Netflix (NFLX) 18 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Reed Hastings	Co-Founder, Chairman, President & CEO
Spencer Neumann	CFO
Gregory Peters	Chief Product Officer
Theodore Sarandos	Chief Content Officer
Spencer Wang	VP, Finance & IR
Michael Morris	Guggenheim Securities

Call transcript

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Spencer Wang

Good afternoon, and welcome to the Netflix Q2 2019 Earnings Interview. I'm Spencer Wang, VP of IR and Corporate Development.

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

Our interviewer this quarter is Mike Morris from Guggenheim.

As a reminder we'll be making forward-looking statements and actual results may vary.

turn to me first for let question. that, it Mike over his With

Michael Morris

Good you, afternoon. Thank Spencer.

right the the factor. jump such didn't in outlook Let's mention into you a particular. from member that being quarter? What guidance significant variance the impact changed And that content during provided quarter this the results versus made and you the a perhaps

you so in something about could I focused past driving haven't really things. talk the we terms think maybe the cyclicality, that's in on of if those

Reed Hastings

Mike, we're was quarter, This past low. high, When one no see as beginning we forecast make in forecast There the forecasting, the you is thing. of one our X over And we're we the years, where sometimes best we estimate. sometimes high. can forecasted

we think light, the explanation. And about also never were billion ago, $X revenue. were years three in confident were really I quarterly Then, of we and if we

billion. $X going we're Now,

are And so noisy. to quarter over-interpret the it's adds, easy a bit which membership

for best forecast we're So the add Do want you to can. anything just and to trying the executing that, we do Spence? forward part, to most

Spencer Neumann

annual X% add Thanks, growth marginal it's million I'd Reed. the net add that that really in subscribers we we're talking growing it's basis so an Yes. members, are minus think a paid X%, those rates about or just when the subscriber On X%, growth, about XXX over Mike. fact XX%. base, Maybe forecasted, over on plus about on

XX base over members. by the So if member we XX look months, we our trailing grew at million

trailing think the forward we'll we XX million end we members. QX, be XX-month that we'll over where at to take you basis, If be, on a of think

like membership and and sustained content playing and things in growth forth. be quarter-by-quarter the so slate on way over really for some increase in we're along choppiness So seasonality time, based there'll the our

Michael Morris

look want detail dynamic -- to in that the pricing the versus the perhaps I a churn Can gross we dynamic there's net. versus well, and maybe just gross as the more on but add including up adds quarter, you how if provide at and get in little to the churn resulted back

Spencer Neumann

mean of when the growth -- the subscriber regions. all our was Yes. we looked generally across slowdown Sure. I at in

we our forward that about retentions. such adds, But And regions little the did our say, overall, across which X.X had funnel indicates the talk more of million subscriber with of growth did us we churn rates we to a maybe or timing of kind content paid you gross of slate. kind and QX we kind seasonality top pull the lower a frankly, of the net elevated slowdown strong see So prices, to of we some QX increased see level bit saw and of from adds. as where some in because also, QX also board, we

So but We and story the factor. primary a was it around played slate, was content pricing timing combination of a and of think our those nature X seasonality things.

first couple in acquisitions. the saw, those retention both the change We're QX, improvement in levels. down reaccelerated also again. weeks of is that, of churn I Mike, the We're you all those rates seeing think good in that growth has pre-price in news towards Now, and top of letter growth funnel of that in that as seeing back

with encouraged trends. the overall, So

-- it's worth very kind And it's with reminding all that to regard that's all of revenue-accretive. pricing ourselves too, piece

members. content ultimately experience our and business may subscriber very our and good great for there while be into for because revenue in pricing, because growth slowdown So that we increased product reinvest back members bulk for our some the that of of is short-term great

Michael Morris

membership particular in the base quarter. base increases? you about your now? seen Can I in through Can the lagging then is we it's obviously entire internationally, So X things, the where there increase guess, by talk those any you portion bit pricing highlight are we price that much right broader. wouldn't that a a such specifically a that of And little June, and be processing can cycle the member help pricing anything markets, impact September us size U.S.

