So I'd like to welcome to the stage, Adam Townsend, the CFO. Can you, can you hear me? Are you, am I on? I'm gonna welcome to the stage Adam Townsend, who's the Chief Financial Officer of VIZIO. Adam has served as the CFO of VIZIO since December of 2020, and as the cal, and as Something like that. VIZIO Holding Corp. Chief Financial Officer since May of 2020. Oh, that's 'cause we changed the Yeah the state registration. Don't worry about that. Yeah. Okay. Prior to joining VIZIO, Adam was the chief financial officer of Showtime Networks, a subsidiary of ViacomCBS, from 2018 to 2020. From July of 2008 to October of 2018, Adam held several roles in finance and investor relations at CBS, including serving as EVP corporate finance and investor relations from 2016 to 2018, and as EVP of investor relations from 2008 to 2016. Adam holds a Bachelor of Science in Biology from UCLA, back home with us. Okay, so- All right. Culture. So I keep track of revenue per FTE, or full-time equivalent- Mm-hmm employee. And you guys are managing almost 1,000 employees. So when you think about what the culture is that you think you and William are building at VIZIO, what do you think it is, and what are the metrics by which you figure out whether it's actually disseminated into- Yeah - the rank and staff? Look, I think the culture at VIZIO is one that goes, that ties back to our roots as a hardware company. Okay. what that means is discipline, cost focus- Okay ... restructure. I mean, the hardware business, as you know, is a low margin- Margin - at best business. Mm-hmm. Right? And so those are the roots and the DNA of the organization. While we've come dramatically far in terms of now having this platform business and the advertising business, I'd say the core elements of the culture is still tied to that hardware. Very disciplined, very focused, very cost-conscious mentality. We kind of pride ourselves on being grinders, is a word you hear in the organization. And our founder, William, will talk about what other companies spend $3 doing, we need to do it for $1. Okay. So when I think about efficiency of our SG&A spend, but acknowledging there are places where we need to be disciplined and cost focused, and there's places where we need to invest. We have to be able to bring in great performing engineers, software developers, to build our platform business, that we've been doing that for the last 4 or 5 years. We're now in market. That business is becoming in 2023 close to a $600 million revenue business. Really a dramatic transformation for the organization. And to your point, with that comes a different body of culture. But fundamentally, the differences between hardware people and advertising people is probably extreme in some instances. times salaries, I would guess. Very different, exactly. High salaries. Very different dynamics. But everyone understands we're all working for the vision of our founder, and he's the glue- Okay ... that makes that all work. So you don't end up with having silos or fiefdoms competing against each other. Everyone knows we're working towards a common goal: to put out the best TVs in the market, to have a great operating system, drive monetization. The hardware people understand what they need to do gets us access to households, and then once we have a household, our platform people need to figure out how to monetize that. So I think it all kinda comes together that way. Stop it. The performance metrics and KPIs around that execution is what we hold ourselves accountable to. Okay. So do you keep track of, like, turnover or- We do. Do you do surveys on, like, what people think the culture is? Like, what are the metrics you use to determine whether this culture is actually... Yeah, we look at employee tenure, we look at turnover, we look at where we're recruiting from into VIZIO. So what kind of, Okay ... sources of talent are we able to bring people into this business? Okay. A great example of that is we, you know, 3 years ago, we did not have an office in Denver. Today, we have a Denver office that's staffed almost entirely with software developers on both the ad tech as well as the operating system side. And a lot of those people came from military contractors that are in that broader, sort of- Yeah ... Denver, Colorado Springs area, or sort of some of the legacy, you know, satellite companies, like Dish Network- Yeah ...for example. So we've been able to bring people into what those talented engineers view as sort of next generation. They wanna be a part of something where they're creating new ad tech, new connected TV's operating system, that really is gonna be the future, where they may see the writing on the wall in terms of what they were doing in satellite or other facilities- Right, something dying. ... based distribution. Okay, fair enough. Your word, not mine. Yeah. Yeah. Future of work. So let's talk about your work from home policy. William's five days a week in office, right? So- This goes back to the grinder. Yeah, yeah. But what percent- We, yeah ... of people actually- Yeah ... aren't doing that? I assume like 80% of people aren't doing five days in office. No, we've come a long way. I would say it was hard at first. We were very early in moving to five days- Yeah ... but it went back to William's philosophy about the value of having collaboration and teams being together. Okay. Also understanding we're a fast-growing company. We brought in a lot of people. Back to your point about- Yeah ... tenure, you know, more than half of the company have been with it. Half of the employees in the company have been with us for less than two years. Which is COVID. Exactly. And we grew a ton during that time period. So now we're approaching 1,000 employees. It was 400 when I got there in May of 2020. So we've grown to that level. And for people to really understand and work together and connect, and especially younger people coming