Cinedigm Corp. (NASDAQ:CIDM) Q3 2023 Earnings Conference Call February 14, 2023 4:30 PM ET
Company Participants
Gary Loffredo – Chief Operating Officer and General Counsel
Chris McGurk – Chairman and Chief Executive Officer
John Canning – Chief Financial Officer
Yolanda Macias – Chief Content Officer
Erick Opeka – Chief Strategy Officer and President, Cinedigm Networks
Tony Huidor – Chief Technology and Product Officer
Mark Lindsey – Executive Vice President, Finance and Accounting
Conference Call Participants
Dan Kurnos – Benchmark
Brian Kinstlinger – Alliance Global Partners
Terry Hackett – Hackett Management
Operator
Good day, ladies and gentlemen. Today, we are hosting a Conference Call to discuss Cinedigm’s Fiscal 2023 Third Quarter Results. My name is Bethany, and I will be your conference operator. [Operator Instructions] Please note that this call is being recorded. Your host for today is Gary Loffredo, COO and General Counsel. Please go ahead.
Gary Loffredo
Good afternoon, everyone and welcome to Cinedigm’s fiscal 2023 third quarter results conference call.
Before we begin, I would like to point out that certain statements made on today’s call contain forward-looking statements. These statements are based on management’s current expectations and are subject to risks, uncertainties and assumptions. The company’s periodic reports that are filed with the SEC, describe potential risks and uncertainties that can cause the company’s business and financial results to differ materially from these forward-looking statements. All of the information discussed on this call is as of today, February 14 and Cinedigm undertakes no duty to update it.
In addition, certain financial information presented in this call represents non-GAAP financial measures and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.
I am Gary Loffredo, Chief Operating Officer and General Counsel of Cinedigm. With me today are Chris McGurk, Chairman and Chief Executive Officer; John Canning, Chief Financial Officer; Yolanda Macias, Chief Content Officer; Erick Opeka, Chief Strategy Officer and President of Cinedigm Networks; Tony Huidor, Chief Technology and Product Officer; and Mark Lindsey, Executive Vice President, Finance and Accounting, all of whom will be available for questions following the prepared remarks.
I will now turn the call over to Chris McGurk to begin.
Chris McGurk
Thanks, Gary and welcome everyone and thanks for joining us on the call today. Obviously, we had a great quarter as our financial results exceeded our internal expectations and those of the analysts that follow us by an extremely wide margin on both the top and bottom lines, with total revenues up 98%, net income up 1,139% to $4.9 million and EPS of $0.03 per share. And all of our key operating metrics grew dramatically once again this quarter across all of our business lines.
Rather than dwell on great performance, where the numbers clearly speak for themselves, I’d first like to start out by stating how proud I am of the Cinedigm team, which continues to deliver outstanding record results across all sectors of our business quarter after quarter and to also thank our investors for standing with us in a challenging equity market. While so many other companies in the streaming and entertainment business are struggling to figure out the best path forward as they try to reconcile years of record-breaking spending on content and marketing and an over-reliance on the paid subscription model, Cinedigm continues to demonstrate how a streaming content company can develop and execute a business plan that works successfully in real time today because of sound and reasonable business principles like diversification, portfolio management and a sensible content and marketing spending practice.
Part of our success is, of course, by virtue of our company not trying to be everything to everybody. We’ve become experts in our sector of the streaming business. That is serving passionate fans across popular and specific enthusiast genres better than anybody else. One example of this success is in our approach to horror, a category that continues driving some of the most exciting success stories, not only for our company but in all of Hollywood. Cinedigm is in a truly unique position in the streaming industry, having built upon our strong momentum to wrap a profitable third quarter with triple-digit growth in net income and adjusted EBITDA as we continue towards our goal of sustained long-term annual profitability and positive cash flow.