Spencer Neumann

do me take that want or Greg, you take do to it? want you to

Gregory Peters

I'm happy do that. to

helping So I notifications. different that, mean places. I we're you the that and situation, we've built would I terms for we've mean obviously account those say to different those into tried already in perspective, our got effects in we've categorize in just all But so QX, for in the through U.S. markets Obviously in international of forecast. forecast our size that

Michael Morris

Spence, then, the operating consecutive guide. to in other second with outlook. ahead quarter It's And [letter income Great. question [ph] the your come to you've relative the respect Okay. one in]

You're when that know full you've you it the maybe was that again, coming why year us feels given as maintaining through. that know your I but would the the forecasting certain perspective, marketing, same been hasn't guidance. with, there clear referenced help marketing From timing.

Spencer Neumann

Well, chime choose to it's we discretion to we -- marketing and should when too have titles. but support -- Ted some as we have in,

And fourth like -- at so a mentioned year. of and the Things and of the Crown some we're sorry. there's of there's team money already later then but quarter to with that to we're just spend in de lot that really have, -- I Money But -- already really I sorry, discretion shift and some latter of launching, into big was the excited very it move -- think content -- Casa support, to Heist, marketing the X just content so half slate we the Stranger and shows movies back when half about you look Papel

Michael Morris

Okay.

bit, So question. we'll these Reed, an usually with with overview pressing start covered of some topics a

any than this I quarter shouldn't and the I we at outlook guess, quickly touching the that dynamic say overall? your look that why question to so approaching is of embedded this And growth in now, business year confidence halfway through and is on business an perhaps we're view your anticipated. forward, strategically the of about maturity And more the guess perhaps change going investor aside,

Reed Hastings

And been I was we've the rates look tremendous YouTube at been in Yes. that really beginning, the you the is capacity Hulu around all big way growing and years having and new streaming, the position and the we've a last amazing and content. world over XX Netflix and over Amazon XX catching if a year. And there in mean over on now building years. past next enter we're think for it's lot our of excellent. We're competitors I

shape. never better Our products have been in

Our investment of high. rate is extremely

in all things of which very is of, stronger get stronger again, our are market way And the to easy So an in I content is if there, strong. coming Internet believe key service. investors one think television, our in a position then terms and that

Spencer Wang

just QX. could topic just point your I out And add on points also Mike, in of revenue growth that QX basis would XXX if maturation, by versus did I accelerate

for look as well I see trend you guidance at you'll our If that well. as QX, continue think

So steadily. financially, I think up things that's picking continuing actually grow that a very are or to sign

Michael Morris

for Thank you that. Great.

Theodore Sarandos

terms I'd penetration as on hitting on a a in or in same well. -- viewer audience also we're add heights new film-by-film just similar reach show-by-show basis, the too, seeing or of also and vein, is

Michael Morris

Okay.

Okay. Great.

the might has do right different each just accounting you they can over look I can can some overview impacting in partnerships go the impacting bit. and of expand where we with like But be partnerships? different. Greg, Netflix we've give we in from wireless the course. now Let's Did the be on what There the struck a where understand year treatments. an we video talked past they're domestically particular, any impact that little discussion perhaps general, the Perhaps But plus, us traditional during are how here? about terms business? those Of in of have quarter? and providers.

Gregory Peters

Sure.

in then application connected benefits. to box. kind sort Netflix history experience, simple there's the experience from as with the us and where a into device folks with bundles Roku can nice do and able sign that operators. to the PlayStation, we And not doing simple our sort makes a a They are, us we with their adapter early their may offering the Amazon user especially seamless still the latest to the device have like perspective. accelerants of into starting access partnerships sort then may that home, the partnership they put are like set-top we back be a integration incarnation these for if a process, the that from population of characterize say, the to do the operator, TV get to operators, a integrations the each an the have include subscription as integration directly of long Xbox of that and added back Smart are at but not this capability and sign but can those Internet be just global doing part pay-TV If subscribers integrations with able that to bundle, our bundling payment TV, not same this yes, more in it and it simple up a to Fire or being So to they of that pay-TV we things may folks super an we're Sony are with Netflix acquisition, would product is who to that set-top actual incremental we as we have as box as nice from get I But mobile that pay-TV fairly directly. same tech-forward up a of

and got there. that nice to expand also around subscriber incremental the But more a add bundle I'd So we're early perspective process. channel say, more -- we're world fairly but that, our anticipate component We've our stages a component, minority to acquisition overall tons still we acquisition to partnerships, so those. globally is continue of opportunity, supplemental going is that of I

Michael Morris

Okay.

