Netflix (NFLX) 17 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Spencer Wang	VP, Finance/IR & Corporate Development
Reed Hastings	Founder and CEO
David Wells	CFO
Ted Sarandos	Chief Content Officer
Greg Peters	Chief Product Officer
Doug Mitchelson	UBS Securities

Call transcript

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Spencer Wang

Good afternoon and welcome to the Netflix Q3 2017 earnings interview. I’m Spencer Wang, Vice President of Investor Relations and Corporate Development.

Joining me today are CEO, Reed Hastings; CFO, David Wells; Chief Content Officer, Ted Sarandos; and Chief Product Officer, Greg Peters.

Our interviewer this quarter is Doug Mitchelson from UBS.

Before we begin, we will be making forward-looking statement and actual results may vary. kick to me first for let question. that, it Doug over his With

Doug Mitchelson

pivoting Good whom going like with start have everybody. for you, quarter. inflection start, afternoon, Thank Spencer. point strong another I’m perhaps hitting Reed you you digital into third your some then it of was topic. you Hollywood each and You to are we video. streaming by will feel competitors video? rotating Do for peers, to we of question ask sort

slew have will We of services be launching of a SVOD quarters. that over couple we the next

You have real direct-to-consumer sort companies marketplace? about a themselves. point inflection diving in the the into traditional media of see Do you thinking

Reed Hastings

Well, loves Wall Street points. inflection

pretty streaming growth. competitors been I’d seen new the we've around a much steady new So say continuous think to love formats, increase And new yes, world, devices, but just evolution. it's I

You know XX streaming ago. years we started

of our Now year we completing streaming. are XXth

great of So streaming. more I’d say, overall, and the success for continued same

Doug Mitchelson

takeaways What was the Ted, better? expected? What than third surprised you? for quarter, worse was what from you

Ted Sarandos

Italian Italian film with relieved Mouth, our watched Doug, world. Suburra for that the expansion all critically big an Fincher's in our our pleasantly in was European animated around an all surprised in Netflix numbers Mindhunter also by for Italian and original I Meyerowitz. like releasing around getting in our new we being the being very customers, world. series users David Rome but and shot including well and comedy original kind of of feature programming Well, big It's and verticals, adult continuing Big received

working of our breadth well for about. I’m So, just subscribers, kind of continuing things excited that a are

Doug Mitchelson

strategy set product learnings the here you time global the days as as to Asia, your get manager? how and from you specifically your that's in started early any informing for the Greg Japan launch in table,

Greg Peters

and new products. do producing me that back the the Sure. we a obviously trying grow those to lessons launching there spent and in to I bring time content, service, to experience that lot of work allows

series So, content. job that invest I'm be we to of it producing evolve have XXX content content built effectiveness technology then in to efficiency have has promoting so more we can million team team to compelling effective and sell so to million XXX it and But work awareness, for is the to those original and is million, be better have investment as meeting we more continue the that at a today at to do and little today. doing. the we members, change that members we improve we as XXX experience product product support forward great that in also Ted's putting of scale. experience can effectively. to looking how the next Also needs new do the How films that the the the

Doug Mitchelson

you discuss some and question measure I field? and on Q&A. acquisition that Millarworld, ever, when you, should the talk the will we into strategy last on first get can ROI deeper we combining the think we Spencer, between as through And Ted company how of that

Spencer Wang

Sure, Doug. a couple to to highlight you. for of With respect things Millarworld

first tell is we you done this The can year first acquisition XX -- from history. think track our is our I the in record we’ve

bias strong can that from you So take we’ve to by. build think over that I a very

our can help into but focused, diversify also enhance opportunistically very remain looking very, so and and growth. other rather content library now assets intellectual property accelerate we’re new that we looking content our to at Secondly, businesses,

it pertains to So but overall, to I selective, think you should be us as expect M&A. opportunistic

Ted Sarandos

feature concentration that side. circling on and of of Millarworld side the say Mark we were and had the would TV kind Yes, incredible already on projects original I

look we track creating deeper continue us we And played think record creation to that iconic the original we really so content of in it. excited -- we just into can and they films we build the to had -- about roles are so were on,

Doug Mitchelson

a of similar other see have acquisitions characteristics? Do that series you

Ted Sarandos

at there of can when lot looking to a one these that things, of so creativity well meaning we're that’s efficiencies, roof, Obviously that. -- kind explore the much one under be

Doug Mitchelson

original content -- Ted bit might not one but like I to I was a as lot of that wanted bit a uncertainty a And as lighter third it the little content little in just well, important last streaming the the was in you, released, talked know, to and David it by the of but second third results strong again. you some of in a it much so for Yet versus to you perhaps this how switch quarter to I be was more think growth content terms relatively year driven exclusives. about when compare overall marketplace. the quarter quarter looked quarter very were

reading is I Am right? really the it's answer the quarter streaming third the seems -- it that So marketplace.