All units of our company contributed to our successful quarter, which speaks to the value of our differentiated revenue streams across content licensing, our portfolio of channels, which are made up of a strategic mix of third-party and owned and operated networks and they span SVOD, AVOD and FAST, our library of 60,000 films and TV episodes, our resurgent theatrical release business and our proprietary state-of-the-art Matchpoint technology. Diversification and a portfolio strategy is a business 101 concept drilled into MBA’s heads, their first day in class. Cinedigm is implementing that strategy to great success, all of it within the streaming content business, the fastest-growing segment in the entertainment industry, while many of our one channel one line of revenue, heavy spending, non-diversified streaming competitors are struggling.
As I mentioned, our total revenue was up 98%, including our 11th straight quarter of record advertising revenue growth, up 79% over the prior year quarter and up 258% on a 2-year basis. We were on the free ad-supported streaming television or fast train before many in the industry. And with new senior sales executives added to our Cinedigm Ad Solutions team, we remain very bullish on this part of our business. We also grew our subscription streaming revenue 38% versus last year’s third quarter and nearly tripled revenue from 2 years ago. We now have 1.22 million subscribers across our portfolio of streaming brands, up 28% from third quarter last year. Screambox, which we acquired 2 years ago this month has become the fastest-growing horror streaming service in the business with subscriptions increasing 900% over that time.
In fact, in the 2 weeks following our exclusive streaming release of instant cult classic Slasher film Terrifier 2, Screambox subscribers grew 144%. And what can I say about Terrifier 2? It was a late 2022 theatrical box office phenomenon. It performed incredibly well on transactional VOD and streaming and consumer product versions of the title are flying off the shelves. The fact of the matter is that the smart and talented Bloody Disgusting team, which operates Screambox and curates our horror vertical work closely with our content team to identify a breakout film and a breakout creator in the incredible, Damien Leone that was very much worth investing in. In turn, we not only trusted their expertise, but we also leaned in to support the release with a cost-effective viral marketing strategy, and boy, did it pay off?
We have much more to come on the horror side with last week’s limited theatrical release and upcoming Screambox exclusive of the critically acclaimed sound footage film, the Outwaters, which Slash Film and others said rightfully it feels like this generation’s Blair Witch project. Also, we have the recently announced acquisition of Hollywood Dreams & Nightmares: The Robert Englund Story and many other films and series in the horizon. And we are also mirroring this strategy with other genres for which we have a proven expertise, including family, anime and Asian films.
John will cover our financial results in more detail and Erick will delve into our rapidly increasing operating metrics and the continued early success of the important business initiatives that are key parts of our plan to continue our high growth while achieving sustainable profitability on an annual ongoing basis, starting with next fiscal year. These include Cineverse, which we believe will become the Spotify of independent streaming video content, our proprietary Matchpoint technology platform, our growing advertising unit and our expanding podcast business. I also want to point out that as our business is scaled and players in the industry have taken notice of our operating and technological capabilities, the scope of our discussions with potential strategic partners for operating partnerships, investments and M&A has rapidly expanded. Look for more announcements in that regard in the coming months. And in addition, our balance sheet remains in a very, very strong position right now and we currently see no need to raise additional capital at this point.
With that, let me turn it over to John for a more detailed review of our financial results.
John Canning
Thank you, Chris and good afternoon everybody. I will touch on a few third quarter highlights, then I will update you on our outlook for the year. While we have previously laid out our aggressive year-over-year revenue growth and sustainable profitability expectations annually, we continue to stand by our intention to achieve those objectives and are making great progress on all fronts.
Our key third quarter financial results for the quarter ended December 31, 2022, include: consolidated revenue of $27.9 million compared to $14.1 million in the prior year quarter, an increase of 98%. Total streaming revenue increased 63% to $8.9 million, driven by another increase in record ad-supported revenue of 79% and a 38% increase in subscription revenue over the prior year quarter. Erick will get into the drivers to these increases in his comments.
Overall, content and entertainment revenue grew by 72% over the prior year quarter. This was driven by organic user growth, new film performance, as Chris mentioned, increasing market demand for Cinedigm’s extensive connected television ad inventory and the launch of new streaming channels versus the prior year. Similar to last quarter, in Q3, Cinedigm once again delivered total revenue and all component revenues, which exceed our own internal growth plans for the quarter.
