Netflix, Inc.

Hello. Good afternoon and welcome to the Netflix Q3 2021 Earnings Interview. I'm Spencer Wong, VP of IR and Corporate Development. Joining me today are Co-CEO Reed Hastings, Co-CEO and Chief Content Officer Ted Sarandos, COO and Product Officer Greg Peters, and CFO Spence Newman. Our interviewer this quarter is Nidhi Gupta from Fidelity. As a reminder, we'll be making board-looking statements and actual results may vary. Nidhi, you now have the green light to ask your first question.

Thank you, Spencer. Great to be with you all again. First off, I want to say congratulations on all your success in the quarter. 44 Emmy wins, the amazing viewership of Squid Game, my children will never play red light, green light again, and your acquisition of Night School Studio and the announced acquisition of the Roald Dahl story company. So we have a lot to talk about this quarter. But first I want to start with subs, which came in better than expected. So just help us kind of dissect the outperformance there.

Sure. I can take that one, Nidhi. So great to see you. And thanks for the kind words in the opening. In terms of what we saw this quarter for Q3, I guess it really boils down to what we saw as sort of what we expected. We talked about in the last call that we hope that we were getting towards that kind of tail end of the COVID choppiness of the pull forward of sub growth into 2020 and those production delays that we're working through as well. And that's kind of what we're seeing. So throughout the quarter, the business remained healthy as it had been throughout the year with churn at low levels down prior to the comparable periods, both in 2020 and two years ago pre COVID in 2019. So retention was very healthy and viewing was up. Viewing per member may be slightly down compared to the very COVID distorted 2020 Q3, but up healthy compared to 2019 comparable period. And then what we saw as the quarter continued into September, we saw acceleration in our growth, which is what we had been hoping for and expecting, but it was good to see as we got into the strength of our schedule. We had a couple big hits. As you know, you mentioned one with squid game, La Casa de Papel, the first part of season five, but a lot of variety and quality programming throughout the quarter with things like never have I ever, never have I ever, and he's all that and chestnut man and Copenhagen at the end of the quarter. So just that's basically the way the way it played out is as we got into the strength of the schedule on top of already kind of healthy business fundamentals, we saw a bit of an uptick in growth.

Thank you for that. And can you talk a little bit about the weakness that you saw in Latin America? What what drove that and how is that making you think about the longer term prospects there?

Sure, I can take that one as well. Another should jump jump in for Latin America. We saw that growth was a little bit soft in the quarter. It was primarily, you know, we took some price increases in Brazil in Q3. And as you know, not not unexpected that, you know, tends to when we do those things, slow down growth a little bit for the short term. The good news is we only take pricing like that, as Greg speaks to a lot when we believe we're increasing the value to our members and we believe we've done that. So there's it's a sort of a short term slowdown in growth, but good for our business. And we're we're already continuing to grow through it. But it did slow us down a little bit in Latin American Q3. And we also talked about in the letter for Latin America and you can both of those markets are a bit more mature, more tenured, more penetrated than some of our other markets. So we would expect growth to be just a little bit harder to work for, but still a lot of runway for growth in both of those regions.

And I'd only add that just like everywhere else in the world, we have to make the shows and films that people in Latin America love. And that's what's going to continue to fuel our growth. In Q4, by the way, for example, we have the new season of Sinfonia coming up, which is our largest original series from Brazil. So it really and we think that these big high profile shows and Luz Miguel in Mexico, new season coming up, will continue to to reignite growth in that area as well.

Great. And as you know, we look ahead to Q4, you have an extensive content slate coming. What's sort of the magnitude of impact you would expect to see on gross ads and churn just based on history? Or, you know, is the huge number of additions that you pulled into the service in 2020 making that relationship less clear, perhaps?