David Wells

additions, continued that helping adoption that our in is more might helped as with saw in well. entertainment originals our we I pretty general, line Internet tends adoption content the do, the the and think of force we really of what growth we our share lion that the been consistent driving that the slate, TV quarter to global that. base second continued entertainment quarter-after-quarter more drive and the that by mean, the force increasing I Internet When from the strongest are momentum is in so. particular which to I’ve international over thought try of explanations or saw of strength that is drive growth the you of above some really net and content our continued notable additions. that quarter that and second on the focus the forward is had And could of strength. it that it's But perturbations of title incremental, the be we slate the all or lumpiness tend quarter-to-quarter to notably we in some I sort and on up show was net think, explain our but use carry

Doug Mitchelson

you’ve last carryover I perhaps about strength you’re maybe It's whereas interesting, forward having talked the from wondering, some strengths in some pulled think growth, as that said from quarters might getting instead in you for where that is there it a quarters, critical because out we've a surprised content level titles into while been we're few mass or the previous and year-to-year.

content if content? fourth year-to-year do and So mass It's the in that to we of And are as new forecast see disagrees? slate your or if follow a you view how Stranger you agrees up think do you sort big critical strong no hitting like a content quarter? forecast? to Things driver original that Do longer our you of might with Ted of just use so,

David Wells

pointing it is are out Well, I it's think hard, -- that right. you

additions QX, to strengthening global releases, growing of do pattern and that and that year is content bit continue it But seasonal Internet very you explain even QX, pleased adoption you’ve releases background hard get force little the growth little just But with from incremental we paired sort global becomes we if a to a entertainment, the to quarter-to-quarter and nearly net we're growth year a to when you of to a away for number pattern from from and own quarters million just As in with flattest content we growth again it of million paired are that certain growing and at we particular back it's the strong can. this prior-year. note we adoption four that slate of try seen is to XX entertainment, year's hard bit changes, grow up our of so best from growing this large the Internet we XX discern. adoption globally and harder be but got and up off QX, of was the look will you quarters, that this ascribe team -- the

trend increasing So, content growth and the Ted over is in increasing just And then for the to adoption. background you comments. general,

Ted Sarandos

just not same be three of Death movie sizable are that I in are that pockets. might To drumbeat films high-quality be Naked, would all that if successes steady concentrated the buying in think The the reflection this and mean, of quarter different was Note, released a a There necessarily are viewing Bone. content I that people ticket watching, it

and crossover between audience little very -- them. probably So

so benefit that's of Netflix. the nearly day every kind output coming programming I original the think of on new And steady of great

Doug Mitchelson

for Obviously, And driving then content the can you guidance, quarter? David questioning. When price there wire like What just have fourth you what there? too question though. coming, swing were in big last investors fourth the do this the some be increase factors you guidance do might that in think see quarter were for the factors Things Stranger you discuss churn, about

David Wells

we price Crown and pricings And in we we next just And the year. factor Sure. the we we are have I but XX past, coming content was so un-grandfathering and got is Stranger wrong ever days. we -- our about, had, guess have strong the we've one seen. this big too quarter with QX it's of that mean, year, we had talk ever largest sort great guess, We Last too, off largest our the perturbations the so Things last releases. is just but will content some Ted primary had again, more this been year comping that we’ve the of best best had.

