Netflix (NFLX) 21 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Spencer Wang	Vice President of Finance, Corporate Development and Investor Relations
Spencer Neumann	Chief Financial Officer
Reed Hastings	Co-Founder, Chairman, President and Co-Chief Executive Officer
Gregory Peters	Chief Operating Officer and Chief Product Officer
Theodore Sarandos	Co-Chief Executive Officer and Chief Content Officer
Kannan Venkateshwar	Barclays Bank PLC

Call transcript

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Spencer Wang

Good afternoon, and welcome to the Netflix Q3 2020 Earnings Interview. I'm Spencer Wang, VP of IR and Corporate Development.

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

Our interviewer this quarter is Kannan Venkateshwar from Barclays.

As a reminder, we'll be making forward-looking statements and actual results may vary. turn you me first for let question. that, it Kannan to his With

Kannan Venkateshwar

is useful and it joining all every we help little that quarter. subscriber Could to everybody could you understand Spencer, you, last getting this numbers. thanks Thank bit Spencer, color enthusiastic cautioning expect add are for much might might can't a you down the the number could net down an But gross break to would us sequentially trends. help some – Despite from just this you with – about and just if additions start you gross your quarterly and us. [indiscernible]? us QX us Spence, from So bit contextualize sub quarter start if how come be us numbers growth, to how be about could quarter useful. a given maybe trended if subscriber of we – Broadly the give the ourselves adds you gross and QX of add

Spencer Neumann

Kannan. Thanks. Sure Yes.

in it's pull and forecast have as given be much very first additions quarter. as the So projected stepping you and really unknowns if we about factor. half expected subscriber could, tried first some QX down of When the to impact slow with all half forward, expected of we first giant subscriber QX, was of of forward we it and in best difficult precision for that back, the the the with year the there at pull To numbers, really the but level that look think we biggest sort much was perfect and year knew the would COVID. super to

but pretty of roughly noise, the base to outs, pretty land a ins So and there's number a million. very came we XXX say healthy. as metrics XXX,XXX forecast members you of on and actually are within general That's underlying close member much

we So retention year remains well acquisition ago, at than strong. very remains levels, were a better healthy

So forward of natural not down, measure effects be a multi-quarter of quarter fact you're want sight it's our of really lose that of fluctuation. single It's that slow pull of business, should but to based on in just seeing – I to some the because multi-year and about it don't kind and measured trends. kind any growth really

And year. grew so which XX year-to-date if little you we've last over through members, look grown all quarter’s million of three we than more the by at past QX, is

healthy super trends line are the topline both and business bottom underlying So growth and growth in retention healthy. and our

Spencer Wang

if respect Kannan, maybe I just on to the more subscriber could add, with trends. And contacts

don't on XX the example, Spence in longer, would've any was over-focus we come you As we said, quarter just And give if guidance XX-day an above to slightly our just really period. hours forecast.

So characterized again, just forecast noise it, think I anything than as else. really Spence more

Kannan Venkateshwar

have your high. half it. earlier Got paid regions, you price did could any expectations. like if come will net And which a first a pass bit that impact point have for some least mean, I guidance seems down at was next based year, lower? and I you had one through. of be guess, out LATAM year contextualize to year ARPU growth next in also you looks was tax as that I particularly adds the increases in organic know that on because did the And on

better. You next are year's pull forward how give it numbers? while color about might that impact us modeling thinking you the understand around us bit just could some of help So a

Reed Hastings

I'll LATAM Spence. the it year you over price Greg take question next then take to pass and the and maybe want to then

Gregory Peters

and over-rotate a at net for if to which sounds million on months, Kannan, is specifically quarter-to-quarter, sort in X again, healthy adds us the think of on we're paid I you it period. good. easy look very it's growth LATAM, And we've seeing Yes, nine what seen that

So think forward pull I to And anything over Reed. then as wouldn't the you specifically effect. more, read I over

Reed Hastings

adds doing been for year years. guidance year high million. this per We've XXs XX net four on And with

So that was records this year. all of new it kinds

is into So half pull the X pull of opposed sort where the is year, first of It's delta forward the million forward next from relatively year the X this second as million again, or very modest. half strong. that effect to

it'll a a the forward not of bit the probably little long-term. QX in in maybe little pull wash but effect was it permanent from It's or So out. less QX, a bit

the in improving think much that's at our the modeling growth particular there's of that do some hours depending many it, year-after-year, and improvement number sort seesaws in quarter, going that I in then the service. terms on we around growth So on the rate it's steady conditions but followed word-of-mouth. relatively And fundamentally Spence? curve. of that of How how underlying quality generate service