in, need to be around other people. They need to learn from each other, share ideas. If you're sitting at home, isolated, and only jumping on the Zoom call that's on your calendar, you're not getting all that other sort of connective tissue dynamics that go on with people working together. So he really firmly believed in that, and we were early and moved to a five-day mandate, really, the beginning of 2023. In March of 2023, we went to five days. To your question, I'd say we've made a tremendous amount of progress in general. We're probably 80, 70 per... say, 85%, you know- Compliant ... compliant. There are pockets in geographies. I think San Francisco- Mm-hmm ... Seattle, no surprise, those particular areas tend to be more challenging for us. Certain roles. We see it more, some of the software developers or coders who just, they have a chal- Stay home. They just don't... Yeah, they put on their headphones, they're doing their work. Yeah. They don't really wanna come in. So we try to make it more interesting to be in the office. We show them the value of the collaboration. We give budget to every office to operate themselves and manage sort of the team camaraderie and see what we can do. But it's an ongoing challenge I think every company is dealing with. Yeah. I think it's hard to manage culture when people don't-- I've never been in the office, and, like- That's right. ... if you doubled your workforce, and no one was in the office, I'm not even sure they even know what the culture is. That's right. Um. That's right. So. We are growing as fast as we have, too, to try to keep that culture together- So true ... they have- I like your point about that. Really, the ad tech, the ad culture is probably really different- Very much ... those kinds of people compared to the hardware culture, and that makes more challenges. Absolutely. That's sort of interesting. Yep, yep, yep. Goals for 2024 for VIZIO. When you look out a year from now, when you're sitting in that chair, what are your goals to have achieved between now and one year from now? Look, I think we made a lot of investments in 2023 to increase engagement on our platform, whether it was the rollout of the new home screen, whether it was the new revisions to the operating system to make it faster, smoother. We expanded the content offering on the platform, brought in more channels in our FAST channel offering, as well as on-demand content. All of those investments were put in place, and all those efforts to drive more engagement. So I really want to see that pay off in terms of engagement trends in 2024. We're making great strides there. In fact, you know, in Q3, we... I'm sorry, Q4, to end the year, we saw engagement on a per account basis, so app streaming hours per active account, back to peak levels you saw during the pandemic. Okay. We knew over the longer term, there'd be an upward sloping curve. Mm. Didn't know how long it would take to get back to those peak levels we saw- Mm ... that were artificial during the pandemic. Okay. We're there now, so we're excited about that. What's the goal for a year from now? Year from further engagement, more monetization, more time spent in ad-supported content. So we need to enrich the content offering to make sure people are spending time in places where we have the best ability to monetize. So I think that's kind of, sort of execution 101 of what we've built on. Okay. The other part is, I think you'll probably want to get into this, but we, we've talked about opening up our operating system to other OEMs. Mm-hmm. Expand our TAM with partnerships with other hardware manufacturers. Our operating system is now built and in a place where we feel that we can do that. We think there's a ripe opportunity in the market to be another provider to that solution. Do you have a goal, like you want to be in two, you want to be in five? Is there a goal associated with that, for a year from now? It's in the works. I mean, we're talking to the partners now, trying to figure out who, what the partnerships will look like, and that will dictate a little bit of what that volume play will be. But absolutely is a new business model for us, brand new revenue opportunity- Okay ... that expands us beyond our VIZIO-branded install base. Why would anyone use VIZIO when they can just slot into Roku, who's done this for- Mm ... 50 guys here and 50 guys offshore? Look, I think there's differences. Our culture and what we bring to the table. Like, we are talking to hardware manufacturers in Asia that care about understanding how the hardware performs. That's our DNA as well. So working with, how does our software enhance their product in terms of better contrast ratios, better color saturation? How does our economic model maybe suit them a little bit better as well? So- Meaning you have lower fees, you have lower take rates, or you pay them a fair share. Or shared economics on the back end. Mm-hmm. There's a mutually beneficial dynamic to it. Mm-hmm. So I think we're gonna be exploring- Okay ... a lot of those, and I'm excited for it because it allows us to expand beyond our installed base. More scale, as you know- Yep, more scale ... critically important in this space. More scale, we now have the team to execute against that in terms of ad sales and ad operations, and that's really where we're gonna be able to drive those incremental economics. Okay. Any other goals for a year from now? A higher stock price. Okay, you can't control that. Okay. Yeah, you can, you can hope. It's a goal. So Amazon is about to move, I think, next week actually, all of its global Prime members, about 200 million, they tell us, automatically to an ad-driven tier, unless a consumer figures out a way to pay an extra $2 or $3, starting in next week, actually. Mm. Two questions on that. Because Amazon can link its, all of its CTV ads to bottom-of-funnel, sales, it can create an end-to-end funnel. Like- Yep ... and so my question is, in connected television, does that then become the new benchmark for connected television, which pushes CTV down funnel to performance, and also then undervalues stuff that's elsewhere in the funnel? Mm ... high and medium term, which is where VIZIO competes using CTV? Mm-hmm. You're doing the homepage is about 50% of your ad revenue. Mm-hmm. But it's all sort of top-of-funnel, brand awareness stuff. Mm-hmm. Can you speak to that? Well, look, I, I think there's tremendous value, but obviously Amazon does as well, to see the benefits of taking consumer commerce purchasing data, marrying that with viewership data- Yeah ... and understanding that closed-loop attribution. Mm. What ads was that household exposed to? What products did they subsequently buy? Right. There's tremendous value in understanding that, and a lot that they can do with it. Yeah. So I think that model makes a ton of sense to where they are. We may be able to find ways to do similar, through partnerships or connections with various retailers. There's ways to kind of build that, separately- Okay ... perhaps, but there's no doubt in my mind that that is significantly, of value. So- But that's gonna be a trend? I think it will. More CTV- I think it'll become more and more— ... tied to some kind of outcome. Absolutely. Okay. I think just CPM-based buying- Okay ... worked in linear for many decades. It's changing. There's better data in CTV. Mm. That data can show better performance. Mm ... better attribution. Those are the kind of performance metrics that are gonna start to become more important within CTV buying. Okay. Actually, that'd be a pretty big change, actually. It would be, yeah. It takes time, and the buyers have got to get there. They've got to understand it. They've got to process it. They've got to move in that direction, but the ingredients- So even for VIZIO- I think the ingredients are there. ... down funnel. Absolutely, yeah. That's what you think, too? That's probably likely. Okay, cool. Okay, and then but Netflix is also, as you know, they were selling a $65 price point- Yeah ... guaranteed by Netflix, which... or sorry, by Microsoft, which is, like, twice the average- Right, right ... of the industry. Now, they're coming down sort of more at the 40 level, so more in line. My question is, with them flooding the market with new CTV ad units in 2024, does that hurt everybody's CPMs, which would actually then also- Yeah ... hurt your cost per thousand? I would argue a little bit- For 50% ... slightly different angle on that. Okay. In that, this isn't really about them adding inventory at someone else's expense within CTV. To me and us, it's really focused on: How does CTV get the dollars out of linear faster? Okay. The viewers have come over. There's a lag effect, right? You've got viewers- Yeah ... shifting over. Viewers are spending more hours per day streaming today than they're watching linear television. Yeah. The bulk of the ad dollars in the TV ecosystem. Yeah ... is still stuck in linear. Okay. To the extent that premium players like Netflix, and even Disney, and obviously Amazon- Yeah ... are gonna kinda grease the wheel, if you will, about getting ad buyers to come over, to be able to find audiences in ad-supported content. Mm. That's one of the challenges of CTV, right? You move out of linear, which is all ad-supported. Mm. You come into CTV, and consumers fragment their time in ad-supported and non-ad-supported content. Yes. And so, to replicate those reach campaigns that you could achieve in linear- Mm ... it's harder in CTV because audiences are fragmented. Yeah. To the extent that these additional players bring more heft and more volume, we think it's a rising tide lifts all boats dynamic. And so I think it's about building the- You don't think they cannibalize the fracture? Not, not for a while. There may be a time in the future where that becomes a dynamic. We are... This industry needs to grow, develop, and expand, and it's the early days of it. Mm. There's a lot of room for growth before that becomes a challenge. Okay, that's interesting. Okay, so, we estimate that your home screen is about 40% of your total ad revenue for the first 9 months of 2023, which is priced like a billboard, not on the basis of CPMs. So my question is, is that basically immune to anything sort of happening in the rest of world, those 7 ad units that go across the top of the page? Is that such a unique offering? Yeah. Do you have pricing power there? Yeah ... and is it sort of immune to the- I think it is. ... context? I think it's largely insulated from- Yeah ... a lot of those dynamics. Because if you imagine what that is, again, use the billboard example, it's a digital billboard sitting in the living room, right at the highest intent to view. Mm-hmm. So if you're Disney+, and you've got a show coming out, or you're HBO Max, and you're trying to promote something, incredibly valuable to put that right in front of the viewer in their living room when they're about to watch a show and choose what they're gonna spend time on. Mm, when they're choosing. Like, right at the time of choosing. Exactly. So awareness is incredibly high. All of these services, you know, it's cutthroat. It's a very- Yeah ... challenging, streaming world. For us to be able to be a solution provider for them to acquire subscribers and retain subscribers, equally as important- Mm-hmm ... by promoting their content right in the living room- Mm-hmm ... incredibly valuable. So I think that, you know, if I was sitting in my old seat at Showtime, and I was pulling down the marketing budget, maybe I'm pulling money off of freeway billboard signs, but I wanna keep it- Mm-hmm ... in CTV 'cause you're in the living room. Okay. Incredibly valuable. So that's where we sit, and we've seen our business continue to be strong. Even as the M&E category went through its challenges with the