So we look at what scarcity does to drive pricing, and Anthony’s last answer about the opportunities that we see, not just on the home screen, but throughout the entire streamer’s journey. So many of the sponsorships that, as we said, used to be M&E only are now both M&E and non-endemic advertisers, and what’s terrific about that, not only does it open up that scarcity to new bidding and new advertisers, but it’s also driving pricing. So I would say the upfront we look at, and those who have committed to us early have been rewarded, and those coming in as scatter seem to be responding to our changes toward opening up the sponsorships, as Anthony mentioned, and the pricing has grown in tandem with that. So we feel like that’s working, and it seems to be so, both in fourth and continuing now.
Vasily Karasyov: Do you feel that for advertisers, pricing is an important factor when they decide between, let’s say, the Roku channel and other streaming opportunities?
Charlie Collier: Well, look, obviously price is something that they, they need to look at when they purchase. Our value has been great. We’re also a performance platform. One of the things that are, unmatched scale, the direct relationships with, 80 million active accounts, what’s great about it is we get the opportunity to be both top of the funnel and bottom of the funnel. So we see people, obviously, they look at us and compare us on price, and we’re very competitively priced. But we also have the opportunity of being performant. And so the fact that we can be broad reach at the top of the funnel and also, in certain categories truly lead in this way, we’re priced well and we’re effective, which is what I think has people coming back, and then when we build these sponsorships on top of it, we are a creative solution for them as well.
So that’s right. Pricing matters, of course. We’re competitively priced, but we also have some unique opportunities that are actually growing in demand and therefore pricing as well.
Vasily Karasyov: Thank you.
Operator: Thank you. One moment for our next question. And it comes from the line of Nicholas Zangler with Stephens. Please proceed.
Nicholas Zangler: Hey, guys. Congrats on the quarter. Given the headlines and the new competition arising, I’m curious what you could tell us about your current relationship with Walmart. Both in regard to overall retail distribution and then placement within the on-brand TV and just if there’s any risk of any material changes in this relationship in the foreseeable future.
Anthony Wood: Hey, Nick. This is Anthony. I see you’re referring to the article in the Wall Street Journal. I mean, we can’t, obviously can’t comment on that. That’s a rumor. But I’ll just say a few comments in general. First of all, we’re the industry leader with 80 million active accounts and growing. And one of the things, one of the primary reasons that we’re the leader in streaming platforms is that viewers love our products. They love our brand. They love the delight and simplicity of our operating system. And one of the results of that is many of our viewers have multiple Roku devices in their home. So we’ve been the number one selling TV OS in the U.S. for the past five years. And we’re installed in almost half of all broadband households in the United States.
And, of course, we have a lot of international penetration as well. We have strong retail relationships. We have a great relationship with Walmart. We have a great relationship with relationships with lots of retailers. And we have strong distribution both inside and outside the United States. We have a large, engaged customer base. They love our brand. They ask for our brand. They have multiple products, multiple Roku products in their house. You take that and you think about our leading technology, our innovation in the industry, our singular focus on streaming. Our lower hardware costs. We have lower hardware costs than any other TV manufacturer I’m aware of. All of this gives me a lot of confidence that we’re going to keep growing our distribution.
We added 10 million net active accounts last year, and we’re going to add a lot more active accounts this year as well.
Nicholas Zangler: Got it. I appreciate your willingness to answer that. And then, just for the second question, you talked about M&E spend continuing to be pressured. I’m just wondering if you’d expect that vertical to potentially improve meaningfully in at least the second half of 2024. Obviously, in that period, you’d be lapping some easier comps. I would think new releases by that time maybe come to market, but maybe in your view, the release plate is just too light, and that’s why you’re calling for M&E to remain pressured for the duration of the year. But maybe just as you think about second half 2024, do you see potential for an inflection there? Or maybe you could just parse out the commentary on M&E being pressured throughout the duration of the full year? Thanks.
Anthony Wood: Charlie will take that.
Charlie Collier: Great. Thanks for the question, Nick. Look, M&E is a really important category for us, and I want to tell you that what we really focus on is helping them right now as they shift their focus toward engagement. It’s really interesting to me to watch as they do so, and I think in the second half of the year, as they not just have to get people to subscribe, but got need to have people watch their shows and watch the commercials, that we are probably their best partner in helping them do so on the platform. So when they’re back, we’re ready for them. I would say one of the things we’re doing to make sure we’re offering opportunities not just for M&E advertisers, but for other categories is to diversify in the way that Anthony said.
We’ve been doing a lot of work to make sure our ad offerings are places where M&E can advertise, but then have opened it up to the other categories. So that pivot to engagement will be successful for us, and we’ll be ready for them when they return. Also, I think we’ll be able to offer those opportunities to a lot of different categories.
Nicholas Zangler: Great. Thanks. Go ahead, sorry.
Anthony Wood: I’ll just add a couple of comments, I guess, just seems to be a lot of interest in M&E. I’ll just say that — like we said, it was pressured it will continue to be pressured for a while. But despite that, our platform revenue grew 13%. And then in Q4, the year-over-year growth at video ads on our platform outperformed both the streaming industry overall as well as, obviously, the traditional TV industry. I mean what’s going on with M&E is pretty straightforward. We’re a great platform for M&A spend. We have the most advanced tools in the industry. We are very good at it. We’re good at helping streaming services, build subscribers and increase engagement. And they spend a lot of money on M&E in the go-go years of the COVID — pandemic now that they’re retrenching and focusing on a sustainable business, that spending has normalized, it’s normalized down a little bit.