Doug Mitchelson

the for so pricing for David, broadly we and will don’t some then you switch why Reed have strategy So follow-ups. can discuss pricing, I and to

Reed Hastings

and viewing Well, that We're reflected prices value. the seeing to content increase are world. around offering relative continuing we're the to in

to the the were the at maintained have of try prices. And in of consumers that in content of euro or relative program standard we amount great €XXX XXX maintain we that course have of zone, So incredibly the value price. that to our that terms low feeling a we

super-premium TV, range got stuff just was it And the XK. I in TV, looks. a Vision great haven't try you if how definitely you picture F, tried Mindhunter to got standard beautiful yet night now, my Dolby in watching this and unbelievable is we’ve I on great is it value-oriented HDR really XK super the So last

Doug Mitchelson

that seen Is your particularly in on lot on strategy what David, or on growth? the more terms far content that, cash developed in so why the seems anything driven countries I’ve at that countries. price of really big spend, the of revenue a have least the now terms more take through at right? markets markets one of of that David, more the self end anything the developed price side. Is to emerging suggests up been increases in piece least And this because from it the are mature and hitting perhaps

David Wells

exclusively add this slow sort content we��re have originals that library if investors been of I mean, that about up hurry. back to global I’d Well, can do the commensurate over no said. that Netflix, doing growth us association in the time. and hurries. value past Reed great criticized value really value and we us steady. we're a have as the in price think Many we for we value difficulty] going up steadily on no like partially being underpriced to Reed slowly with year take there's and opportunity. We’ve to We're [Technical it’s I that we and we only for [technical member of what said, think that take in people sure and and as that and from make want difficulty] grow And and next that the spending more

Ted Sarandos

the to mean, grow go business been long of time and so for timing no grow there's correlation increases. without a growing content our growing intent to I slowly the steadily. and this and between I planning let shouldn’t addressing that and I and mean, sort spending, we’re has planned content that price Yes,

taking ASP we're we've up slowly over grow as time that So and assumed with the going well. that we’re to content

David Wells

keep again can think established brand -- eye of pattern its the new and Things Big already, to show new you like like we live might that Mouth, steady that I release like Crown, we great Reed that the I into are quarter Season is, on. drumbeat -- think we’re going -- most keep yes, to without Atypical, Stranger a shows and like keep and -- new X, Doug show have and that next of next the season a excited new like are Ozark mentioned to an recently had the Mindhunter great of this going but building released shows seasons that and we

Doug Mitchelson

undeveloped strategy? markets, a to just that global more developed price in right in or seen address sure far the market terms sort And taking in price the up versus that of increases developed just of really and make markets we it's is so of we

David Wells

I market, mean, define Well, how raised terms a other we’ve parts in Latin price Brazil, the of you in in America. of year developed earlier in

all in in grown all. and and chose many sort we around honest the if sort of can old to those to a We price XX So may year, think that chose global specifically market that But of and quality lower engagement It launch. we be in markets those once and library only pricing have a markets. is may markets, that true months we're didn’t we raise you that in don't with -- a a launch tailored not an the make to library divide not the it. at library we’re enough, that in chose track we had I of those -- haven't decision cleanly specifically markets with a value global fast increasing to

Doug Mitchelson

the sharing list more taking and up the tier is expensive? the How tiers tier question company? an $X, I is The X, on up increase asked a a sharing last it the the a middle going whether the is price lower making for higher or high password issue. get Is higher password the the of priority lot reflection $X $X question and you're that tiers of went is on is

David Wells

Greg, you want to take that?

Greg Peters

Sure.

regard to -- think us right now. with isn't I huge a for sharing priority, the password issue

to that and value and really take HDR, seeing a in we push the that us measures better the So priority we're to Reed address pricing reflects tiers, apart spread to think it's in a try so you’re spread that try that and mentioned go stem broader not delivering huge Mindhunter, significant farther just value. higher the that in try and it, awesomeness XK, the the

Doug Mitchelson

little for start and before So Ted, want. competitors you win shows over to let’s all might about switchover a I you content access that to trying the bit, the asking

a how pretty I Just but you on the got do we’ve your on 'XX coming? slate strong content think scaling? development any half visibility is see update quarter, process good first a fourth the

Ted Sarandos

those project think we've we're yes drumbeat in we excited, the that more scale really our definitely. been with And results Yes, people with we Edgerton just our for And which they that Will big That and wrap upcoming than our movie year in by of David origin. is I Bright, event and it's incredible with seeing that film larger will directed potential behind budget in Ayer's. but original series really a this up much they're will Smith starring correct Joel biggest start I’m Dark on with markets really in this original ramping that continuing And production, is television original original in of up for marketplace. seeing movie Italy, new on enormous so a side. those be with marketplace, watched series Germany the in big a more just being the we’ve which is us had about language of local initiative on done we excited kind on production steady -- country those travel top can can languages the exciting outside, we're it much local becoming -- competitive competitive that What really shows. you're success you new are that of shows them, to could those recently it’s have scale also is markets are happy because shows put our