Asia. little strength Japan, and particular Let's seen content-driven Prior data Ted. seems had as particular content-driven characterize strength France board. mentioned tailwind indicated I tailwind? right we in the Curious particular in could a was if you relative today, markets particular South some more Europe; any that seeing internationally the Korea in turn The -- markets particularly that guide Germany a across that results markets of weakness. any to well, the a now, in in realize you But

Theodore Sarandos

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del We Sacred well. enormously in from from Games home this new And also have in Elite season driver the Spain a big first quarter as a was the for which new in dropping seasons and its Chicas India, popular coming the are of out season, that is region And Cable quarter. past Sell and found shows, How us Quicksand from relevant Denmark X season the global country, Rain and from very they've the to months The been traveled release X been audiences. well it of deeply Online, with in amazing and what's Germany Drugs Sweden, very,

have Germany, the So X Sweden million just I from watchers. Denmark shows XX global XX to mentioned and

some we're the world. globally from So real all over seeing regionally locally, coming relevant and content

Michael Morris

Great. the And a size the you mentioned of because like into course. to India. of we bit a dab topic It's more of market,

for of we offering? content a original, milestone, to need this can traction, So second referenced in Ted as there. of really I an amount the some where it Greg start some and other Games, season you've think bulk you also, of a but where approach are I market the in certain with bit for we on offer Sacred you markets gets guess particular, a

I in we or that other are that India? series you have projects five light. a also you So the we green shows, have content reference I or know offering in seen particularly where mentioned have

with pricing, the the about perhaps letter pricing in some and And particular? question product talk then, new the bit in you made Greg, India reference a about both in little pricing. in a Can to more you product tied

Theodore Sarandos

Yes.

year a is which would into add Indian about Before step really film into think building going be originals our country engagement five we is we is film. Growth and been we've model a seeing was viewers popular keep increases we Indian -- announced later based that new It's -- large-scale thing that incredibly first in on in ago, prequel/sequel And our the we're really steady for we that marathon. year India. with we hugely can that that this also nice popular is our think I on. pricing, get is original only a on a series is one in to steady like Baahubali, excited a The India. this to

the it long So we're seeing in haul nice and steady we're for progress.

Gregory Peters

service the able that content content access to So be increasingly that we're and engagement to as so there's to opportunity then think an that expanding can grow, offering enjoy and seeing the offering. broaden relevant people we that more

is behind lower point. improve which the In structure going one have. tier offering have that clearly be mobile lower where a $X, the a also package accessibility, a that's we the complements offering, we adding to think we market this to it's need we that price typical under So -- the motivator price pay-TV tiering existing think to but

the bigger that's content buzz that that more for more audience love Ted's season can motivator that's broaden like we that And that we can team X, So primary means the enjoy so it, that you when content, audience for move, Sacred that is when we excitement social launched and can have a Games show. that great because making. about create

those think via working there's partnerships the well. We're opportunities that. have also because improve doing on as to the partnerships we accessibility we're specific we in So market

Michael Morris

you Would And us do sort How use potential than be connected broader larger million the you Great. do XX imagine a but -- globally? parameters Or your willing would lot question. XX of of global some I given the to could historically, it? the broadband subscriber how outlook you you view you? think wouldn't see base on U.S. that. you it Reed, see be? think marketplace, broadband as opportunity And I million what to why us the member for put you've

Reed Hastings

service. the we roughly as YouTube? Well, a in is us of big wonder, than can do viewing larger we Xx hours, be and YouTube phenomenal in as fullness time,

Of course, it's free.