Spencer Neumann

the hit emphasize of on And I both that. the would was XXXX. XXXX you the for mostly mentioning. think In really just of half year-over-year that's because of the most versus we’re Reed of Kannan, first half letter comparison the I about it. dynamic talking that first

of by quarters had million growth first the twice If the you again, That's the of first two we than this grew members look at XXXX. half XXXX. year, more of XX in level we in

sort of base. just member we're So growing we're through again, acceleration that big our – in

we So be comparable. expect to year-over-year shouldn't half first

Kannan Venkateshwar

it. Got

Spencer Wang

temper enthusiasm, to try that Kannan. Just

Kannan Venkateshwar

fair. That's

across bit on a some experiment able engagement ways, as engagement you're can the us times one in does from countries pure the I was And able some guess, work-from-home what which to because ways services see different and levels. maybe better, help levels. engagement So almost are that at little a reopened benefit understand different guys obviously streaming you an the in this Board there of component to in lift environment, But to general.

in still tough be comp have that and opened this tailwind as could how markets may or a guys there world, that be a much become is of how up So plays have next engagement of that much seen out year? markets process in open lift structurally longer-term not versus structural could you the around any that

Reed Hastings

at look some of but effects metrics nature. ago. all in on we one-time to the have get try do And very now overly not a and because by focused like engagement, we We year churn they're are COVID those from this, large of expected would

of that like, because relevant interesting think just and So was to that temporary effect there it's it's sports, really but world. when minor there's it's finding not as a no not background the learning well, the

growing. fine back in we're with we're Now and partial sports and that's a world

YouTube Fortnite. we compete as HBO, as as So we time so for well as broadly, TikTok again, well compete against and

to limiter quality nights and often, next our oh us can the what's for want the service, really is I say, So show. how the to go you of God, watch how Netflix my many

Kannan Venkateshwar

guess year And XXX one end. shooting the productions of I Ted, comments of in from goal by release the the it’s whether

Theodore Sarandos

Yes.

Kannan Venkateshwar

what there's your does versus tells how more to been? really strong, a probably content the compare that have plans initial Because flow you quarter me cash which So happening. what's free were may planning lot that this number is initially

could around you the cadence. just if give some us color So

Theodore Sarandos

since over. we've expect another year over COVID out we productions pointed before we is shutdowns, on Like XXX the production and completed Yes. the XX

had the the in all most business of back on including ramp operational of planned. back that materially, So and go places America that production may nearly puts in North up are a slower. Those But fully productions world. most than in have parts us little we to come world, we slower in

expect had a hit expect I So we've the really to amazed to more forecast adaptivity And But work happen little we the that the that We've of step and have planned way, to everything in has a – such And every physical at the incredible for world been to XXXX, protocols shutdowns plate art exceptions shutdown. it parts looking that that we steady and than these we'll maybe the so last got And all think of in for were where now, weighted say XXXX, a new and near we coming should the couple our minor I'd had right production year. of that different with I that we get really done place thing how think up I and by so we've in that then you going a it the right is think we production. we few slate, some to back XXXX planned now safely reopen. COVID state we've in can But in the back been we're in day. we're of been and an through XXXX out. communities production safely. quickly

Kannan Venkateshwar

algorithm of on around your this So that momentum? that timeframe? on be Canada respect Greg, the where this you think want forward goal given Got how think release when we decision, going increases was we is the and and more slate from a a of increase about Or perspective, I Is there it. price starting should given are of recently more based ARPUs price productions to some now? with kind an the about based you cadence over strategic price to in increase think Australia. subscriber content And

Gregory Peters

Extraction, increasing to genres, coming and but the out judiciously and like amazing We've job Klaus. or magic is and that month smartly amazing Guard invest new are us like give and and take is as is, as movies we Moon The more as what and the that we No Over and really animation our stories. can think every money algorithm, Old members creating model our and titles an our got responsibility core we that across range Willoughbys have