Our adjusted EBITDA was $5.1 million in the current year quarter compared to adjusted EBITDA of $1.3 million in the prior year quarter, driven by the phenomenal success of Terrifier 2 across multiple revenue streams, as Chris mentioned our streaming content growth and further decreases in the scale of our digital cinema business as it nears its end of life. Net income was $4.9 million or $0.03 per share compared to a net loss of $0.5 million or $0.00 per share in the prior year quarter. This was also driven by the success of Terrifier 2 and our streaming expansion as well as the recognition of other income under the Cares Act and variable consideration attributable to the digital cinema business winding down.
Our balance sheet remains very strong, as Chris said, with just under $9 million in cash, and our only debt is a small revolving working capital facility we just took last fall to provide additional dry powder for key content acquisitions like the aforementioned Terrifier 2. As previously mentioned, we expect to generate substantial full year total revenue growth for the company this fiscal year versus last. So far this year, total year-to-date revenue has increased by 42% over the same period last year despite a shrinking contribution from Digital Cinema. Looking closer in Digital Cinema results are excluded from year-to-date revenue in both periods. Our revenue growth is 60%, which exceeds our long-term growth goals of our streaming business alone.
Our M&A-driven synergistic expectations, top line and bottom line and streamlining initiatives are already starting to produce benefits. As both Chris and I have stated previously, we’ve made significant progress toward our goal of achieving $7.5 million in annual cost savings through operating cost improvements, outsourcing and application of our Matchpoint technology as we finalize the integration of the 7 acquisitions we made in the past 2 years. We remain confident that we will achieve our goal in the coming months.
With that, I’ll hand off to Erick.
Erick Opeka
Thanks, John, and thanks to everyone for joining the call today. First, I’m going to discuss our top line streaming business results. And then after that, I am going to discuss Cineverse mission and strategy in detail.
So first, total streaming minutes in the quarter rose to approximately 2.14 billion, up 60% over the prior year quarter. This was heavily driven by the continued expansion of our streaming services on to new connected TV platforms like Samsung, LG and others and the expansion of our overall subscriber base and user base as well as the impact from popular originals and acquired premium library titles. This consumption serve drove a substantial increase over the prior year quarter. Total subscribers of the company’s subscription video streaming service has increased to approximately 1.22 million, representing an increase of 28% over the prior year quarter. This was driven by considerable growth in subscribers at the 3 flagship owned and operating streaming services, Screambox, Fandor as well as the Dove Channel.
Additionally, our podcast business continues to flourish with nearly 74 million cumulative downloads to date across 28 shows. We’ve become a major player in the new and emerging scripted podcast category with our show the Mayfair Watchers Society picked up by Apple as a top podcast for 2022, and we had 5 shows on Spotify’s top 50 fiction charts. We continue to scale this business with the forthcoming international language launches of key shows, our partnership with the George A. Romero Foundation on a new Living Dead property and much more to come.
We also made considerable progress on the technology side, having relaunched Fandor and Screambox on to version 2 of Matchpoint, our proprietary streaming platform. We also announced our partnership with ROW8 during the quarter, and I’m happy to announce the product is now officially live, bringing thousands of high-quality Hollywood recent theatrical releases and premium catalog titles to Cineverse. In addition to utilizing Matchpoint as a means to expand our own distribution footprint, we continue to work on making Matchpoint available to select partners on a licensed basis. We see tremendous interest in demand in this area from other content owners and channel operators who are struggling with the challenges of effectively competing in this highly complex business. We will have more to share on this in the months ahead. And finally, we added multiple key hires in the quarter to bolster our Cinedigm Advertising Solutions unit. I’m happy to report we’re already seeing considerable benefits and lift in our programmatic and direct businesses.