Doug Mitchelson

in big subscribers, a Bog OTT back Any new Canada, that to is impact in here Any States launch the that in service. the companies going other suit? hot Iger might in that content, on Netflix concerns I channel only said media away in of years Disney but with with X course, Disney and Hollywood? there sense United concerns Pay last think terms an of window content he's valued going could Disney also direct-to-consumer also particularly, Disney not and on Of and the his around the access couple going have content follow traditional but on reported the you you having going its

Ted Sarandos

everyone is their better. to So everyone to I it's over-the-top better strategies and and make have television think is exciting own going trying that

and it good get for every our is that on of can't creating all that just without think month. live to have I members and content us about we focus excited

the decide get us landscape and our for produce doing whether around really for us that’s we're and really or to for of distracted that's have -- the So great -- it, think competitive with to their not one it's the a own choice they too based that people more by compete I to not make partners or are on And that innovation. us, thrilled business. because

and a to out that it's have we have best the choice, to I there. choice think for lot of consumers great just be

that's I’m And in NBC world the that because not Doug, with our we’ve on different. think Fox. those than being isn't Fox television these players made lot where series. we have choices basis. I produces off The run access, a shows not different long-term for a think and I so environment that -- all that it produces case-by-case agreements worried ABC for is about

as if renew the By second there, that long that interesting are successful and in So way right Netflix to chooses out an they on of as a not here Dead window. exist deal the somebody series as to continues expired in show ago be Walking Walking being a example will produced. with years and successful something deal the and Netflix Dead show two as AMC long is like that

Reed Hastings

the about end also billion. on book you of of of we Ted commitments of of the of content, library so the growing level have was $XX just to at and sort produced our billion at the quantify, sort $X.X the of helps for And were that over of was next benefit quarter quarter our that, value end years, quantification the what saying, Doug, net the which another put

Ted Sarandos

these with -- all thing are in by the be we more of we would are example Star are to Trek: CBS Star Discovery. with And the just Trek all access series, included coproducing content transitions add way one

environment a rapidly sure. changing it's for So

Reed Hastings

Disney our but the international growth Doug, great internationally Australia, and And, brand big is without was with how you only Canada of content. and content, a in Netherlands, in world the we Disney have great it most the saw

although of we've growth, it. significant see well relative you very in done international without in its brand an significance it's terms that can got So, enormously to

Ted Sarandos

to them We are too. they’re with partner ready ready when

Doug Mitchelson

seems content investors either think down might content. struggling licensing ramping I I major the original loss think to strategy less dynamic Netflix be future? Disney or sort your be of more do Netflix but that as on companies interesting will that an to are OTT, in and it's situation a you farther original a And farther how license U.S so with offset you going increasingly because any to with licensing and content you have look of the of media the less Netflix, I'm Hulu confidence curious exclusives more road, that and have you derive the

Ted Sarandos

I’m Well, agreements said as And that have what -- date. of we're an like has out we that be up. not long-term deals is smooth confident and these ramping a pretty I to of run erratic kind it shift, those will because transition been pretty

audience Season and where the in those evaluating still having Netflix X. in on studios are meant a it the an value that in sure I’m producers like growth lot of think something where networks Riverdale is -- window for enormous second that Riverdale I there's and partnerships,

only on different audience thing was that Season Season Is Netflix. XXX% Us and X, from X from in fact, is increase In Riverdale This the on CW to

see threat make think does people and value when decisions to the competitive the trade-offs and too become So and outweighs look partnership. the look competition those of of in the partnership value when at the to those I that at have

Doug Mitchelson

that Hulu season increase in Is And, This season on and Ted, the big was back Us for it how season? was given

Ted Sarandos

I nowhere Season don’t It from not nowhere It wasn’t near but XXX%. the -- XXX%. up know. was X, near

Doug Mitchelson

perhaps said all? at that strategy is next would sense that I and impact for shifting programming Amazon the of Any Bezos Netflix Thrones. have think has on Jeff Game any that looking he's