are produce the China, willing that million, So households that's would kind of of about television pay for? question pay people enough that million we outside U.S., can real of that benchmarks, established you is it's If to market. content at look XXX XXX the for so the one be equivalent so

each very know. is that those Now, local some content countries? large Internet do Most customer is well bases, content of of enough consumed. of you we But the have in I'm capable gets as that sure

than to take adds that. want care think adds have is what still year-by-year it larger grow. this itself. our net try year. keep will continue We'll and last and just year just every then And takes on we'll do We of grow So to the our net the pushing year adds to we be net future

Michael Morris

Great. to concept video that The games, for of I between want new here. broadly, you've platforms. you though view a Reed, your strategic competition clearly stated press couple a time of in topics streaming Netflix consumers' about cetera. broader financial talk this pretty wars sleep, number the past, and loves et and of existing

characterization holds So do fairer video you of think and Netflix is that what the future for streaming wars for a entertainment?

Reed Hastings

Yes. high off themselves very get world a never cetera. is Ted's been for between They it mean talent. is. all Amazon, world better It's level, et of Certainly, us, bid I to Disney, competitive.

a pay a the who will there's world, content battle So real it's for for not but around competition. zero-sum

they us better. do on to to multiple content the subscribers. to will HBO even think love I employees that Add gets and that be -- want subscribe people shows. are wage Netflix We most everybody spurs

that a wars that, draws like advantage is because helps the consumers something the TV. catchy TV from great linear shift of it the grow the industry. quickly competition streaming So more of people, And to attention. more it's streaming having And

Michael Morris

Great. Greg, XX you've questions. over couple technology. a the I of the approximately -- $X.X past billion spent company mean specific on spent months,

things of part maybe that of to you can of fit to X would be scalable incremental those can spend the talk help understand part into you Greg, buckets, would the can you the about that of us quantify, great. spend? of that extent perhaps And the that sort extent First, versus two types the

be a your technology get a how subscribers. question for advantage competition also is competitive really this think that I can in we spend And

anything So is separates platform feel it's, to you that consumer we the it perspective there? where point see just or we you from really there can the it, the competition from like whether Netflix enjoy

Gregory Peters

that the spend scale. a investment let is lot There's benefits majority which cost Yes. say take try fixed returns of increasing and would so say I piecewise. there, it we a at would me

on more of but get as to small to you side. streams, we efficient, delivery invest that that either that content -- We say cost, which that that higher just cost to of scale a then of we we business, so seek So side the the have on more cost cost the deliveries we as deliver is fixed elements sort There certain of I as as scales make that's how a portion our grow investment. can obviously business we we fixed right? that, grow is incremental off think that leverage would

perspective, benefits of a couple few. the a from see this to you so consumer a examples can just pick But on

So of a we clients, a we is all to encode range to think mobile pictures we efficiency. to actually digital we one say, of sort them of so can that way form into reduce gigabit-plus, creators a our our wide, a that actually produce network super And the moving environment. about reliable back variety then how see wide like the is variety them flaky the and let's world different that when this constantly devices take deliver of in conditions markets, different around in in networks a

in process that try so we the we maximizing that so have, we of that in pretty any environments time. at the And we point good connection capability that to much have are any wide that given make consumer range and encoding

realizing the engagement, more a picture that's immersiveness quality So good more content. benefit the and obviously, consumer compelling just is in experience

kind an would of be that that example on return. So fixed cost

Reed Hastings

how tests running have currently? guys you about Greg, do AV And many

Gregory Peters

And of we -- compelling have based which in that the them is say, users a that And where of that and experience, experience present around roll which we'll gives a the better a determine how a year, we'll work, test run, benchmark. theory, are users more good out And is our XXX we do out the are the not. obviously, whole actually hypothesis say, engagement. experience let's typically it was on let's universe more world. use ones then or will hypothesis better we're if our users a So correct how to largely better situations we'll these service, to a a

Michael Morris

users read was questions you the place do being and interface discovery quite particularly all with about about that didn't know I they streaming content of survey spend that's We survey, mention itself. X/X for and to but There's to watch Nielsen. A they service, the X/X get minutes, looking look they another X in. to just when a the from to invested go what watch. want Great. something user XX the to according