And and every do day efficiency that about delivering basically pretty that experiences. we better more of that make we're so how component basically And for just we to our better much well, that if investing be and members product and value better. every effectiveness seek

back going. to deliver those to a pay more we'll more value value said we as bit at go before, that independently. country occasionally look cycle our investment and members keep And will little of ask and we and every creation members to We virtuous

of right, grow. if we we to really do and that particular then them what pay instead here we delivering think a it's look popular more we slate metrics, want how we assessing, is more we're that's we And continue much language we're we and like? to and very time our hold that value churn, we to the are basically the remain back note those okay, important just have what incredible right the improve fundamental engagement whole delivered, keep country think to like, looking that close incredible one the to new And service – originals we believe algorithm, say, that members? – looking what to heart do an do think local So so, our so what's and as we do value, an many that and like, just we can assessment, are go as coming other titles just North this an in we Star our process ask again to I thing value entertainment cycle And going. bit the in

Kannan Venkateshwar

normal you the mentioned quarters? increases that And churn go now on, that some of the just now expand levels few different we so of of a in is you're and when engagement for and next metrics analyze markets more and over pricing to you room forward as in a I couple recent terms price the mean, markets, environment there in

Gregory Peters

Yes.

ample we I think, but continue and the you speculate model great a just of feel to from to specific number do like sort that or basic on Ted value. we at we described, more. that productions members occasionally changes, go job those the value if that heard there's original we've a that deliver back investing we're more countries And we is I do comment opportunity won't if we delivered of these extra even opportunity that number. ask in little and pay that bit a then under conditions for then doing feel to increasing to like there And where that

Kannan Venkateshwar

this. been And recently, have last free U.S., away decision you've of I it. the because one U.S. to the the I the Got from you understand in now already U.S.? the you've markets in done this Is the and is in walk with mean, the also where additions of past, done help most the I us tier mean, U.S. people in the away new free subscribers tier and who could think

Gregory Peters

well. what's things to we promotion we're most And and improve. testing understand best, Like as our do working and we that with marketing what's do Yes. trying we that constantly assessing how and tactics working, do,

and innovate the we new Netflix up countries to of and introduce new come States. including seek to One ways the Netflix ways also different can on the many most we to tactics, those to as United that around world, that many, members. countries, in But in performance, with effective to use and what that note, we've based actual shifted you introduce are testing people

people but so idea that giving And be for for think an Netflix could a we'll how about of and bunch up. free event, weekend expose new we're have, goes, the the we a access really see sign excited bunch create of to in the a service stories we it folks that a way to to country service, amazing works, get to everyone and hopefully those an great a how that

we're going that just to kind how an space. see the So of do of and in in that's that this innovation to India we goes. try we'll example And that seek

Kannan Venkateshwar

interesting. That's

a in that well butter general which licensed, use obviously as may product which to you're your licensed, I in an content your productions, to even more into some these theater a a event, not owned services by that opportunity be they're your So that as guess explore this or either Pluto. content, are term dovetails as for your with cable with starting mainstream around I Ted, as of that that base, a if to like is of as bigger originals productive bigger licensed question shows can else. not the free and existing your Netflix is been I some networks something with But legacy somebody have willing as worth for had way? or anymore the stream is opportunity a And

Theodore Sarandos

Yes.

trying different and in to a people ways. get new ways including there service everyone's content the I for always at that of about, sample looking the think out talking we're here different

people for to our on original think licensing keep it's I I to us content helpful our content other – mostly, Netflix. think

that was So it meaningfully, seen not the when around show see past Univision the like relatively to to was or on sample pretty we small in And show lifts own way people the We that licensed if grow proposition awareness network other a when people and it platform that experimented did don't interest and we've to outlet but on it our understand but something the things Narcos, it'll Gaumont they in ability that past with a value deal to try the show. – relative Netflix. to of to other necessarily be have seen with smaller a to to get how try and in the we've actually Narcos, the it's we Netflix. interesting

Kannan Venkateshwar

changes – like low been marketing recently in but other Got I to from it. there And at churn out churn there leadership content perspective, voluntary last with this is Reed but your the of year, well, the of And bunch as Ted compared for guess, have course, and been voluntary management and over have the I you been Spence, is side. course of really organizations. starting in a there've your recently marketing – pointed changes the you think book, on Netflix in

that a making. it some deliberate more choices So of in these you're lot feels

you changes what where are and through now? these and think you more organizationally help these done changes or us So less drove are could right