Reed Hastings

So as Game Thrones the Plepler Richard of next looking for …

Doug Mitchelson

lot an that a you so That’s and interesting mean, had going sort sort belabor terms others on doing buy Ted much content Amazon, lesson obviously to and Hollywood disruption success you’ve be is and at the necessarily everybody. too I I forum of can't to it don’t is interested continuing are there could of some in Sarandos, is success of this you when in but for how point want would you're high-quality of discuss in if struggling? create I its what investors, sustainable just

Spencer Wang

be of want of extension They’ve people to around our brightest. corporate been from lives. -- I place into come have friends, attracts repeatable. and heard created come And their the It their think peers, think to a they create. responsibility. it's best it I their a work of they've and quite culture able that the we've where and from bit seen is best an seems that And employee to freedom

for keep creator keep try come of to that want building heavy we great to network is content we giving people model I a successfully. that by on professional So something resources so avoided the that think handedness to that the have And betting experience. we've on other replicate a the where and

Doug Mitchelson

Reed and shutting the Weinstein that sale situation of week resides company property the the massive if Ted, I would Weinstein and was or all that Wall be that For its the the reported, believe, the company at selling Board Does of Journal Netflix and Netflix given business. at was intellectual considering for down there, last put interested? sort up impact the Street studio

Ted Sarandos

Particularly interested acquisition? in

Doug Mitchelson

Yes.

Ted Sarandos

of happening lot from clear a smoke to is There there. what’s

and Our the we business course arms theatrical second have on alpha distance television agreements them. a Company window is window, deal films, the some their Weinstein with pretty and with second of

in it's either So not material way.

Reed Hastings

the for extremely firm. will us be a to unlikely It be better for

Doug Mitchelson

you. Thank

to over Greg. switch me Let

you next that short -- consumers the the can changes what now in us So, midterm of Greg, here? to expect should Netflix you’re of product the terms side, give on over

Greg Peters

changes. of Tons

novel think excited to about of to great and at Ted's ways to I think I'm making ones most new tremendous that in our morph about use and to the members, forms more I explaining with the what's new video to original more IP, to experience a opportunity one is one that that is huge those team connection shows there there effective surprising -- make I also be this is making product opportunity think a assets, the connections. is of

Doug Mitchelson

would list say you And your what right is priority now?

Greg Peters

global that and engaging and increasing members, content Its Also Priority that team and scale, marketing consumer job and partners new better that better leveraging too, those effective marketing at for his actually and so better provide again both consumers needs new technical programmatic that set million we great at changing use the do at that really will keep million, we new of support our making shifting to eye are experience channel, to really, the the be right an the to evolving our the provide do respond use finally making Ted cases right to make list the have, really team making is product acquisition sure the to can for right to well. message promoting next there a and supporting of consumers, the we sure the continues in to as XXX time requirements. series. XXX of members at we our targeting to that right

Reed Hastings

And, something T-Mobile. add about Greg, just and Proximus

Greg Peters

United on T-Mobile our States that very, the are SFR/Altice and mean, find with we we're of efficient super care, sign members about here the about for to started excited excited be doing to partners one should very and out Yes, Proximus I our is new and we work to our effectively. in service say ways leveraging with in the pay up basically very very, members Europe we’re our to and I about we just bundling, find launched things

Doug Mitchelson

broadband extend focus some mobile. sort access of I any investors about Pay-TV David, when -- think jump part mobile they Reed, addressing to addressable part at market and you to And immediately is a about as think company of and comments? Asia, point this the as if Think or have the think the still of TAM mobile touching households? on you're Does

Ted Sarandos

sure, sure both think addressing just we and David entertainment. I the and part we market that's where Reed terms how of in of global cycle, much for of for the Internet do. great are we but and -- It’s learning delivered differently, that opportunity in think

Reed Hastings

metrics tell Wells so see complaining David, when Tam. the you often can number internal it's would broadband I'm we that households, of

the the and I So and it of also. about very will Internet it’s get enjoy on all so next to of planet we people over years, will all them the benefit that Netflix think people hope get the much XX is number of

Doug Mitchelson

encoding all you then, on so And Greg, there room the around work specifics service you. better to how Any fun is mobile? How much back things are that? making on and the engineering like

Greg Peters

Sure.