Does bad that's seem So where seen? thing? that making a the for on that your right perspective, from is that you've to also, thing anything good is interface, my or you. based great? question a But And

Gregory Peters

Sure. I track those mean we numbers. obviously

engage We time the we with around that have they metrics how how our own the spend members discovery process, et service, our in use cetera. much

our we don't and they're say we're doing growth in good and And job our So generally, have general a a would are think growth that. think the but typical by own sound-bite, reflect I as evidenced -- of Nielsen I subscribers. And experience. I view the on numbers sort pretty good engagement

the a titles don't which service tremendous Now, said know. number we're many before. that, haven't of to and it titles people heard having They bringing of

which better to gets the to relevant better them, audience in watching opportunity is present and which is and a a to excited them meaningful and that. right continually So improve why the we have explains get to them them how show about right we in titles to way an and

good do ideas at that, we that run road that a way. AV of a and around content service do have can think call that of we unlocks a how better tests job excited better, better figure to year and value map about a make trying better And a so deliver good how our that advantage. experience we're effective the a out that. is competitive that. healthy of a to we it, there, lot about We those do more a library are And we XXX, in we If job in

Michael Morris

Great. Great.

Okay.

global talk of some Netflix-branded view versus to that strategic across your I'm I about to. items. point And a just allocation vectors, licensed. versus I of think And investing? know get Ted, on films we well-publicized of But content-related So series, current resources versus topics talk want key local about I want couple think we content, the about can and market-focused thinking to first, I

on Just how if you of a resources from you're high sort level could your splitting a stand tell where there. you

Theodore Sarandos

charts three kind seen is and of one those branded license, quarter that We a country Academy, producing I that plays that is similarly all globally versus with like globally is incredibly Things of relevant them content programming performing Well, off show. in Umbrella the completely which almost now of world. in the global shows across we've cut globally, the is Stranger right every that important. a And last show think the original saw

do and time, travels. about once So world content at there's plenty is television, out change Casa all that's that get lot it's and is with and that from America, and every X. constantly the Spain large a global specifically travels of most from rapidly. also a La to content the audience of English becomes since of in same of beginning we've phenomenon pretty -- nothing content we're that very that very, in for very the we're you And the a like has those there's something dynamics between global a while, Papel de of almost local, that what seen content English-speaking film those But balancing seeing and

So we're constantly X. trade-offs those doing the between

the more more to think license global, be original of film. paid for has levels be would and of we're We The license continue strain. and it's over come road, toward will to continuing more under -- original we by the years that sources That the difficult think. business of is, very into more original strategy X to maybe been that international, pushing we to the ago, of off, license different drive so betting that got content to programming, that more overarching down program -- important

to also will large next We of fruits up in us coming a animation year. have the investment some serve see that early from

in So all areas we're that consumers we betting love. content our the think of

Michael Morris

And relative just platform at more is film more basis. you our is and focus, on been we've to is it certainly Can Because follow-up. important it perspective. Film from like that something incrementally relative clearly, seen talk the overall to least going the why effort for more series? say has a where, volume a about feels And there? it fair

Theodore Sarandos

say and effort than successful I would in I'd more in the the say years. -- than past last couple last in of years the more couple of effort

what about. of movies. excited well, X Murder thinking, to So what want you you'd film We're the benchmarking benchmarking our large it most movie perception When that's a I've as been an has, aren't to start we hit as ability Pay audience against against see license Mystery Friday on they really consumer night. like see

a Underground, with We they just are Mystery. QX, year in to So team I Box, those the done punching an Bird intimate and films between. the films pay-TV watch into they like zeitgeist, these And watch think they're movie. kind Murder job everything when think about that the like not not when of this want -- for very a most becoming people talkable think moments very the large-scale is indie films and want for and movie has films, in Irishman in incredible competition that out X to that

Michael Morris

Great.