strikes and the slowdown in terms of content, you know, our business has continued to perform. We grew year over year in Q3 and in Q4 as well. And so we're pretty proud of that. Okay, so let's-- we're gonna slow down that statement 'cause I think it's really important. So CTV was actually sort of weaker than I think a lot of people thought, not for VIZIO- Yeah ...but for other people in Q3, and I even think in Q4. And I think when I just talk to people and read things coming out of CES, what I'm hearing is, I think there's a lot more optimism at the same point versus last year- Mm ... on connected television ad growth, because we don't have an auto strike in 2024, which we had in 2023. We don't have a actors and writers strike, which makes M&E, which is media and entertainment, which is a big CTV category. Definitely. They won't replicate those strikes, so they'll be in market, advertising new content. And we also have political- Yes ... which is somewhere between $15 billion and $17 billion, that sort of drives demand up for ad units. So can you... You know, how do you feel about the ad, connected television ad market, which is 100% of your ad revenue, in 2024, and are there any other drivers that may make it even more robust than those three inputs would suggest? I think everything you just said is spot on in terms of drivers and tailwinds to the business for 2024. We're sitting in front of those big trends, and we're excited about that, and so that will be factored into our outlook. Guidance, mm-hmm ... as we provide our guidance each quarter. Yep. I think for us, specifically, again, we've said this for a long time, but it's still true: We're still relatively young and sort of new in the industry. Yeah. So we're still winning clients. We're still asserting ourselves in terms of a destination to plan to reach audiences. So as we work with all the major ad agencies and brands themselves, they're planning on putting more dollars to work 'cause we're now on their roadmap, so to speak. Mm. Right? They're aware of us. We scaled a lot. We're now at 18 million plus active monthly active users. You know, I think we were at 8 or 9 million when I got here in 2020. Uh-huh. So we're just, our sales growing, becoming more known, becoming more established, and then all those sort of macro factors you just highlighted will be tailwinds to us as well. So we're excited about where we're positioned for 2024. So Adam, one of the things that's different between you and Roku is Roku gives us active accounts by home. So when they say they have 72 million active accounts- Yeah ... they mean homes. Right. And they have, like, 1.5 TVs per, so they're actually reaching... 72. They're reaching, like, 100 million people. By contrast, when you guys give, I think it's 20 million. Do I have that off?- 8, 18 million. Yeah. Eighteen million? Yep. That's actually number of TVs. It's- So- ... it's a device metric, basically. A device metric- Yeah ... not a home metric. So- Correct. Is there an average, like Roku, of, like, 1.4 devices per home? Yeah. So I need to sort of cut it by a third? No, 'cause it's kinda the same. When we've done studies, and we do kinda consumer surveys and things. Our conclusion is that there's about 1.1 Vizio- Wow! ... TVs per household. Really? Per VIZIO household. Oh, I would've guessed higher. It's kind of one and the same. Okay. Hopefully, it will be higher over time- Mm ... and then we'll have to address the way that that metric is articulated. But- Okay ... for today, it's sort of all, it's one and the same. I'm surprised that once people have a VIZIO TV, they don't buy the next VIZIO TV. That really surprises me. They probably do. I think... Look, I think we also index to a value consumer that might just have fewer TVs in general per house. Okay. Right? That's possible. I mean, we sell- You and I have 5. I- Like, maybe they have two. That's right. What? I don't even know if they have two. I don't know how you live on two TVs, but You know, it's possible, one TV, and then everybody uses these in the house. Well, some of that, too. Like the kids. Yeah, the kids, they like small screens. I have TVs that are off, and they're using their tiny screen. I'm like- Me too ... "On switch. They're sitting in front of an 85-inch TV- Yeah ... staring at this. OLED. I'm like, "Turn it on! OLED TV, and they're watching it on their phone. No, it's crazy. It's crazy. It's infuriating. Kids, these kids. These kids today, what are we thinking? Okay, great. Questions from the audience? Yes, sir. Talk about short-form video. What that's doing, is that sucking linear TV dollars away from you? Yeah, look, we don't see it in our metrics because we're still seeing growth on a proactive unit basis, still increasing the shift to streaming in general. We don't have a tremendous amount of short-form content on our platform, so as they're increasing their time spent, they are spending it in long-form, ad-servable content, which is great. I think there may be a generational dynamic or maybe just an age category dynamic. I think that probably plays more, to Laura's point, the kids these days, watching more of that. You know, it's interesting to see as people go through life cycles, their behavior, their viewing trends change. We saw this when I was at CBS for many years. Once you have that first kid, and you're stuck at home, and you're not going out as much, you start to lean back and watch more long-form content again. So, we don't-- it doesn't play a role in terms of our programming roadmap or strategy. It's something that we watch quite a bit, but so far, the metrics are showing that people are consuming long-form streaming content. Okay. Devices. By the way, generative AI is gonna, like, really increase crap content creation-... over the next year, especially in a political year. So I think premium becomes- Yeah ... more differentiated, more valuable, because there's gonna