So both perspective. user focused effective on engagement from acquisition also we’re members new from member a making definitely but mobile a the perspectives,

that a experience. there So, we go, want or make smart members great don't have for on those who a TV watch something while to at home maybe want the to

video we've of example So to the really give an one And are the this. encodes provide bits. is hard point you using can and really, experience are one we're working that a superefficient, on making gotten low as that lesser very mentioned, that to so you sure lesser how we data things quality with we as that high

from of an unheard kilobits You take coding is which which something can a is per practically quality titles experience second, anime, amazing mobile like at anime previously. perspective. We now for superefficient on quality video provide -- XXX

excited down we're pushing we mobile making can. is experience and that about So super those great as numbers

Doug Mitchelson

new there's States the Since distribution T-Mobile. United the in lot about of deal brought here T-Mobile up with we investor questions a

how think If the but to David deal court, your measure I a walk a perhaps again that and jump a through are the bit of Spencer benefits and you jump at could of all, all, at relationship? bit you and on going more all, of ROI again

Reed Hastings

Sure.

can Doug, I out, bit, to can to enjoy. trying to jump Netflix to fill sort pull making our is in we're and little and do for it access So and partnerships for easier back but what a to ultimately up David customers of sign

extension So is an that. of partnership the T-Mobile

our is in streaming there a if reporting costs other what’s the the we BD and don’t alongside of those that a are revenues our economic partner I've on our the progress marketing extent our Beyond into, costs in benefits airplanes extend in Those and and billing cost And, line. payment There expense To share. get relationship arrangements marketing the that from our partnerships. film that marketing generally expenses. what’s can we perspective, Spencer, are my of builds chance forgotten have that speaking financial the behalf. on broadly download front? our of marketing To processing on processing components we a are

Spencer Wang

getting Reed. better, It's

airlines be just in So that that recently Apex to encodes we we us. and more opening we the done XXXX the will that efficient where are all leveraging September partnering at be with announced is work has those and Airlines up partner early team of great the end with will we Greg's there at conference

fly from And can and that support we it's from experience on delight which It our that and in-flight bandwidth in promote more more somewhat engagement we attention So in-flight Netflix. brand we that and case Netflix. customers. passengers benefit they good hopefully help for generally a them for begin to hope airlines use will efficiently think is an good streaming we mutual think as will our is

Doug Mitchelson

localized end. penetration add efficient Ted, of to might company the the to on just where have do? if and give market Netflix it addressable markets work I in is that the investors in develop? sort bit from it were curious programming Is continue localization Netflix beyond low local it's that is does of do to David it for still percentage have XXXX a what Is be early-stage So and Greg still more to the just markets on would you just encoding be rates? to is What help waiting some

David Wells

not waiting We anything, Doug. are for certainly

all moving content. and better Latin and on in relevant We America launch aggressively you of years, doing on for tech thing been investor we our in are state Asia. the built Netflix Brazil and how a those have focused Mexico side, fronts out same number remember the an you again, we're streaming in more if But, on

the just to on making around content developed, five that about take as we're progress. did So are I run time some Latin partnership we which that to working on. in we we so play. America to are got to again the we've world, really years content, how But know good how the model lessons get nation to ago. in we’ve this It learn going specific There every think iterate

Doug Mitchelson

I think the Greg Google discussion, one to product strides? want platform? AWS. are I did that Before and on I in get leave Are you more to to make whetted trying with Microsoft

Greg Peters

us say have infrastructure. would partner great has using their and I been just we AWS a enjoyed for that really

Doug Mitchelson

any on David, The the key some financial anything across -- like reaffirm earlier in update? margins, to not-too-distant to flow, the our of just cash you to switching thank that free just again by change you the you, for future, metrics, over to discussion enlightenment. XX% outlook the would

David Wells

margin we is of XX% target, ago thing think, that U.S profitability as a one out losses. landed say two I Well, year note international was U.S that grew useful contribution our and years to

were on we early, which basis target approach profitable that profitable that to fast-forward consolidated years sort of three and going turn able forward. international to a stay will we You

switch business optimizing margin. we around margin global the global we really operating operating So and are to

us see some back spending marketing. you'll and shift notably So forth

past I've absolute basis. gone an has think the on up I in indicated U.S that marketing

in able on of that X% January. and X% But to for track that test benefits that As to growing original again and I we that, benefits around growth. some around well we give and from more you think some X% 'XX, continued year, so you'll we to operating and we of the we focused to of indication growth track our really and guiding We're year margin. are specify past promoting are content, be forward this on increase will this the see grow see in