Ted, to service about broadly, the really more off the and question up happy I'm ask next of course a open but it high-profile you this, big or the mentioned you the content So over so. year and coming

have in The first we the coming have question think but you addressed Disney-branded letter, a platform. when about the in content particular have is we off and I Office, the impact, we bit Friends, -- it the

So consumption And be One a how up? the there'd it just addressed love expansion person-by-person, also the of between is on viewing any this I'd does much day. bit. international amount domestic precedent. then again, Either you hear I historical of make viewing it for viewing of and to and also just a think There's the it. the dynamic. sort differences are that one members number of

content precedent have -- Family things to the how off. had come should that like has You we Guy, us What X-Files, like this. think with about that, help

Theodore Sarandos

of in Since with Starz been the years the consistent kind come Remember started with we The licenses a films that was competitive, go and they back and true. off, Netflix the through dynamic Disney at swing license comes X them day, XX them get we second streaming they This Sony used the same to is round content goes. along films. had big is on, that's expire, somewhere ago, it they time. Pay else, from on and the

create we're proposition And in get going in where price next aggregator. can than to favorite believe, So we've value that the go not you seen we much making and going be and that more show, think Fox. members anything the these on that our come through to we more Nickelodeon low investments by expectation the of attuned there And there's consumer be time. their original entire that grow output output the entire kids getting by, from We've site. place early seen to the our kind we we're the in programming and would every

Spencer Neumann

Mike, going the Ted only as studio be viewing. have been or the and over single-digit thing going be of is said, off as we've And in is percentages the time. rolls the Any if off it this but any -- in low about when to talked just, service it's letter. show, and show. look there service, I single to we our might that when for any single any are -- to the at -- content planning single-digit shows We viewed most single add you rolls a even time, it overconcentration for don't long

will what's If or X, of content, on there's from that today X run a X the you meaningful still now, second look be license that service out still on portion from years years very the X, service X today.

that's we're a if So available, then of and license And obviously, to our original Ted part strategy of focus programming as developing more continue programming. there's second to on business. going still the said, more that's just round

Michael Morris

Understood.

Before, we it international consumption of the The that? some content availability we think domestic on How talked a there. off, budget that's about consistent Or a for it dynamic phenomenon? and that specific of of this domestic that primarily versus allocation is should the high-profile of about global basis? is coming

Theodore Sarandos

a Like had added -- our primarily recently in available We territory. Big domestic way to our it now. U.S. to of it's of Bang -- just never international the by we example, It's Theory lot

a be domestic-driven international it's -- initiative that it we think I an believe, will more international of one, it's So success, and too. today --

Michael Morris

And you're spending content. of this then, money course, Okay. on

So it's not being you you like leaving have if just will. -- resources up, freed it's

Theodore Sarandos

Absolutely.

Michael Morris

further When that we piece whether there's even any available? sort it it of take be types of go if recreated. a think ample and about we talent, there's think you though that? about that for originals, have expanding money to and your product, the Or redeploy opportunity resources budget talk there and off do have availability are redeploying constraints to on content When out not thing shelf iconic one of the to of

Theodore Sarandos

opens do emergence very animation the film we becoming of all also certainly the much years of anywhere the definitely not there's and that. producers opportunity, are and we at world up being Like global ample aggressively. over that in world from the seasoned storyteller were that next think across more today, to We we think investing said, ago, in television. opportunity, we're all. investing And particularly couple I a

Michael Morris

Okay. Great.

to addition what And in more for and own don't the one I Netflix terms studio working opportunity that Now, an technology advantage as of talk on? on production. in some we about that a with there is are thing Ted better course. your be to a much the think studio side of Greg, being company Is you more investing studio, opportunities company efficient of to you're a a take media technology of capabilities,

Gregory Peters

Yes.

we back if opportunity in about producing the we the do you think across benefits, that screen we range So of the had a outcome that dollars strength the the quality the of around impact an titles we are are investment, and or either cost just to the think is of to technology benefits there in that that analytics, that discussion terms of that titles efficiency number just and making we user get the producing. fixed have