be a lot of user-generated- Yeah ... but it may not actually be user-generated. Yeah. It might be machine-generated. AI-generated. A lot of clutter. A lot more clutter about to happen. It's gonna happen. Yeah. Okay, on the... Let's do devices. Couple questions on devices. Devices, I still think are running around, like, two-thirds of your revenue, right? Two-thirds or three-quarters- It's a big- ... of your total revenue. Yeah, yeah. When you're shipping, you know, 4 + 5 million units at an average selling price of, you know, $200, and then soundbar is another 1 million on top of that, with another $100 average selling price, it just is a big part of our revenue. Big part of your revenue. Um- Okay, so on the third quarter earnings call, William stated that VIZIO will shift its device focus towards larger TVs because engagement levels are 60% higher for televisions over 50-inch screen, large. Can you walk through how lifetime value is impacted by this shift? Yeah, it's a really important one, and we've been studying our user base now for the last several years as we've gotten more scaled and built up the platform business. So we can actually understand by unit, by series, by screen size, how much time is being spent, how it's being spent, how long that TV continues to be active in our- Uh-huh ... installed base. Yeah. And so we've learned a lot about our the behavior, and clearly, it's makes sense, but now that we have the great data to support it, larger screens tend to be the main TV in the home. They're gonna be the TV that they're watching the most amount of content on, and they stay put for a lot longer. A 24-inch TV has a much higher churn profile to it. Makes sense, right? Sometimes you buy a 24-inch TV to use for different purposes. Maybe it's the TV in the kitchen that doesn't get used that much. Maybe use it for a while, then it moves into the garage. Mm. A lot of dynamics. So as we understand these behavior trends, we understand the customer lifetime value on a per unit basis, right? Okay. And so it makes sense and changes our thinking about what we're willing to support in terms of pricing strategies to acquire a household- Customer ... at that screen size. Okay. So clearly, you can imagine we would be willing to spend more to support pricing to gain a household that's gonna buy a 65-inch TV. Mm ... than one that's gonna buy a 30-, 24- or 32-inch TV, right? Because the- What's the mix today? ... the economic dynamics. What percent of your TVs- Yeah ... before he stated this shift, are 50, over 50 inches? We- Like 50/50? We don't really talk about it. Okay ... it's a blend. We do really well in the small units, so you can imagine it's a good volume. I remember the beginning of COVID, that was a big driver for you. Big driver. Twenty-four-inch TVs. The trade-off we have to go through is: Do we forgo a little bit of volume- Mm-hmm ... for higher quality and higher economic value, higher customer lifetime value units? I do think people watch your ads, your net ads. Yeah. So if your net ads are gonna- They do ... go down a lot because you're adding longer live TVs- Right ... I do think. We have to talk through that, 'cause I think people have to really understand that economic shift. I mean, that was the basis of your question, what does that mean to customer lifetime value? Yeah. Tremendously more valuable installed base as we skew towards larger units. I think that's gonna be something that we'll continue to highlight. Mm-hmm. We'll show our success in it. We'll talk about various promotions we do around different units to drive probability that we gain that household. 'Cause it is, it is night and day in terms of the economic value to the, to the enterprise. Also, remind me, is it what% of your total TVs are done via e-commerce versus sold at retail, like in physical? Oh, it's still 80-ish plus% is still brick-and-mortar. So 80%, but that means 20% is probably those 24-inch TVs, 'cause you're not- A lot higher indexing- Shipping ... exactly. So. The shipping cost of large TVs is high. Breakage risk is high- Super high ... which means returns get higher. So- So the 20% of your business or revenue, that's the e-commerce, is probably in that 24-inch TV. So that's sort of what's at risk here. Logical theory ... in a way. Yeah, yeah. Because those people do need- Yeah ... 24-inch TVs. They do, yeah. It exists. But we are doing better. We increased our sell-through with Amazon this last year in a pretty significant way. We work really closely with our manufacturing partners to figure out packaging solutions and reduce risk- Mm-hmm ... which is an important piece. Different foam compounds, all kinds of different ways to eliminate the breakage that can happen. As that gets better and better, it allows you- You can ship larger TVs. ... to do more, e-commerce, should that be a profitable- Okay ... approach. All right. So, I mean, I just focusing in on if we're gonna focus on bigger TVs, so your ads go down, even though the lifetime value is going up. It seems like it adds risk to the stock story in 2024, and- Well, I think you have to look through, obviously, the net adds, so active account growth is one metric, right? Yes. But you need to support- Yes ... that with what's the growth in ARPU? Yeah. What's the growth in ad revenue per active account? Okay. 'Cause that's where you're gonna see it show up. That quality shift is gonna show up there. Okay. That's really, you know, ultimately what we're focused on. I see. The totality matters, and we gotta balance it- Yeah ... 