Doug Mitchelson

that you -- you -- to it other do plot of that and be what gives -- billion a as XXXX hitting the seems with OpEx, Do now know that? $X or of you the revenue growth, working an investors on spend a the year that to might least number have burden. but have burden point original incremental this building year, is capital each that working a what at and slate? big course sense of in we have trouble Do the of the capital your I obviously amortization about the you big Ted $X likes for line think you sight billion calculating, play got income statement have at of out so billion terms content

David Wells

to Yes, much on next that a I capital in or the the for away, two really we about somewhere on billion move spend year, more P&L away of you productions, are We us months owned markup into would going billion of giving given specific content. X.X P&L $X X.X. productions. content the the idea owned say better obviously our $X past you are more cash a X.X mean, X.X that months we of corner to number I us to backing have range. to or a three And we're mix, has next year. will from This enjoy year on sort without a benefits mix basis seeing do been content and be it to in and working ratio markup our of

on X.X that X.XX again becomes around think I average. So

year. cash models where the you ratio, So next of to there is of things offset and from going shift there of directionally operating is in I in growth, a think run $X working markup with to little but around quarter-to-quarter, towards be content giving profit and billion capital a bit you know that's a in it's your direction $X to in but enough lot numbers as guys flow higher goes terms and free billion the we spend lumpiness the these getting

Doug Mitchelson

play? two content in XXXX company increase extent expected and the The the the content XX% -- original had faster dynamics grows or the and spending to in than by approaching you those might is also still place about

David Wells

sort on different to we of classifications feels or a I when are it bit see just socialize increasingly a is becoming provide a They of that subscriber context and will XX% around say more Netflix little -- to they whether an it. At the we that it own have like and we sub licensed made or us, piece original. content of sort To the it brand Netflix to end be have and about Netflix. could would the more Ted, something it's development the of is of we've like as the benefits the that I that and we say as future and only you important know consumer don’t content accelerate owned talked production. we number day I that in past on in the XX% you different. that exclusive what's But higher But, know more if

Ted Sarandos

and trend I say the would No, accurate for that’s sure. that’s

Doug Mitchelson

similarly Ted, on makes international. to sort in What it talking categories. One, of and on? creating what scaling? percentage of more of know, then Any now as You about that's talking going doing How about content? we’re terms think we local content few more or spending of you're How wonder years, me that’s for update movies? two kind a are budget spend in that I naturally

Ted Sarandos

international originals, a on of producing efficiencies lot Well, production say in I'd of enjoy the States. outside the we United

standards we bring and markets. volume higher can higher those in produce higher kind So of and production to

of It we’ve that. production series Italy of kind days, our Italian. the it's you’re just with just just Greg much a of that the a original like the anime to about feels of be of projects -- going anime So just and in XX in earlier so House way see Global in is Suburra, show doing more like thrilled these case We’ve ability Original, looks happens work like very not a give been and some Italy. scale a states big just the than not to Cards, in really is of to do mentioned Narcos, show in sense is that a by we're and various you example.

something coming So and next -- scale range are X plan all at now early on United larger anywhere way we're right that's this Martin the this year in scale, to past and Sundance We the we end seeing and up a the films. the quarter in Scorsese larger and much larger they United on a hit, should the up be year outside of to -- States, at on States, we are movie going we from side the with 'XX. that we Bright, original producing released inside XX like about Irishman production million-dollar

Doug Mitchelson

time the on but comments about is inflation wonder issue the become you specifically Shonda content up at hearing titles, leads about best Netflix hours, of we number an are the because Hollywood. at that something broadly the content some of content of me could same cost for that point? keep And Any for cost inflation to the deals in sort number Rhimes certainly of scaling more

David Wells

them predictable. of costs costs market, personnel the go it get asked up professional big quite this a thing think a compare And which competitive handful the and for those this the lot overall to where pretty same might Yes, of I’m say to content player are sorry, it case are a I record feel been broken in one gets I’m this I’m if competitive but superstars, I shows, it's on unicorn I price one, but but those lot that of general I any very a is Doug, sports of going more lot predictable.

we creating little the where outside spread a So earlier that she box her had little knows with to attractiveness bit, place a wider, we're -- ABC. class do had as and like is to she talent thing as outbid like talents about of I wings you she that. also to mentioned so will a I a and can her network that, Netflix could lot world Rhimes where continue more like attract world-class just Shonda that get to we where the to attract she And than more create, wants