Now let me take some time to talk about the company’s strategy and mission around Cineverse. Cineverse was born out of a simple idea to enable the discovery of the amazing diaspora of film and TV shows from around the world. With the top 10 streaming services accounting for just 3% of the movies and shows ever made, the vast majority of movies and TV shows are simply inaccessible to most people. Since I mentioned those statistics last quarter, things have become decisively worse at the major streamers. Major television shows are being removed without warning, heightened anticipated movies already completed are being shelved. Ultimately, millions of consumers are becoming increasingly frustrated as movies and shows vanish with no notice.
Meanwhile, the big streamers are increasingly trying to squeeze more profits by imposing usage restrictions and rapidly raising monthly subscription prices. And with more cost cuts to come, this trend is only going to get worse. So do we want to entrust the world’s collective film and television history in the blood, sweat and tears of filmmakers to this environment and these gatekeepers? How will consumers ensure access to content they care about when day after day, these shows become more inaccessible? What happens when the major streaming platforms decide that the transactional business is no longer in their strategic interest as we saw which happened with the music industry. vast swaths of our collective cinematic heritage will be inaccessible for viewing.
We feel there is clearly room in the world to provide an alternative ecosystem where movies and television series of all types and made by filmmakers from around the world are easily available, protected and celebrated, an ecosystem where films, shows and their creators are not treated as commodities and where people are looked at as unique audiences and communities, not just eyeballs. We’re not looking to assert the major streamers. Instead, we aspire to make Cineverse a valuable part of the mix that sits alongside them as an important archive and discovery platform for film and television content. Spotify provides an interesting parallel with non-major label music now driving 25% of music consumption on that service and rising rapidly. This is because Spotify is very, very good at helping each listener discover the perfect music or playlists for them, and that is what we’re going to do with film and TV on Cineverse as well.
We have a big mission in front of us, but we’re excited about the challenge. And we’re confident that we possess the technology to achieve this goal through our end-to-end Matchpoint distribution platform. Through the extensive use of AI and machine learning, Matchpoint has been designed to operate at significant scale, a scale that few others in the video streaming industry can compete with. Matchpoint allows us to easily ingest and deliver tens of thousand movies of titles and television shows very efficiently and at extremely low cost. To put this in perspective, in January 2023, just last month, we delivered over 9,000 titles, comprising 50,000 assets into the streaming ecosystem with our automation platform. So in context, we delivered about 2.3x the total number of movies on Netflix or 7.2x the number of movies on Hulu in 1 month. This is a level of operational scale and efficiency simply unheard of in the streaming industry and provides us a massive technological moat as we look to add hundreds of thousands of titles in the coming years.
Despite Cineverse being in its infancy, you can see those advantages already bearing fruit. First, we have dramatically expanded our content library, now totaling close to 60,000 movies and shows, bucking the industry trends, we’re focused on rapidly making all these sales available to consumers and are adding thousands of titles per month to Cineverse and its sister streaming services and plan to add 4K and uncut versions of films for subscribers in the coming months. Speaking on the sister streaming services for a minute, we continue to focus on several key content verticals where we super-serve audiences. If Cineverse is the sun, these are the Jupiter sized audience that we believe could each become major businesses in and of themselves, the same way Anime streaming service Crunchyroll is a $1 billion business for Sony.
Our horror service Screambox has become one of those pillars for us, thanks to original programming like Terrifier 2, fan-favorite documentary, Pennywise: The Story of IT, the psychedelic festival favorite, All Jacked Up And Full Of Worms, the Belgian/French survival horror movie Deep Fear among dozens of others. In addition, with the Outwaters, Living With Chucky, RoboDoc, The Robert Englund Story and so much more on the way, we’re very excited about the future in horror, not just in theaters, on transactional and through Screambox, but across Bloody Disgusting’s editorial content, our podcast network, consumer products and beyond. This philosophy of curation and our 360-degree approach to serving enthusiast fan bases is being brought to our other channel brands and verticals, including Indie film with Fandor, family with the Dove Channel, Anime with RetroCrush and Asian content with AsianCrush.