'cause I don't think you wanna see us, you know, going, you know, meaningfully backwards, for example, on our install base. Mm-hmm. But I think, I think slower active account growth, but with the right active accounts, you're gonna see it show up in the economics, and that's gonna be very clear from those KPIs. Mm-hmm ... and it'll trickle down through the income statement. Engagement shows up right away, and then the lifetime- Right ... value shows up at the end of year three. They don't swap out. They keep it. Exactly. So that takes a little longer. E-e-exactly. When you talk about OEM, one of your goals was, like, more OEM announcements, where you're gonna be the operating system. Like, what's a great number, and what's a disappointing number for you a year from now? You're sitting there... If you added 10, I assume that's an amazing number. That would be a great number. Yeah, yeah. If you added two, are you disappointed, or you're like: "Okay, two's great- Okay. -because it's our first year? That's right. I think we're gonna tiptoe into it. Okay. We gotta see what kind of output... Obviously, these partners have existing output agreements- Of course ... with other providers. They've gotta wind some of those down. They've gotta allocate some of their output to us. Okay. There's work to do there. Right. But think about the incrementality of that. That if I get 2 million units from XYZ, you know- Mm-hmm ... OEM, that's 2 million that's above and beyond my own branded work, right? Yeah. There's no base of those units, so there's really no churn- Mm-hmm ... in those early days. So you're, it's true incrementality when we can start to do that. So- Yeah ... an extra $2 million- Might add costs, though. It will. Might add a bunch of costs. It will. Let's be clear. Yeah, long term. We need to invest to support that. Yeah. There's engineering resources that need to go against that. There's legal support. There's- Oh, yeah. There's just... That's not- Yeah ... our business model today. So it is new for us. Mm-hmm. We will be investing in that for 2024. Right. It is TAM expanding. Mm-hmm. The only way we gain a household today is through a VIZIO-branded hardware buy. Yes. Now, we have an opportunity with a partner to compound on theirs, and then maybe we get multiple partners in the queue. So- Yeah ... I think, I think it's exciting from a TAM-expanding standpoint. Yes. It will be at slightly different economics. I'm fully prepared for that- Okay ... but it's incremental. Very interesting. Okay. This is just, like, like again, a sort of drilling down... Any other questions? Yes, go. Hi, Bill. Hello. Bill Wise. He was so much fun on my panel. Oh, my God! Anyway, Adam Townsend, Bill Wise, CEO of Mediaocean. Excellent. Yeah, I was with William and, and Mike O'Donnell last- Oh, good. Yep. Yep. It seems like they think that local is a potential big opportunity for you guys. Meaning, stealing kind of like local and spot linear TV dollars- Yeah ... on the platform. Given your media background, do you think, do you think you have the infrastructure set up for that? How big of an opportunity do you think it is? Yeah. No, I... Yeah, I absolutely. I share the view because I think what we, what we've done is we've ingested in local stations into our WatchFree+ offering. So there's a whole section that's local channels, and we can geo-fence them and keep it designated for geographies, and then that allows. It's just one more way a consumer is gonna get to that content. So we're eliminating the need for an antenna. We actually can do very geo-filtered, targeted advertising solutions for ad buyers in that environment against that kind of content, and so absolutely. I think it's a great solution, great value proposition for consumers, and we partner with those folks that are... Look, linear TV, you know, they benefit from retrans dollars, but they're also losing, they're also losing subscribers, right? As cord-cutting continues. We can be a partner to kind of backfill, recapture some of that audience for them. Different economic profile for them, but versus the alternative, I think it's pretty- it's favorable. What are the rates relative to your brand content, your billboard stuff? It's, you know, similar. We sell an aggregated CPM across our video inventory, and so it would be blended in that. To the extent that someone wants to use more hyper targeting and more micro targeting, then obviously there's a premium against that, clearly, right? So if that can grow, that's where I think political gets interesting as well. You mentioned political. Yeah. We're more positioned to take advantage of political this year than we were the last cycle. And so we'll see how that kind of delivers into CTV and certainly at a micro targeting capability, should they wanna go that route. Great. Yeah, you haven't talked that much about local, so that's new. It is relatively new. Yeah, we've brought in 30, 40 different local stations into the platform just in the last six months. Does that make your political upside more? It could. It depends on how they buy and what they wanna do. They have to allocate money into CTV out of the total budgets. Yeah. I think some of the forecasts that are out there, they're calling for about $1.3 billion-$1.5 billion to come into CTV. Mm-hmm ... political dollars, this, this cycle. Okay. We've gotta cast our net and get our, get our share, if not more, from that. Okay. Okay, so you don't have it built into your... When you're thinking about 2024, you don't have it built into your guidance? Well, we sort of do internally from a model standpoint. We don't, we don't guide for the full year, so I haven't communicated that externally- Mm-hmm ... at this point, but generally, it is in our roadmap of sort of what we think the year can deliver. Okay. It's a component. Okay. Um- I think there's one over here, Laura. Yeah, yeah. Go. Any observations about the consumer right now? Um- Electronic products? Yeah, I mean, look, from our angle, consumers have continued to be very resilient. I think the US- In terms of buying TVs, is that what you mean? Buying TVs. Now, they're benefiting from very competitive and cut-throat pricing that's out there. So we're probably stimulating demand that otherwise might not be there, just because the pricing