Reed Hastings

difficulty] I cost faster, but long-term the you made of content the better Doug, at have library, profit margin we’ve improvement look in business, years. if which over grown what’s investment and driven revenues content our investors the improvement we’ve inflation And what is perspective, we from would come in content hopefully is to the an [technical a the budget, terms trend confidence ability our say gives is manage grown the

David Wells

to say. going was I what That’s

cost we least it, so content this of So or at the the what said. speculation Spencer escalation last over face three years

Doug Mitchelson

I moment, thing of question one sports rights a -- was for a over find sort to switching for The Reed. interesting

position still So, I of question. think to the is upfront, sort be what to going answer wanted but know I the I

that is $X.X in and digital you with that the engage Night on the you had Obviously, -- for hoping the it want I here is Facebook rights just now I in on multiyear billion Thursday would India. States. was Football for right So IPL air United bid Amazon it

will switching all by pursue its much DVDs that you course to were that waited platforms bidding it we the for you anticipation evolve I right it little to of obviously where more that the the right know time you, the but back Netflix past from there sort in And video so of it. a when think streaming investors weeds, to reminds indicated for of sports in more rights. be and the this really to bit in not me point you for not has of by sort that was but on marketplace

as So longer I’m for to looks the it trying Netflix understand just at content? term points are trigger what sports

Reed Hastings

XX I the next hypothetically to those have see Doug, point trigger be points near-term. years, at Well, might the over in what some

miles around unscripted, doing series, documentaries, much we're on so going have an thing a the our XXX We global expansion world. just the movies, of hour running in

nothing so the And in near-term. about to talk that's really interesting

Doug Mitchelson

likely other to sort ad half not first to The banners lot, of but it, some it's of want or perhaps in to the or trying Any pursuing or we asking that’s than that up price launch still clear do year, product figure still they’re post-roll emerging point? end you, a have Amazon next that pre-roll if markets question a points some is thoughts in sponsorships is the developed require advertising or on that updated what world. given out you have and my lower it understanding at we

Reed Hastings

case The the is far. to not things, the keep get of as the copying a really to going typically they're someone very leaders because to famous video many phrases Amazon not for strategy in main challenger You is is thing. the sure, just know brand main often Netflix streaming right to try role is thing the which

at not expanding focus ads is all. in our new And so

last base partnerships, to well And even is many We doing doing question. do thus think scale, the what work for global I customer the will at Our on keep content, if one time getting we just have focus that out mobile times really investors. for things Doug, better to our and better doing we're we’ve have streaming. and our better discipline for

Doug Mitchelson

the it had of I curious, I you one try two as because competition the really let was, I these Reed, access I and was days are and going to divide And on to was was that The go evolves. the market focusing to --well, really with, them. think going so for between I’m two interesting investors content

And I that your on now? sort on curious the wrap think, of I ask when when peers question regarding is advantages of content issues, around focused the sustainable so was, some what Reed right Netflix regulatory up that one you two is going about think at overseas look a you and And and there issues local that going scale competitive anything are quotas through was specific side those with for regulation is sort I of Netflix. you if would separately to was

Reed Hastings

a about we're strategy, bit character. the coming targets amazing we’re got and do in and promotional And good Stranger us that's some learning how materials also in or days Things amazing displays celebrating little amazing XX very because Stranger Doug, content on out so, We've Ted, you both we've to Well, sweaters staying tell a all want to target. Things? merchandising, great about at do got our

Ted Sarandos

And Halloween. you we are only the it our can't is base. but international equally with out, we for show come -- to hit Well, that are how if will Season October of these can ugly sweaters gives releasing your Stranger question party, -- ugly next you -- for it and not is the enormous the Things, sweater we from way you your get United new XX a in really the Christmas this be across an answers Target wait too show of celebrates in which one membership the spending spirit you States, but great of

So we month. Things are thrilled coming this for Stranger

Doug Mitchelson

Things? Stranger what doing are Greg, And, product support on we to

Greg Peters

all incredible I'm are show scale, job had investing taking is we're with to good a to and is. great in do the to that And track connect for We to What open off your question last out. record big that answer the are pretty And parts amazing things doing with of we site being as figuring basically able show handle to and well on over content work how it an as Doug connect this years. we've our members of anticipate. sure of others growth Amazon XX continuing the

worry particularly. So about I wouldn’t that

Spencer Wang

for look you talking us to on forward and Thank everyone joining quarter. the more you to the over call

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