relationship so far?
spk06: You're just a little early with the question since the remotes don't actually get to consumers until the second quarter. So we'll try to answer that question then. But for now, obviously, the answer would be zero since they're not there yet.
spk05: No worries. How have video views trended from Q1 compared to 4Q?
spk06: The viewership has been going up overall. Impressions have been okay, up a little bit. So generally upward, but Q1 and Q4 are pretty different in terms of their tendencies because of the seasonality associated with them, but they've been fine.
spk05: All right, that's all for me. Thanks, guys. You're welcome. This is going to be the last question, operator.
spk03: All right, our last question will be from the line of John Heckman from Latinburg. You may begin.
spk04: Hi. I just have a really mundane accounting question. What prompted the reversal in the return line, the return?
spk06: Yeah, so you know, it's a funny thing. But we, we have to guess john every quarter on how many DVDs will come back. And we we guessed wrong, less came back than we thought. We over reserved.
spk04: Okay, so that's just it. I mean, that's you're guessing every quarter in the year and then we
spk06: To be in the queue for you to have to show up at some point. And if it came clear, you know, really, I think the outpost did it because the outpost just kind of really was ridiculous across every single place. We, you know, distributed it, whether it was TV or as VOD or DVD, it just kept going. And if you put a normal reserve on on a film like the outpost, you're going to over reserve without a doubt. So.
spk04: So that's what happened.
spk06: I mean, it's not a, you know, it's a, it's a good thing, not a bad thing.
spk04: So, okay. Then I'll ask someone else's question. What about international revenues?
spk06: Um, you know, we had, uh, we have had a growing international distribution business and it is continuing to grow. I know why Dan asked that question in the third quarter, somebody asked me, how did I think we were going to do in the fourth quarter? on the distribution and production business. And I said, I thought it was going to be okay because even though the Outpost was such a great hit in 3Q, I felt that there was a pretty diversified set of international sales out there that were going to basically make up for it. And I would have been right, except for the Willys delivery issue. So unfortunately, we delivered Willys on New Year's Eve and Apparently that's not 2020 anymore. It's now, according to the accountants, that's 2021. So you guys will have to teach me about the new calendar that exists out there where that's the reality. Anyway, thanks, John. Operator, thanks. And everyone, that's going to wrap us up today. Thank you all for joining us. We appreciate it. And I hope to talk to you all soon. Take care.
spk03: This concludes today's conference call. Thank you for participating. You may now disconnect.
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