We also see an opportunity to establish ourselves and super-serve other key verticals, such as the African-American vertical, LGBTQ and others. We’re focused on pursuing and establishing partnerships with key brands in each of these areas. So to sum it up, our strategy of both superserving enthusiast fan bases, while also building the leading destination for the world’s content are extremely compatible and we believe not only to be great businesses, but an important mission that we can all be proud to be part of.
With that, let me turn things over to the operator to take your questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Dan Kurnos with Benchmark. Please go ahead.
Dan Kurnos
Great. Thanks. Good afternoon. Obviously, congratulations guys on a terrifyingly good quarter. I have one first just on that maybe for Chris and/or Erick, whoever both do you want to take this? Obviously, this film was a tremendous success, and I’m sure you guys are working on Terrifier 3 and whatever comes next. But you have all of the buzz. You’ve got some new films in the pipe. How do you go beyond that to sort of capitalize on the momentum there? Is it self-convened in the horror channel? Can you take simple learnings? Can you cross-pollinate? Just help us think through how you take what happens and kind of parlay that into sort of broader-based success across your other genres?
Chris McGurk
Well, just first, this is Chris. Thanks, Dan, for the question. Just in the horror genre itself, the floodgates have opened in terms of the creative community now coming to us, having seen how we took a little $250,000 movie and turned it into a top 10 theatrical and a blowout title in physical DVD and in TVOD and of course, on Screambox. So we’ve got a wealth of opportunities that we’re looking at in terms of new content to continue to blow out that business going forward. And there are also some acquisition opportunities in the space as well that we’re considering to sort of round out our [24:20]ore business, build it up and scale and serve all our audiences not just like a Terrifier slasher audience, but maybe more adult-oriented I mean, older skewing content in that space was called elevated horror. So we’re doing that in the horror space. And we learned a lot through the release of Terrifier in terms of how we could identify properties that had great potential and then market them in an incredibly cost-effective way virally. And we think we have that very same capabilities in the family vertical that we have great capabilities and experience in and the same thing with Asian content in Anime. And we’re evaluating content acquisition opportunities and also some M&A in those areas as well to build up our bulk, build up our content and be able to take advantage of the machines that we built in each one of those arenas. So we’re very confident that we can keep the momentum going in horror, and we’re very, very confident that we’re going to find a Terrifier in the family business, the Anime business and the Asian business. So with an ultimate goal of increasing our subscribers and viewers on our channels because that’s where the sustainable profits come from our acquisition opportunities, content acquisition opportunities in those verticals.
Dan Kurnos
Got it. That’s helpful. And then just kind of thinking, I know this is really difficult, right, to kind of tease out Terrifier 2 from the quarter, especially since you certainly deserve the credit in Screambox. I’m just wondering how you’re thinking about sort of ex Terrifier the fundamental momentum. If we can get some more color on that. Obviously, you gave some sort of qualifications around Matchpoint and some of the other things that are going on, but if you were to look sort of under the hood at sort of the other segments or genres, how would we be able to sort of point to the improvements that we’re continuing to see from the momentum you’ve built there? And beyond what you just said, Chris, are we looking to kind of round out sort of the family as we get closer to a much broader Cineverse launch?
Chris McGurk
Yes. I think first, I’ll make the point that even if we took Terrifier 2 out of our results for the quarter, we still would have had a record quarter in streaming and in our content distribution business. So this quarter was about much more than Terrifier. I think another thing that I think is important that you recognize, we released Terrifier on October 6, I believe, around that time. We’ve got a huge increase of subscribers to Screambox. And now it’s middle of February, and we’ve held all those subscribers, which we think is great news because again, those are replicable profits each month, year in and year out, hopefully, going forward. So I think you just look for our activity in the genres that I spoke about going forward. Right now, we’re evaluating a family film for theatrical release that we think could break out in theatrical. And we’ve got a couple of ideas in Asian and Anime arena, so I think you look for our content acquisition opportunity in those other arenas as a sign that things are moving forward and then, obviously, the results following that. But I want to stress, we don’t need a Terrifier every quarter to continue to show great growth and hit our goal of sustainable profitability.