Now, I days it's here. say early would

how trying So we're we'll bets bets of those and a of see bunch play now out. sort replacing

a one trailer our on indexing index leverage so process creators tells to of is putting basically Well, of scale. That's from inventory what's like and just use And use step concrete, trailer. about provides are abstract more make this returning on-service. But are goes increasingly been story a taking more scenes process, of you assemble, for the which authentic show something that the to movie in in against what characters, happening a first in at and sort of it of has show take that the through off-service, creative to us use the have that and their and actually that way when right? the investments compelling of we the in automation, We trailer bit they a example you or that kind little result that process index making of then focus that super that make and energy typically, use attractive time this you and the that can less think compelling, a users. an someone investment do that just think and we and process that -- after who really give promote a together it material sense made, the we creative they that. all that, is We to look of they there, what's automated that show, example, is use technology so makes can kind to process, can a

Theodore Sarandos

being an just efficient is to a thing producer I marketer good distributor that an very being an is being do but P&L-changing. obviously, And efficient add would and efficient

that's those all same at working of the in So think We're way time. a things to about. X

Michael Morris

little data call. Great. I you to bit last and granular of on want the the to the reporting move that a reporting referenced

is clearly the the in One with XX list. it places U.K. top of the more seeing we're

list, means #X, talent, as So follow-up it #X? my I have with for that top or to of are, you course. XX X what forward? any can respect U.K. going we, what And the one share And #X, results questions consumers members, can then from expect

Theodore Sarandos

other viewed creators well. some they that lot think think opportunity balance get off are everyone watching in the how thing figure the one we their We tools can out best being that people they out what to trying to popularity general, present country, increasingly call we're in definitely personalization city, is want we the in still a use terms of else the town, active if against a still choices. But mostly on people to that last the to inputs Netflix, all with them helps to because testing I different much them. being their of see that what it's to of that is very I we popularity mode. see, and want to their one in testing figure make we're of the And we public application said in them much this Well, and and as -- in with transparent in think in that what's are way more better

Gregory Peters

Yes. just I'd to want comment.

factor about think of enable users. take great that the there's for then sort popularity next to on make they that, enable the can to looking sure it. less It's what as like folks way use we available those those a and popularity who want are making feel users want for we to at seem present don't that for personalization, that basically but those watch decision-making just very in popularity actually that I present. signaling and that users the signals a And

Theodore Sarandos

million million. data XX XX And are X a Things fan was creates people it my Yes. granular those want there next it. tell can the follow-on very -- on. lot them oh watched give first entire share one very season. about wow, So in was, a to Or one of want my data of XX recently some one an friends X, we God, million? that base you of of to to million. days number? when the Or that those piece you as shared Because the I of I'm those I more chew be the XX of excitement of in And why Stranger that than example to

Michael Morris

one-off is or public a consistency feel perspective So that it a member type you from perspective, should more from going on of are to in that we be a items valuable? selected data? Or expect

Theodore Sarandos

Yes.

I things like I not compared think is we'll And understand streaming be similar. increasingly are transparent be apples-to-oranges being what and with so the important condition market producers the us really we for it's data and tomorrow, it's publishing more not help doing that to that right if then, against over start only to viewing the more. time, now, it. we'd service

Michael Morris

Right. Right.

that or these partners, this films, value giving a and you and when film data content as want talent? traditional your protection if make the flip actors you this And these the the of you approaching create you the talent content well. data as way that box In side doesn't that starts incentivize to you performance. perhaps have you office perhaps protection? on is that do were maybe to there compensated large-budget little to So is the incentive a a model, of more both other films creators, want have How you to big-budget historically are

Theodore Sarandos

Yes.

particularly to their talent what box film Netflix. I very for do next model, think -- we're want big make and is in office-friendly new a it's to trying who

figure be they want with what talent big will quicker that. applied economics similar film-by-film, -- in a that negotiate to there's film in we to fact paid But what it's or fact, hit be discount had if they a it's discounts the ultimately, And to theaters. guaranteed, at pretty neutral be period, out for least The model the are over out would we there that's actor-by-actor. that, have in for applied be success, we a compensated? So they that. if how And would some

Michael Morris

open this Reed perhaps. up I'll anyone, to Great.