dynamics of the industry at large has been there. But we're. The industry rebounded, and it's kind of flat to up in terms of net growth in 2023, after obviously pull forward in demand during the pandemic, which we had to comp against for a couple years. So we're now seeing the industry kind of start to rise again, but average selling price is down double digits. So, so great to the consumer, but it's really, it speaks to the changing business model around TVs. You know, the pricing's down because it makes more sense to get to price it low and gain that household to generate the long-tail, multi-year economics on the back end of it. So everyone's sort of chasing sort of that model dynamic now. And again, benefit to consumers, but it is a dynamic. One of the things Bill said on the last panel is that it's sort of like hardware, up in media, but you and I don't think of Kroger ever- Yeah because we're media people. But he's like: "Look, there's, they're not making any money in groceries. They're not making any money in their core business. Mm-hmm. So they're all gonna become real estate for advertising," which is sort of what hardware going to advertising is. Like, you make no margin on the TV- That's right ... but driving the installed base, you then can monetize it through advertising- That's right - at 80% gross margin. 60, but yes. Yes. 60. 60% gross margin. I don't know. For the record. In the olden days, where CBS had 80% margins, gross margins. But, but anyway, same idea, that more- Yeah ... and more advertising is subsidizing what I would call sort of troubled business models- Yeah - or low-margin business models. Low-margin business models, yeah. They're transforming it. And that's why when we manage the company, we sort of manage it on a holistic basis and think about what's the total company consolidated gross margin? Yeah. Right? Not hardware's negative, you know, platform's at 60%, and okay, these are two disparate businesses. They're not. It's one and the same. Mm-hmm. It's sort of you sell one to gain the household, you monetize that household on the back end, and on a blended basis, in 2023, we put up three consecutive quarters of, of record level... Even when margins were higher in hardware, we were never at this, this level of gross margin on a consolidated basis. Right. It's because you've got a disproportionate part of the business, all the growth is coming on the platform at the 60% margin, and that mix profile is changing pretty radically. Right. Right. And it increases- improves your return on capital- Absolutely ... as long as the hardware prices don't go down too fast. Okay, so let's talk about Platform+, and let's talk about key growth drivers in 2024, and the political, like, the upside from political, M&E, and autos, which won't be on strike in a political year. So let's talk about what you think, the Platform+ business could look like next year. Look, I think we're building on the success of the last couple of years. Like I said, we have the team in place. It's more established. The dynamics are favorable for us. The consumer trends could not be moving more in our favor in terms of time spent in streaming and time spent more and more in ad-supported content. So that's really the driver. Okay. I mean, the metric of time spent streaming is important, but then to understand the next layer, which is: Where are they spending that time? Because- Where- ... every hour is not equal, right? Well- An hour in Netflix, where I get no economics, versus an hour in WatchFree+, where I'm selling advertising- Yeah ... very different behaviors. So- But how do you affect that? You affect it... Well, great question. So that's an advantage of owning the operating system- Mm ... and owning the home screen. Okay. We can use the home screen to promote content- Right ... that we have in WatchFree+ to increase- Mm ... the probability that someone turns on the TV, doesn't realize that we had, I don't know, Die Hard for free- Yeah ... and clicks in and goes in and watches that. Mm-hmm. Okay. So controlling that experience is really, really valuable. So we affect that using our data. We have extensive viewership data, our ACR data- You personalize it, presumably? and we personalize it. You personalize the recommendations. Every step of the way, you're looking to how do you increase the probability that you affect behavior that actually advantages us and also gives them a great user proposition? I think you have seven. I think you guys settled on seven in your carousel- On the carousel … on page 1. 7 or 8. Is it seven or nine? 7 or 8, maybe. Seven or... 7 or 8. Yeah. How many of those are yours? You cross-promoting your WatchFree+ content- Yeah ... not somebody having purchased the ad unit. It fluctuates. Similar to the broadcast network model, which you know very well- Yeah ... there may be times when you wanna use that time to promote something- Yeah ... in WatchFree+. Yeah. Or there may be times the market's really hot, and you're willing to take someone else's dollars and not promote your own service. So we have a team internally that analyzes that and looks to optimize how do we, what do we use for our own promotion or whose dollars do we take? Okay. And so it can fluctuate and move around from week to week. Supply to demand ... not typically daily, but week to week- Okay ... it's something that we manage on the supply/demand, aspect. So I guess your homepage isn't getting bought in real time. What's the lead time to buy an ad unit on your Vizio homepage? Two weeks? A couple weeks. Yeah. So like broadcast- Yeah ... it's about two weeks. Not too dissimilar, yeah. What I would call scatter, what you and I would call scatter. Exactly. Okay. Yeah, yeah. Okay. you know, as the networks are gonna start to launch their- The other 50% of revenue is real time, right? Video? Yeah, the rest of the video that isn't- By and large, absolutely. Yeah, yeah. Real