Dan Kurnos
Got it. That’s really helpful. And maybe, Erick, you called out bolstering the ad department. Obviously, the market is trying to find its general footing right now. We’ve heard mixed bag in CTV, the publishers have called it sort of stabilized weakness, but your results have been pretty strong and pretty consistent, and you’ve not generally, I mean, yes, there are market pressures, but you’ve been seemingly a little bit more immune or less prone to some of those. So I’m just curious if you could expound a little bit upon sort of your ad force expansion and where you’re targeting and how you’re sort of thinking about direct versus programmatic expansion this year?
Erick Opeka
Sure. So just speaking generally on the broader ad market, I think if we kind of look at it and take the tenor and tone of conversations that I’ve been involved with and my team has been involved with, I think people probably overreacted at the end of this quarter broadly in the market. Everyone kind of hit pause in December. We didn’t really see much impact of that. But the big players well above us who are $1 billion entities, small amounts of downward pressure impacted them greatly. We’re a much smaller and nimble player. We can grow by gaining market share by launching new channels, and those will have a very material impact on growth. So, we are just at the beginning of our growth journey, where the broader marketplace, while it has some impact on the existing business, we are bucking that trend. Early this year so far, I think just to give one anecdotal data point for this month, we are probably double-digit outpacing the market in growth. So, I am not concerned about our ability to maintain high growth rates, just given all the levers we have to pull that probably are not available to our much larger peers.
Operator
Thank you. Our next question comes from the line of Brian Kinstlinger with Alliance Global Partners. Please go ahead.
Brian Kinstlinger
Great. Thanks so much for taking my questions and great results, especially with Terrifier 2. I wanted to see if you could break down at all content and entertainment. Sometimes we get to see distribution versus OTT streaming and digital. And then while certainly one it is not what you need, you made it clear to drive quarterly results. Can you help us understand the contribution from ticket sales, which aren’t as recurring as other pieces of Terrifier 2, so that we can go forward, think about the business?
Chris McGurk
This is Chris. Can you hear me?
Brian Kinstlinger
Yes.
Chris McGurk
No. We had a policy that for any specific title, we are not going to reveal elements of the revenue and profits that we got. I mean we have participants and everything, and it’s just not a standard practice to do that. But generally for an independent firm in general in the industry, you will get about 40% of the box office in rentals, which is a little bit lower than the bigger wide release film. So, you can just use that as a guide going forward.
Brian Kinstlinger
Okay. And how about some quarters you guys have given distribution, physical distribution versus OTT streaming and digital. Can you share any details about the breakdown of that? I think you had a chance to go through the entire Q? I know it just…
Chris McGurk
Yes. I think you will find that in the Q, correct, John?
John Canning
Yes. That’s all in there.
Brian Kinstlinger
Okay. And then can you talk about, you have been clear the Outwaters is going to be headed to streaming. What are the factors that indicate whether you take a movie to wide release versus keeping it as a limited release, is it certain performance in those specific theaters? Just maybe kind of wondering if Outwaters had the chance to go to a more wide release?
Chris McGurk
Well, the Outwaters went on, I think like 110 screens, it did really well this weekend. But we just announced today that we are going exclusive on Screambox, I believe this Friday. It will stay in theaters, but we are not planning on expanding it. And there are a lot of reasons for that. But I think first and foremost, with Terrifier, we really kind of had a franchise. We didn’t know quite how it was going to perform theatrically, but there had been a Terrifier 1, which had become a real cult film and had a big following online and everything. So, that’s why we took it out originally, I think on 550 screens. Again, that was a movie that cost $250,000, and we spent probably less than $100,000 in heavily marketing. And then with the Outwaters, that’s a film that was produced for $15,000 and a sound footage film. And it didn’t have sort of the built-in audience that we knew we had for Terrifier. So, we thought what we would do is take it out on a lesser number of screens probably not expand because you have got big titles like Ant-Man and others coming into the market and take it quickly to Screambox after we created a great deal of awareness and buzz online and on Twitter and TikTok and everything based on the fact that it’s really kind of an extraordinary breakthrough experimental film, and that’s exactly what’s happened. And we also looked at the impact that Terrifier had on Screambox subscribers. And we think that will be our main goal here with the Outwaters. So, that was kind of our thinking through the whole thing. So, you will see of mix going forward – you will see a mix of the release patterns going forward based on factors like that.