Theodore Sarandos

of Bela global one like to like I team organization. excited we're more to to of about, team business unscripted with times they local three I are and run grow restructured – original incredible [Scratch] years. the changes a has our start have slate and which was tapped the have to really that two to talk going one we are Well, team, can brought time three areas Bajaria, over developed Netflix is moved you I team the this over to been in our to unscripted in that more and on the major content successful. that that be or usually language to group, These four film long next came for our animation our team that today, And outlet from who's five

and that the on Universal series She suited well orchestrated joined us of Master bring great English as [indiscernible] was also Television, was Kimmy original I President and first a business. in Netflix us that to she delivered Witcher. end scripted she you season So language really she Unbreakable And None, where thought to and take of that that and she Schmidt from brought on organization.

to Bela that running some some that, at So after is changes as group. think that whenever And going I put phenomenal there's there's new change be top, then you effects downstream the well.

Reed Hastings

broaden to our on talent we take your Kannan And challenges. trying bigger to we're question, yes, always broader as

on a about Spencer, grown roles, normal model, no product they IR but took have ago. And a to into one of four the Spence, and about CFO for year Greg three years keep ago; all it's a So eight about or half job free. head gets those years ago;

earn of we which You got intensely love all that and part challenging it to it. every year, is

Kannan Venkateshwar

next squirm but last month Got in least at something essentially the said question you a in hadn't bit, it. for And may change. was mentioned CFO, that an realized year. it Spence, you think a make keeper my therefore, a little and an you was interview, and And Reed was I was company move, you I desk CFO deliberate which last time change it entertainment needed

deliberately about comment? think decade a or the versus a like, seems that change to an that So it the right to more about looks how maybe the seek entertainment to phase is is that company company like level in what shift attuned what CFO about ago, you a think Netflix make to interpret at today way

Reed Hastings

offered move CFO. then dream we we'd and think And that. as LA CFO, he so that, and is many the with years. wanted to human into stay and been well great Neumann, generalist and Wells for former demurred, him to we had the extraordinary being our entertainment And and done Yes, an for Spence moving a lean CFO, I super to CFO Netflix. like company tech an really David mean, so recruit a and I Who's chance broadly. being felt fortunate to He to been he towards

and So not it be could fortunate. so super better

Kannan Venkateshwar

That's great.

Spencer Neumann

test was to do keeper I thought going here. I right

Theodore Sarandos

Netflix… I would been have in

Kannan Venkateshwar

point. last the subs things think theory of the spoken year million the Is content around one way Could guess, you overtime? the of honest. it's big, content Things. SKU last through that attributed overall that a become when singular QX me is surprised year when on of I content the there mean, impact. think And be I And over help of talk most opposite, some into effect? one content has would right. SKU or us like of slate you have And of that the I me have much seems in XXX is these about about started the have why consumption? of of you seemingly which of having comments? a a parts this course when just growth, the last and too year, the a content more to to versus consumption, increasingly big but you starting like big should when that show, smaller And expected so comps was in bigger mess. now was pieces is at slate the bigger we reasons is have less I reading And Stranger Or have impact

Reed Hastings

of Kannan. It's little just a math, bit

because small used a growth. of and there's to content X% let's margin the of a be part X% variation So on say the

and that be notice it didn't then might now you growth. half if subscriber X% the So annual of much really

noticed changed. And So that particularly it's think more. much I don't you

Remember bit and variation if case, but the you on theatrical more year, is up our up that in wobble it a sensitive direction. a year, In that there's up are revenue. little little is have business, again up, a in you of have the and We revenue going growth. the to down

it's So of sensitive. Crown are we which think I hits coming kind that's returning you what's got think The and big coming of happening. particularly have lots say, series, Like I don't up. more up we've and

So there's big of coming. a lot things

Kannan Venkateshwar

it. Got

Things the I still to to normalized fair Witcher impact The guess an basis, a when every down, absolute has say, The overall a or And it growth that have or like impact. shows on year an so that of coming Stranger basis by Crown coming on, these goes show keeps you but it's on

is way of that read So some basically comments? these the to

Reed Hastings

steady, numbers, year is Correct. call the rate's fraction XX that. let's And been base because on a our bigger that a million of growth percentage the

more. it feel you So

picture remember Back it's thing better to you year standpoint [indiscernible] variations from growth under has So steady but how a word-of-mouth, show diffusion to you year. big after of then that. like growth been as have have after go. year a practical when is stunning bigger in growth, And a a a it's the then big underlying a investors, and way the you deal, capture and is of the COVID models little Netflix more this that shadow just

surface So it diffused and a as just you're then think big general happening. are like of that variations little model seeing