that at Looking very versus itself profile, as a point? building properties. of the a monetizing. partnerships Does part referenced Things, or certainly In broad. product buzz, expand for of you product lot the bit the very about on it product of high broadened rather placement might benefit at Stranger how become be being some monetizeable that the letter, put more to doing Or differently, other and a it business the

Reed Hastings

more we're Well, in people excited membership growth. Stranger today monetizing focus about is Things. it more The get

join they tell They it. Netflix. friends So about their

So history about revenue, the of entertainment almost year, and we'll world. than has subscription is grown incremental of of the add that's faster which all company any billion gross margin, $X this in

engine going when up year. growing distracted So don't get add keep what just is which not want a alternative going, engine revenue and we to do with that subscriber that billion $X keep sources you're

you touch energy all feel Things create join. so the these So the tie-ins, is opportunities, that people so Stranger focus merchandising more core points that

all that, through engine So monetizing we're monetize it's giant together, do as little it we sidecar our through rather vehicles. than just

Spencer Wang

Mike, I think we more... have one

Theodore Sarandos

a heart when jammed was years about particularly -- XXXX show ago. pitching it's character in there case in set movies creative and placement, two in product X, summer in -- of and Things -- that the out season blockbuster Remember, set big You all in Stranger talked should as think than those of about -- is partnerships more a really the the were choice you about think product with film when almost the the should show. the they

Spencer Wang

last Mike, have please. question, time we for one

Michael Morris

one a get to is we time. about business but the Usually, specific that over Great. really and margin a very do it's big like we potential this question lot, the financial Okay. picture, of

unique Netflix was ever going global I that a product, these of in margins that dual read of the think clear inherently it. a we've stream cable talked your part the a historically that the of be are things whether about. stream? hear opinion chance we Because networks, is you expand type despite average not we single Netflix for a revenue or letter is bit. hear ties a together very I'd Spencer, future basis? the Or Can revenue love model But advertising we we've what different seen to of an achieve your just to is margins revenue you it out network had lot to sub-historical Netflix which on that on a be another in press. HBO, are it -- single

Spencer Neumann

it. or it I take Reed? you, take can you mean, I

Reed Hastings

it. do to got You

Spencer Neumann

I margins yes, when think, at terms target demonstrated about talked this of that's a multiple XXX for look the When a few building -- be the XXX business roughly and business, earlier, growing years over we last I focused we're our business healthy for XX% of of year. bit forward a potential first, model in is last a already we've Reed for that members, current our to size. on a yes, very scale look, it aspiration, and to Well, go the paying few points million the basis years Okay. margin those long-term

relative before that comparables So that in that mentioned entertainment you a in so for favor. scale those really premium that is hasn't those works of margins, terms historical a seen for network our been network a with

reasonable moments a think whether of subscriber, the also continuing single a building can about a value we that served then revenue or in single that to now is continues healthy when way with then stream. great it in revenue to scale network our a And and revenue per truth stream in we're revenue global do advantaged individual winning We that with against start and occasionally create think any a best that calculus a focus And to we that content, offer margins way. those for great very proposition member a obviously and at on a price. that's experience price stream, experience dual with great we

But in are things you that some going some when favor our things look comparables, guidance. there that to those work not provide and We're specific at don't.

a So model We model scale subscription is favor. our in for is the us. think terrific

we that of over that, I'm margin can be to time. you go. a have going long certainly, but to that assume kind believe way accretion So it there's more to And again, leave going at we

Theodore Sarandos

nominations. Internet say in be the want standard the that two this end on to it. really to July could we them. we're dry. Jenji love gold the be end vision month, up to an incredible to heights. something high quickly. the fans and the I idea hope our HBO wanted final incredible to helped and a chase, that seventh Orange the up really television thrilled Emmy this at They congratulate And on wrap seventh I really season would well, Mike, XX, of of One emotional our also New incredible Kohan and drive that is we're -- in thank to year and new And season, things Black. to going show continue that for And whole -- we wraps don't And we her for record-breaking of really for

Michael Morris

Great. for that Awesome. you Ted. up, livening Thank

Reed Hastings

you, Thank Mike.

Michael Morris

Thanks.

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