time. Yeah. Okay, so go ahead. You were gonna say something. Oh, I was just gonna say the M&A category, with the new shows finally coming on- Yes ... they're gonna be front-running that and start to launch campaigns to promote awareness around shows- Of course ... and the services on our platform. Yes. And so we're gonna start to see that, kinda late in Q1. Okay. Yep. Right, the shows coming up. Mid, mid to late. Okay. Yeah. Okay. Yeah. Other questions? We're about to be out of time. Yes, sir. On the M&A side, I guess there's a perception that Netflix is sort of winning that game. Are you seeing any signs of that on your end in terms of show promotions or anything else that? Well, I'll share. I'm not sure the exact question, but our perspective is we can be an incredible partner for Netflix. Today, Netflix does not- They don't buy anybody's. ... promote, they do not promote shows- They don't promote. ... they don't buy any of this, right? But we have an audience that over indexes in ad-supported content consumption. So we go to them and say: "Hey, look, our user base has an appetite for content with advertising. You're trying to grow your advertising install, subscriber install base. Let's find some way to work together where we can be a provider for you or a source for you to mine our install base," and maybe that means promoting shows on our home screen. They do pay us for, you know, a sponsor button on our remote controls. But I think there's a lot more we can do with them to help them achieve their goals and bring economics to us. ... Netflix doesn't promote any show on Roku or on VIZIO or on LG. They don't promote any of their shows on the home screen that he's been talking about. They own a lot of billboards. They do. Outdoor. Physical, outdoor. It's not- Literally physical outdoor ... all world, man. Yeah. Yeah. Yeah. I think they do it for, like, the critics. Maybe. Like, it's all in Hollywood. Yeah. It's on Sunset Boulevard. They buy them in the routes from the- Yeah ... producers so that they see their shows getting promoted. Yeah, which isn't about advertising shows. It's about telling Hollywood it exists. It's about customer acquisition, that's for sure. Yeah. Yeah, or talent acquisition- Yeah ... for their shows. Yeah. I don't know, it's crazy. Yep, yep. Data. Okay, my favorite revenue stream of yours is the $100 million you get from selling your data, your ACR data. Yep. Are you seeing more competition from new entrants? Are you getting more demand? What kind of growth can we see in that data piece of your revenue? Yeah, look, I, I think we still have the largest, richest data set in the marketplace that's available for sale, and no, no one else, at our- Yeah ... size or scale is, is selling that data like that. So we think it's very valuable to the measurement companies, to networks who are looking for more intelligence, to ad agencies who buy the data from us as well, ad tech companies. And so, just to be clear, though, we, the only data we sell is the basically sort of, sort of viewership that's usable for measurement purposes. Mm. We don't sell any of our customer segmentation-level data. So any of that household, profiling con- Yeah ... content that I talked about, understanding what people watch, what their appetites are, we keep that for ourselves because we use that to then sell targeted advertising to advertisers. You got to buy through us. You can't target our audience with our data outside of us, right? Aren't you just selling the raw data? Like, you're selling the feeds- It's a... Yeah ... so you really need somebody that can ingest and clean the data- For sure ... and use it as a measurement product. Yeah. There's opportunities to layer in more, analytics and usability and products around it. That's a good idea that you make. So we've got a small team that's focused on figuring out how to unlock some more value there. Mm-hmm. But we're currently selling to all the... what you'd think of as the major users of this. Mm-hmm. So I think it's more about- Major measurement companies, I'd say. ... proving-- Exactly. Nielsen, like, you know- Yeah ... Magnite, everybody, you know, they all buy it. Right. I think the point is that the population is probably pretty well harvested. Okay. The question is: How do their business models start to continue to use our data to then drive their business, and then our data becomes more critical to them as a cornerstone input, right? To their product. And that will give us pricing, onboarding rules- But, I was just going to say, doesn't, don't you have unlimited pricing power? He has a question. Because if you told our data, these companies go out of business. In theory, yeah. In theory. Yes, sir. Not in practice, right? They don't go out of business. They'll go find another data set. Have you assessed Ramsey from Mediaocean. Oh, great. Have you assessed what the revenue opportunity would be if you actually allowed for not just the measurement use case but the ability to target? I know that that's proprietary, and you sell- Yeah ... the media based on that. Yep. Yeah, I don't know if it's a one-to-one trade- It was a strategic decision. When we didn't have an ad sales team, previous to having our own internal ad sales team, we were licensing that data. We pulled it back because we knew we could execute against it. Our ad business today is, call it $400 million. I don't think the marketplace, in terms of pricing, would support it at that level. So the decision to bring it in-house, give up those economics on the ad server basis has more than paid for itself, and I think our opportunity as we grow our install base and grow our ad business against that install base continues to support that decision. So I think, the economics work in our favor by holding that data set back. Okay, I need to call it there 'cause we're out of time. Okay. Anyway, thank you very much. Great. Thanks, everybody.