But it’s going to continue to pick back up, and over time, it will be a growth business for us.
Nicholas Zangler: Got it. I agree. Thank you very much. Appreciate it guys.
Operator: Thank you. One moment for our next question, please. And it’s from the line of Jason Bazinet with Citi. Jason, please go ahead.
Jason Bazinet: I just had a quick question for Anthony. Given your focus on growth that you talked about and less on cost, what sort of your aspiration, in other words, what metric do you think is most important to focus on, given all the metrics you disclosed? And what do you think is a reasonable aspiration where you would say, we’ve been successful in our effort to reinvigorate the top line and get growth?
Anthony Wood: So I think — so first of all, just on cost. I mean cost is obviously a big issue. We’re not — I’m not saying that we’re not on cost. I mean the company, we take operational discipline very seriously. We just made a lot of progress last quarter — sorry, last year. And so this year, we have more time to work on some other initiatives and growth is one of those big initiatives. And for us, for me anyway, there’s just so many opportunities across our platform to drive in particular monetization growth that we’ve worked on historically, but we’ve never put a huge amount of effort made a focus in terms of monetization growth. And so it’s a renew area for us in these areas, and success to me means reaccelerating platform growth rates beyond what we’re seeing this year.
Jason Bazinet: Just in dollars, dollars per hour? Is there any sort of metric that you think is more important?
Anthony Wood: Let me just add on to that. So when we look at both the current year and out years, we are very focused on absolute free cash flow, and we’re going to get that through acceleration of growth rate on the platform business. So again, when we look at investments, we ask ourselves how does this, of course, impact in a positive way to streaming experience and how — what’s the ROI on this? That second component, is really how we evaluate what we invest in. So again, we see tremendous opportunity to monetize our platform. We’re really just getting started. We’re doing a good job. 2023 was very strong, but there’s a lot of opportunity as we’ve grown to these 80 million actives. But when we think about it, again, it’s not — we don’t focus so much on a margin percent or an EBITDA, we’re focused on absolute free cash flow and free cash flow per share and driving that up over time.
Jason Bazinet: Thank you.
Charlie Collier: And my focus that is also just the fundamental drivers. Like what are the features and what are the areas of the product, what’s the strategy that will fundamentally just drive increased platform revenue growth.
Jason Bazinet: Thank you very much.
Operator: Thank you. One moment for our next question, please. And is from the line of Barton Crockett with Rosenblatt. Please proceed.
Barton Crockett: Thanks for taking the question. I was curious about international in terms of your active account growth. Can you give us any sense of the contribution of international to the over 4 million active account growth in the fourth quarter and the 10 million over the year? Is it a minority of the net increase or a majority? Or is there any kind of sense you can give us of that contribution to growth? That’s the first question. And then the second question is just to drill into this idea of your market share, you as a leading platform, smart CDOS in the U.S. and some other markets. I understand you’ve kept a number 1 ranking for a number of years in the U.S. But as your absolute market share, has that also been steady? Or has been any change up or down in your market share of smart TV OS in the U.S.?
Anthony Wood: Barton, I’ll take the — I’ll start with — this is Anthony for the kind of some high-level thoughts on international and then — and then Dan has some thoughts. Just in general, I think overall, we’re pleased with our progress internationally. We’re the number one in Mexico as well as the U.S. doing some well in Canada. We’re doing well in all of Latin America. We’re making great progress in Brazil. So we don’t break out our active accounts by region, but a lot of them are international at this point. We’re making good progress. We’re also doing well in the U.K. So Dan, did you want to add something about…
Dan Jedda: Yes, I’ll just comment. I just think it’s important to note that we — as we talk about the 80 million actives, we are growing in both the U.S. and international. And while international, of course, just given the maturity of the markets are growing faster. The U.S. continues to grow very well for us on net new accounts. And as part of that, a significant part of that those 10 million ads that we have. And we expect both markets, both our international and our U.S. to continue to grow on actives. One comment, just as it relates to the platform revenue and ARPU, we talked — we stated our ARPU was down 4% due to the fact that international is growing so fast. And that is — that is true. But in the U.S., we are actually seeing ARPU flat to up.
We don’t break it out, but we are seeing year-over-year growth rates in ARPU, and it’s really mixed. It’s all mix that’s causing that slight contraction in ARPU. So it just shows you — and then we’re at a different stage, obviously, in the monetization of our international accounts. But those will monetize over time. We’re in that scale that scale phase, that engagement phase and that monetization base depending on the international markets. But we feel very good about the growth rate of both the U.S. and international.
Anthony Wood: And this is Anthony again. Just on your question about market share and it’s been steady or up or down in U.S. Well, I’ll just take that question. So globally, if you look at regions outside the U.S., let’s say, outside the U.S. and Canada, which are more mature for us. you’ve seen strong and steady upward trends of market share growth rates. In the U.S., also, we launched Roku TV 10 years ago, and since that launch, we’ve seen steady increases in market share growth rate. We’ve seen our bounces around quarter-to-quarter. Sometimes it goes up, sometimes it goes down. But in general, on average, has been going up steadily since we launched Roku TV. And I actually think there’s still quite a bit of room to grow our market share even in the United States because there will continue to be consolidation.