Kannan Venkateshwar

Got number significantly it. Netflix titles, I of decade streaming that than total actually And is when then a the what in terms than if of the have ago. think right, this on more started had today total Netflix have you you lower of I number shows

of much I don't is that optimum know is that's mean, broader if determine deliberate too the First that I that's do true, question? How much? guess true. then, you how is volume? I and if all,

Theodore Sarandos

what titles you because what well focus it that don't out isn't could days today programming. doesn't that figure war remember stream. And them. were that and Remember that meaningful the we the there's streaming less worked don't we of was about the early everyone And licensing the out of had, many a people on deliberate versus much much the was in was that turns that – but marketing we content true just more the of in is how we're It trying where to earlier Netflix, title just in see volume – watch count. were days really bulk lot we to

of audiences a aggregate and of for and business impact forward our on that done a really we can lot have value big move lot concentrated add So and is titles members. what the the

ago title count, and you don't the streaming, XX an So it started we films them. entire of we nobody years from focus to than was really correct, first it's any significantly lower library where we license more used say, watched but are of XXX somebody when on I'd

these So the without. can't a but for you it's titles, titles really live are not chase how many

Kannan Venkateshwar

Got Ted it. year. are to put I already recent wrong, of goal guess, feature a together. was that top you not animated one up think you five in And your indicated than if guys interviews, the studios to And I'm I six scale the films doing more movies Hollywood

So originals that build think of maintain off? scale is scale a mean, versus content, between on about trade quality? when building balance do you I quality kind how to that you

Theodore Sarandos

that working we've I'll tell and doing. thing the you trying on and been

that of building you of about used produced more films extremely honored the single had in kind many the how many more Feature is Animated the that more keeps industry in the animators animation more attracts and producing the attracting today of how Award Animated and the quality. Best quality BAFTA last year. were the relative to most Best nominations doing to were than If And everybody and Academy is slate, series best for a from for original released That television of the our Annie Awards, else we that we celebration kind popular. of in which Emmy world. season television XXX of think which we're history work we won six quality. year, for And the pretty Also quality around two Award Emmy’s. up today year slate. how we're was nominated Klaus Both popular. Feature. for feature our we Last We're

in with slate, of they've our some been Netflix. Nee Woo like and animation Williams, to Gutierrez, dying Chris the that make into making world, Jorge them XXXX, XXXX greatest Alex and deep animators we're Twomey, So making in Chris XXXX, working the projects Nora all the

features So Netflix. for it. quality there's appetite there's think trade-off we're at quantity, big excited and a big We no appetite for for really about a that that and animated film we think

Kannan Venkateshwar

think Got obviously with And different been last purchases. if a in-app and the Play quarter on in this terms, has switch you little could been we Roku it. could touched for it slightly on between changes there've discussion and I topic, if so you this also Greg, going dispute a longer broader Google term the And especially near-term to do recently cope the on, issues be us store And you But help payment the a plan of move, the forward with bigger impact with expect just do mean, becoming pricing issues, to Is how of past? how it some deal these deal in bigger to the Google a used about I bit. HBO, aggregators? not to so on but than Peacock, headlines front?

Gregory Peters

Sure.

been solid iOS the payment through I partnership, those we've on We're – some won't store On that, for app not not the any channel. new and store position growth devices signing mobile discovery. the our payment dependent dependent I method. using the on of the we've think Google members can on for app on that quite browser, steady Play through own store specifically, We're for seen on comment time details where up you given but you look our at

So been effective quite it's regardless.

to then that's coming And are to a new think Internet into note point, think your when mean, relevant of that you I of and dynamic. shifting sort in. the players bunch look, about to world I TV, is streaming

the value And time owners manufacturers devices focused between adding on have those people those to that us investing for We're over we for in those device really, sort world change decade. experiences and and them it amazing their stories some positive devices we we've purchase device and dynamics to aggregators because see this the business those great devices. to services and tell manufacturers this in around that to a making devices we're think making I these are a just in really and great the for of a – any keep incredible on relationships But out. new don't quite it. with don't they And being invested for Netflix model. there, new in significant platform we for more consumers been we the because positive making I experience get access have relationships use with worked to because streaming so going and And and I

