And we’re a really good partner for the studios as well in that respect, because we’re a window that hasn’t existed before, and we can monetize it in different ways because of the power of the UI that Anthony mentioned.
Rich Greenfield: Thank you.
Operator: Our next question comes from the line of Ben Swinburne with Morgan Stanley.
Ben Swinburne: Thanks, guys. Two questions. There’s an echo. Okay, it’s gone. I want to ask you guys about live programming. You guys mentioned in the letter quite a bit, growth in live and the investments in live. And I think back to years ago, people probably thought live TV was going to die and streaming would be all on demand. What is — any sense for how much of your viewing is done through live viewing? And whether that’s an opportunity for you guys in terms of monetization? I would imagine it would have greater ad loads, maybe greater overall engagement levels. And I think a lot of the investments you guys have made in content and product are around driving fast channels and a lot of The Roku Channel is built, particularly Sports, around live.
So, I’d love to hear some thoughts on whether that’s something we should be thinking about as a tailwind to the business. And then I just wanted to ask Dan on the North Star comment and free cash flow. You guys generated I think about $150 million year-to-date. Any expectations you can share this for the year or the fourth quarter just to get a sense for what you think free cash flow might shake out for 2023? Thanks so much.
Anthony Wood: Thanks, Ben. This is Anthony. I’ll take the first part on live and then Dan obviously will take the second part. So yeah, I mean, well, first of all, let me just define live. So, live in the streaming world, at least on our platform, means content that is truly live, like a sports game or an award show. But it also means content that is just programmed linearly, because it’s hard — calling it a linear channel — I’m just explaining this for other listeners. So when you call it a linear channel, that doesn’t — the viewers don’t respond to that. So, we call the whole category of linear viewing live. And then — and live is something we’ve been focused on for at least a couple of years now. And we’ve built out a lot of great experiences to promote live content.
There’s a live menu in our left-hand nav on our home screen. We built an EPG, that’s an electronic program guide, which is sort of like a traditional cable box UI for live programming. That’s also very popular. And we continue to put a lot of effort into things like our machine learning algorithms drive tuning of live, and it’s very popular. It surprised me actually how popular it is. I was one of the people who thought maybe it would fade away, but that’s not true. It turns out there’s lots of people that don’t want to pick a show. They just want to flip through a few channels and find something that catches their attention. So it’s a big growth area for us. It’ll probably continue to be a big growth area. It’s especially important internationally where linear is still super big.
So there’s a lot of different categories, different types of content, whether it’s live or VOD, AVOD or SVOD or TVOD, and we put a lot of effort into all those types of content. But live, yeah, live is popular and growing fast.
Charlie Collier: We’re also actually airing some live events. We have Formula E coming up, and we’ve done some great work with Miss Universe Pageant, and so there are opportunities there. But also, live is confusing often to the viewer, the way so many of these sports packages are being split up. So, Anthony mentioned it earlier, but our Sports Zone is an incredible tool for viewers to figure out how to navigate. And actually, the consumer experience team does an amazing job helping viewers navigate to the live events that they’d like to find. So that’s another platform advantage as well. They come through our front door, we make it delightful and simple for them to find what they want to watch, and get where they want to go.
Anthony Wood: We’re always looking for ways to help our viewers. So for example, we have something called tune-in reminder, which is a way for a viewer to, like, be reminded when a live event is about to air. They can click on an ad for an event, and it can schedule a tune-in reminder for them where they’ll get a notice. So, it’s definitely an area we’re also innovating in as well.
Dan Jedda: On free cash flow, thanks for the question on that. And yes, you’re right, three quarters, we’re about $161 million of positive free cash flow, $239 million in this most recent quarter. We’re really focused on free cash flow. And with respect to Q4, we will have some restructuring charges that get paid out in Q4. So, I need to wait and see like the timing of that relative to our working capital. Obviously, Q4 is a big advertising quarter for us, but a lot of that collection doesn’t come until Q1. And then, Q1 also is a big payment for us through some of our sales and marketing channels. But that said, I think that EBITDA is a very good proxy for free cash flow. We, after several quarters of being capital intense, we are now capital light. And so, EBITDA is going to be a pretty good proxy of free cash flow with some fluctuations in working capital from quarter-to-quarter.
Ben Swinburne: Thanks, everyone.
Operator: That concludes our question-and-answer session. I’d like to turn the call back to Anthony Wood for closing remarks.
Anthony Wood: Thanks everyone for joining. Thanks to our employees, customers, content partners, and advertisers. Thanks for attending our call today.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