Brian Kinstlinger
And it brings me another question as you speak of Terrifier 2 and the impact on subscriptions. I think it’s important, and I am not sure if it held maybe you can talk about the churn or lack thereof of those that have come to Screambox, become subscribers probably to see the movie again. How would have the stick rate been? Has there been churn? Have they stayed with the subscription? Maybe talk about that.
Chris McGurk
Yes. As I have said, again, there has been minimal churn and if Erick wants to expand on that, but they stuck. And we got a great lineup, we think beyond the Outwaters, as Erick described, new titles to continue to refresh the channel. So, we feel really good about the stickability of the subscribers who have come on board, and we hope to continue to grow our subscriber base going forward. Erick, is there anything you want to comment on that?
Erick Opeka
Yes. In any of these types – any type of service where there is a high in-demand piece of content, you are always going to have people that sign up to watch the program and will cancel. That’s the nature of the industry. But what we really look at are the rates that we find acceptable of that kind of practice. And Terrifier, just because of the high volume of original movies, we had very closely following Terrifier’s release. We had very, very strong take rates that exceeded our – with retention rates that exceeded our expectations. And the net result was a very, very six-digit growth in subscribers on a service that when we acquired it, had low-five figures of subscribers. So, that is a pretty impressive result that has really set Screambox and the horror group as really being sort of our first breakout hit vertical. And I think it’s provided a very strong template. We obviously will adjust this going forward to optimize it, but we were very pleased with how many subscribers stuck around.
Brian Kinstlinger
Got it. Lastly, I would be remiss in not commenting on cinema equipment, although it’s not core. And I know we have been talking about it for a while winding down. It provided quite a lift in the December quarter. How do we think about that? And is there any visibility into the next few quarters on that business?
Chris McGurk
We will be done with it at the end of the fiscal year, as we have said before. There shouldn’t be any appreciable contribution after that point. But beyond that, I don’t think it really impacted our comparability year-over-year because I think we did significantly more last year in the digital cinema business than this year. So, I think that’s all I want to say about it at this point. But we are going to be very happy when we unhinge the last of that business next quarter. And then we will finally be a streaming content and technology pure play, which has been just going through the roof now for 3 years, as you know.
Operator
Thank you. Our next question comes from the line of Terry Hackett with Hackett Management. Please go ahead.
Terry Hackett
Gentlemen, good afternoon, and it is a good afternoon. Gary, Chris, Erick, Tony, great job. Just a comment that I don’t know if everybody understands what a great comeback story this is from 4 years ago, some very, very difficult days for you guys to say, “Hey, we have got to pivot and we are going to pivot and become an aggregator,” and then to effectuate on that has been a great, great story and along the way, cleaning up that balance sheet. So, well done is all I am going to say and keep it going.
Chris McGurk
Thank you very much, Terry and thanks for hanging in there with us over the last few years. And I think we all feel that as good as it’s been for the last 3 years and what a great comeback that’s been and how we built the business that’s working now. The best is yet to come.
Operator
Thank you. Since there are no further questions, I would like to turn the conference back over to Chris McGurk for closing remarks.
Chris McGurk
Thanks operator. Thank you everyone for joining us today and for your interest in Cinedigm. Please follow-up with Julie Milstead with questions you may have. You can reach her at investorrelations@cinedigm.com. We look forward to speaking with you again when we report our fourth quarter results for the fiscal year 2023 in June.
Operator
This now concludes our conference call. You may now disconnect.
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