We take have manufacturers deliver great those buy experiences great but who who device devices. just that on for technology whole to the teams and consumers it our nothing, make our to do basically

Kannan Venkateshwar

all of last marketing, a Netflix Is viewing I Netflix get other I much on at data your comes that it. that don’t where on versus instead Netflix know XX% of terms first quoted you of itself, is spending know recommendations? mentioned recommendations actually number had folklore, that the Got but put tool all, from, came think quarter, And some I you of content is to page things but and sources you your going consumption use the the great over forward. be promotional don't the promotional was I of could would how in by true the driven potentially? place. up if context think screen this like the impact from around scale as And the it's Greg, one of and the of itself

Gregory Peters

we that significant driven very majority a the Yes, by present. recommendations is

our people, working millions of to show our And something the interfaces, for so up we're I great members is with to millions model our to day of point, think every watch. your that that applications, looking

– that sort they wealth have a of watch, sort want you them, they're again opportunity that how think when titles how And good interest do to positive of if and in do that or going But then done good night, the compelling we and of like, that and and members titles to available to through that that you present process. entertained? fulfilled. they satisfying keep of each a in they're next about way they're opportunity And means recommendations, what a night, those do they're at the giving have And to to really about be job sort to job thinking happy, we fulfill fulfill the moment, us went the If those select, something fulfill that tremendous demand. previous of turn to so want a we've just we an that options are through. the again feedback we Reed

we're really in invested deeply And so that.

and people of to be making their every decades better every work we're We professional entire who exciting. sort have super come, existence aspect hundreds of and which up doing for and know that to that of better devote to is wake We going day to better.

Kannan Venkateshwar

means Reed, I Marketing performance the on process, measure time. mentioned in evolve guess book, this I Chief that this an at think changes And also with you of in also your And interaction internally your the point. over as you KPIs you that Officer some

where she XXXX number signups used think retention. was the instead guys back against I team these a with ultimately KPIs pushed measuring time performance went internally. over being of shifted in customer I retention, of of seem but have for marketing you this think to And

how of a business understand content you us retention? you for do the So this the the Is part focus doing could Has engagement such to from bigger even to help measure comfortable how Or origination performance think as extent How this? team? features you for you performance example? broadly? that you're shifted about measure

Reed Hastings

no more there there please the a least last likely gimmicks, if fundamentally a it's night, five to come are no techniques, night. realized you we've about member are And Wednesday at we on back on Thursday are For satisfaction. you years,

member us fundamental And for many viewing less with those we but days, Netflix, aspects. the of much you to look again, to it it's the choose wanted but spend how choose which choose choose all everybody for downstream do for can your So retention, you if or or all you title best repeat got not of because particular just how a pay them very can joy, signups time you metric, any can at title you to, given distorting. you're going is

of really on to seem so our that and the And fundamentals pleasing we're focused members what does and that's grow. we how please

a all most activations fun talk in], because augment [you Now titles like with And these see conversation you titles that want every when we the to be this then locks something that never talked about like doing our statues, Holmes London we're and in about. want interplay Enola of because a Enola we it's Holmes, like we nation in of the with you to lot we watch a Ted it we use works. great But top this. satisfaction lot each guests And about member on fundamentally spend our and in product how do is country to How on area thought do content great a content. much each fundamentally spin decisions. that by is driven across budgeting how piece that in really is you've that

you. So let me over turn to it

Theodore Sarandos

advertising to opening a get I XXX% in XX, studio not XX office the to and Greg first the would $X said, in of of million, unusual weekend. spend one to budget We I going folks XX watch our film marketing what our for And for out think impact. XX, box like it's in production paid getting of of that million which in billion – a Yes, you. turning a do the Hollywood sometimes to a is of movies those XX I films. box people agree mean, back yet with a million, things cultural to its advertisers out XXX terms for office of fraction terms in days, we're

So heavy that, promise by presentations – Netflix the talk and when guys] conversation, one. what the to talked I for about earlier. people enormous on into [site is on scale watching value of being of a get watching the it I at is things handled get they're to and those of that our back we're the recommendation their the and the you do the that that great have come watching, about into looking engine, the it the first you sure look the next get page on the And and lifting that's the recommendation trying make primarily marketing Netflix recommendation in to experience and think

a to base activate is events about fan really a do could the movie, we're show, when every day. that building show, sort they're about about a that thing a they're of and talking talking Netflix or TV we so and talking talking to what really toward Netflix fan So TV excite base clever create a when the marketing to and that about movie they're

