Operating Expenses
Operating expenses for the years ended December 31, 2022, and 2021 were $133.3 million and $123.7 million, respectively. This increase of $9.6 million, or 8%, primarily resulted from the following:
Cost of Revenues: Cost of revenues for the year ended December 31, 2022 increased to $51.5 million from $36.7 million for the year ended December 31, 2021. Cost of revenues primarily includes content amortization, hosting and streaming delivery costs, payment processing costs and distribution fees, commission costs and subtitling and broadcast costs. This increase of $14.8 million, or 41%, is primarily due to the increase in content amortization of $11.4 million, primarily driven by the increase in content licensing arrangements and an increase in the number and cost of titles published during 2022 compared to 2021. The balance of the increase in cost of revenues is due to an increase in revenue share expense related to bundled arrangements with other streaming services of $3.4 million compared to the prior period.
Advertising & Marketing: Advertising and marketing expenses for the year ended December 31, 2022, decreased to $40.7 million from $52.2 million for the year ended December 31, 2021. This decrease of $11.5 million, or 22% is primarily due to a net decrease in digital and tv advertising of $11.7 million, and a decrease of $10.0 million in agency fees, partner platforms, and brand awareness advertising compared to the prior year, partially offset by an increase in radio and print advertising of $10.2 million compared to the prior period.
General and Administrative: General and administrative expenses for the year ended December 31, 2022, increased to $37.5 million from $34.9 million for the year ended December 31, 2021. This increase of $2.6 million, or 8%, is primarily attributed to an increase in legal, accounting, and other professional fees of $1.3 million, an increase in salaries and other compensation expense of $0.2 million, as well as immaterial changes across various cost categories totaling a $1.1 million increase.
We expect to incur additional expenses in future periods as we continue to invest in our corporate governance to support the Company’s activities as a public company, including adding personnel and systems to our administrative and revenue-generating functions.
Impairment of Goodwill and Intangible Assets: We also recorded a goodwill and intangibles asset impairment charge of $3.6 million during the year ended December 31, 2022 as a result of the impairment analyses performed. The impairment charge was applied against the entire balance of goodwill and substantially all of the intangible assets balance. There were no such impairment charges recorded during the year ended December 31, 2021.
Operating Loss
Operating loss for the years ended December 31, 2022, and 2021 was $55.3 million and $52.5 million, respectively. The increase of $2.8 million, or 5%, in operating loss primarily resulted from the increases to our operating expenses of $9.6 million, or 8%, partially offset by the increase in revenue of $6.8 million, or 10%, in each case during the year ended December 31, 2022, compared to the year ended December 31, 2021, as described above.
Change in Fair Value of Warrant Liability
During the year ended December 31, 2022, the Company recognized a $5.4 million gain compared to a $15.2 million gain recognized during the year ended December 31, 2021, each resulting from a decrease in the fair value of the liabilities related to the Private Placement Warrants for the respective periods.
Interest and other income (expense)
Interest and other income for the year ended December 31, 2022 was comparable to the year ended December 31, 2021.
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