Ben Swinburne: Thank you.
Michael Marks: Thanks, Ben. Operator, we will take the next question.
Operator: We will take our next question from Michael Morris with Guggenheim. You may proceed.
Unidentified Analyst: Hi, this is Charlie [indiscernible] on for Mike Morris. Just wanted to – are you guys able to hear me?
Adam Townsend: Yes, go ahead, Charlie.
Unidentified Analyst: Great. Yes, thanks for having me here. I wanted to follow-up on the OEM partnerships and ask if you could provide any color on how you’re thinking about the licensing potential there. And just how are you positioning your offer, your pitch, to partners in order to compete with others like Google, Roku, and Amazon? And do you expect to share advertising economics with the OEMs?
Adam Townsend: Yes, look, it’s early. We’re really excited about some of these conversations that are already underway. And we’re working out details of what these arrangements will look like. But we really are confident and feel strongly based on the feedback we’re hearing that there’s a real demand for something different in the market. And we hope to be able to bring that to these partners. I view it also as really a TAM expanding opportunity for us. If you look at the U.S. TV market, a little over 40 million units a year, we’re at about 11%, 12% market share of that. So it’s a very large market outside of our own existing sort of our own product, market share, where there’s an opportunity to break into that and penetrate more and more.
The more we can expand our platform into the market, the more we can scale our advertising business, the more viewership we can take advantage of, we become a more important partner for advertisers, content partners, really across the board of benefits. So we’ll update as these things come together. But early indications, we’re really excited about the progress we’re already making in these early conversations.
Unidentified Analyst: Great. Thank you. And one follow-up, if I could, on engagement, you noted the strong growth in the SmartCast hours per account in the quarter. Can you speak to anything that drove this engagement lift? Any impact you would call out from the launches of the ESPN or NFL apps, and then what levers you have to drive further growth from here?
Michael O’Donnell: Yes, I’ll take this off. So one of the key factors, look, we continue to add more apps to the platform. I think we shared we added ESPN, we added NFL. We have a ton of great content partnerships that have helped drive more time spent in addition to the already great partnerships we have. But one of the key drivers this quarter was around the redesign we’ve implemented. So we, as you know, we redesigned our home screen towards the end of last quarter. It’s more immersive. It’s more interactive. It’s got a cleaner look and feel. And we’re really pleased with the results of the redesign, right? Reviewers were overwhelmingly positive. Consumers definitely are as well. And we know consumers are because they vote with their behavior.
And not only are streaming hours up, but we’ve also seen engagement rates on the home screen up over 60% this past quarter. So it’s been great for consumers. They’re spending more time. They’re engaging more with the home screen. They’re using it more for search and discovery. This is great for advertisers. Obviously, it helps drive more engagement into the apps that they’re promoting. It’s great for WatchFree+ because we invest a lot of home screen real estate and driving consumers into our own and operated app. And what is very important factor in it is it’s all been backwards compatible. So if you bought a VIZIO TV seven years ago, or you have one bought one yesterday, you have that same great redesign on the home screen to help drive more time spent and more engagement.
Adam Townsend: Yes, this is Adam. I want to add. What I like about it is we’re seeing real indication that it’s not just engagement for the sake of engagement, but it’s actually engagement in areas where we have an opportunity to monetize as well. If you look at the statistics we provided, the SmartCast hours for active account, you can calculate that was up 12%, but our ad revenue per average active account in the quarter was up 16%, so again, showing that we’re actually able to monetize that engagement and that will help, obviously drive our revenue and growth over time.
Unidentified Analyst: Great, thank you.
Michael Marks: Thanks, Charlie. Operator, we will take the next question.
Operator: We will take our next question from Steven Cahall with Wells Fargo. Please proceed.
Unidentified Analyst: Hey guys, this is Omar for Steve. Just a quick question on TV licensing opportunity, do you envision finding partnerships in your current pricing range or is this an opportunity more attractive to you guys for device types on price ranges when you have a lower market share, especially at the upper end of the market?
Adam Townsend: Look, I think we’ve got to be competitive in price on everything we do. I mean, that is the market, right? We know we compete with house brands like On. We compete with TCL, Hisense, we compete all the way up the ladder. And so whatever we do has to be compelling offering for the consumer. It has to be competitive, it has to be thoughtful, and we’re looking for a partnership relationship which as we mentioned, can be mutually beneficial. So back to my comment about continuing to be thoughtful, competitive, but disciplined in our own products, and then having these partnerships be an opportunity to expand our TAM beyond that. That’s really sort of the great add-on to this that this can bring to us.
Unidentified Analyst: That’s very helpful. Maybe you’ve been on the competitive environment, just can you talk around what is it like out there from a pricing standpoint, especially across some of your close competitors?
Adam Townsend: Yes, look, we track it, as you can imagine, very, very closely across the board to understand where we’re positioned versus others. I would characterize the pricing dynamics as continuing to be very competitive, but not quite as extreme as we saw in Q1 and Q2. Some of the big outliers have moved back up closer to the averages on a given skew, and that helps a bit. I mean, it certainly takes out some of those very, very extreme dynamics where you saw maybe one, maybe two, but really one particular brand gained a bunch of share in the first half of the year. That seems to have moderated a bit, and so we’re encouraged by that. But there’s no doubt we expect it to continue to be competitive into the holidays, and that’s why we’ve kind of factored in our position and our expectations around the holiday period, where there’s a lot of demand.
We want to make sure that we have a strong competitive pricing, but again, we’re going to continue to be disciplined about how we approach that.
Unidentified Analyst: Great, thanks for that.
Michael Marks: Thanks Omar. Operator, we’ll take the next question.