Kannan Venkateshwar

guess, of between movie a significantly mean, and last a the lot there's than opportunity terms Got in in the it. slow in content now of And right already. there's was releases smaller Ted, of itself, theatrical the the window year next there, what reopenings probably the and content year given it shutdown I is I pipeline lot

probably another gets potentially this to of pushed somebody movies out else. quarter, a come will if you So lot or Amazon or

into you pipeline So in go thinking terms about that that of of as a acquisition? how content big opportunity Is next year? content are you

Theodore Sarandos

theaters week already we're at the year of films is and be Enola at Reed one short-term as theatrical, us, coming gone we that the things. bought reopened this a past going them opportunistic. pipeline studios world, but of release how nice will up all we'll would've a we be short-term to similar pretty it and we They released under with that But to this and that In capacity. opportunity The remember, some mentioned rest Japan, said I XXXX. great. and the from next conditions, out It's a fairly films. out for refigure Holmes have there of in be looking table, turned XXX% to you But then Trial just healthy at they're picked a where have which X parts Paramount look Chicago and of is different very of the the would that hit we

think I they on are make to and with their going new are plans have the of XXXX looking around that films. at their impact going So they XXXX and world XXXX and they're to do they're films the sitting to how long if what

So short We'll certainly think pick some be in not there'll the up all, be some, opportunities. but do I we'll mix.

Kannan Venkateshwar

also lot movies side seen models open some by opportunities, experimentation is well on releasing more it. I of as [indiscernible] there's likes Got way But the of this streaming. in these mean, of a potentially up? a of for of of their new consumers a newer light And this directly well. terms business some to also music, as lot on Disney to in the been we've as

some avenues well? for monetization COVID up of during your from these perspective open do as also So opportunities new potentially

Theodore Sarandos

go in I'm do Look, of some sometimes. out I that dimensions. happening to hope a natural capacities. I a at going of been and don't think accelerated consumers with what's are back said, audience people it. kind And with been films to crave people we've social may reopen the and so. happening migration desire see has growing to to think that doing been of fan back and think Like the think was out and going But are home doubt a at this to I see myself an I theaters. kind already come I point theaters was I there to going that that's satisfying interaction some some go film it I in have

So already it's that I accelerated that be wouldn't look change an radical being at works. just change. have this – I the it'd was probably been think in may

Spencer Wang

We more one have for time question, Kannan.

Kannan Venkateshwar

Got it.

just obviously, production, you just this in broadly, to cash mandatory content I in the this of thinking about than to you're the a cash when lot use So more where getting those but maybe flow to year. are How is guess, potentially to lumpiness cash the kind given get once about you use flow four-year cash now that have to, get flow we be three-year, cadence about free you've [indiscernible], billion of have Spence, capital think What's point? as And free of I content. that structure of of you a your $X course point question free cash positive? breakeven mean, over done closer flow the there's a you going

Spencer Neumann

from but But reduction a where say peak just to at in our of as cash than billion point probably breakeven, free we profiles being improving, flow cash sheet, cash obviously yet $X sustainably free to not now, of can not bit you exciting guided improved positive short-term we least cash of free already, balance that thanks. an forward a story with are – Well, flow you we probably we as then flow least from content sure. in cash The negative the to ready year free But us flow could see cash on right flow given a but self without call rapidly We're markets. say, to needing vastly billion we're flow look this on finance free Yes, free still improving based at for or negative XXXX. XXXX negative, cash our $X so that, spend. our the also in guidance obviously the and profitability, is couple sustainably flow away, was positive. free pretty at the can to access cash the closing safely capital more years we're growth one

to that too we're and you we're call other we going to little a approach that will long-term be going maximize believe an the than approach our it's remain our we're disciplined, long-term shareholders. that to take value going trust – say So probably early can to to capital allocation for

So more to come on that front.

Kannan Venkateshwar

it. Got hopefully, much. And the time Thank next we'll today. for you all chat again quarter. so Thanks

Reed Hastings

cash content flow next pictures that positive. XXX $XX an time all you be should million get humming. members record million amazing marketing we and big We've of to there, over referred year we together, completing free The engine time a technology got

So to really looking forward next year.

Kannan Venkateshwar

Thank much, you so Reed.

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