Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Richard Ingrassia – Roth Capital Partners, LLC.
Richard Ingrassia – Roth Capital Partners, LLC.
I’m not sure who wants to take this question, but I think there’s a bit of a disconnect between the increased network penetration, your increased content of files, etc. and the per household TV revenue figures especially since normally we’d expect your business to be somewhat immune from consumer spending pressures. Is that not the case anymore?
Or are the results suggesting that overall demand in the segment is weaker, that your placement maybe on some cable tiers has suffered, splits are lower? There must be some explanation for the lower year-over-year per household figures. Can you fill us in a little bit?
Ken Boenish
In terms of per household figures, as we gain incremental distribution on existing platforms we don’t always see a one-for-one return in terms of revenue in line with what initial distribution looks like. Further, I would say that there is a lot of competition out there. I don’t think that we’re necessarily being direct affected by consumer spending habits however, we have competition both inside the existing adult category, we’ve got competition from premium program providers line Cinemax and Showtime that do show adult themed content and we have off platform competition from online companies.
So, I think all of that does have a slight impact on the business but, I think the good news is that we’re continuing to gain distribution, our content is performing very well, we’re gaining incremental shelf space with existing customers and we’re beginning to grow our business outside the US. If you look at the revenue we’re definitely performing well. You’re just not domestically see the same sort of revenue ramp in line with incremental distribution as you did with the very first distribution that we got seven years ago.
Richard Ingrassia – Roth Capital Partners, LLC.
I guess the prevailing wisdom is that on the last time we saw a downturn that was consumer driven there were fewer options for, I wouldn’t call it quality content but let’s just say alternative content available online at no charge. Is that a fair characterization of the environment we’re in now or not?
Ken Boenish
Well, like I said there is a lot of competition out there right now. Internet delivered content is certainly a better experience than it was even three years ago so there is low price content available online, there’s free content available online. Some of it is a decent consumer experience, a lot of it isn’t but, those things do have an impact on the business.
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