Well, we don't really break down the differential between the two other than to say that the what we've sort of been seeing throughout the year, we would expect to continue in terms of that healthy retention. And then this kind of acceleration as we get past those initial market reopenings with COVID, past that COVID pulled forward and into the strength of our slate, as I say, across the board from big returning English language series like The Witcher and Cobra Kai, and even unscripted like Tiger King and then non English language series like, like, you know, La Casa, we talked about already, we got the final, the final final in late in the quarter. And then we've got big, big films like Red Notice and Harder They Fall. So there's just a lot coming. So going into that strength of our slate plus stronger seasonal period that's kind of playing into it with underlying healthy retention.

What Spencer is saying fundamentally is we're in uncharted territory, Niddy. We have so much content coming in Q4 like we've never had. So we'll have to feel our way through and it rolls into a great next year also.

That's good. In one quarter to have this many high profile films and the returning seasons are our most popular shows. And we're in new territory of normalized post COVID or pre COVID or in COVID, all those different ways that would kind of, that impact the metrics and the performance. We're all looking at how that's going to impact. But it's, we certainly think it's positive.

Great. And sorry, Spencer, were you going to say something? No,

I was just going to say that as you see in the guide. So the guide is at eight and a half million and the pin that adds is essentially in line with the past few years, even pre COVID, where we're kind of in that eight to 8.8 millionish range. Right.

Right. And you mentioned 2022, you know, as the world starts to normalize next year, you know, we'll see what that looks like. But how do you feel about your ability to sort of get back to that, you know, 27, 28 million annual sub addition level. And, you know, I hesitate to even ask a question because, you know, we're sort of anchoring to this 27 million, which it would be helpful to understand actually why it fell into that consistent range over the last few years. And, you know, are we wrong to sort of anchor on that recent history to begin with?

Do you want me to take it?

I can take it, Spencer. You know, the big picture is no one's really sure, Nidhi. You know, you can't come off the craziness of COVID and be confident of the next two years. So we're going to push really hard. If we think about the big picture, you know, we're at 200 and something million. That's pretty small compared to PTV households, ex-China. So just matching the PTV households plenty of room for growth. Streaming is developing, you know, at a great pace, all kinds of devices and competitors helping that market growing. You know, competition, obviously that's a factor. But the amount of scale of content and entertainment that we have and the way we're set up, you know, it's like squid games incredible. But it's not that Ted commissioned it. The most incredible part is it's the system that Ted's built with highly distributed, you know, when it was one of our leaders in Korea two years ago that commissioned it. And so there's got to be other amazing ones like that that even Ted or I or any of us don't even yet know about that are digesting in the Netflix content engine. So we certainly hope so, but, you know, there's no real certainty. I wouldn't want to give it like management credibility of that. We want it and we're going to push hard into it. But I think we're all wrestling with the post-COVID how do things come back together? Spence, anything you want to add on that?

No, I mean, you really hit it. I mean, at the end of the day, it's about, as Ree talked about, we're just trying to continually improve our service around content and the ability to discover that content with our choosing and conversation every day and getting better every day. And if we can do that and be that first choice in entertainment, then ultimately that's what's driving that secular growth from linear to streaming entertainment. And over long trends, it tends to be, at least to date, fairly predictable, just as we saw through Q3. And if we deliver our guidance through Q4 over a trailing 24-month period, that's about 55 million paid ad ads or about 27 and a half million on average, which is kind of where we've been the last few years. But to Reed's point, we can't predict with certainty, but those secular growth trends are pretty strong so long as we continue to improve our service.

Great. Well, Ted, turning it over to you, you know, Squid Game is top of mind for a lot of folks, clearly for Reed and Spencer as well. Your biggest series launch ever, 142 million viewers in the first few weeks, as you said in the letter. You know, many of those viewers outside of its home market, South Korea, which makes it even more impressive. Can you talk to us about how this happened? What made the show so successful around the world?

Well, I think it's really, it goes into this kind of storied history of content creation. Squid Game, as Reed pointed out, got picked up a couple of years ago from the Korea team, who did recognize it to be one of what they thought would be their biggest title this year. So good that they did. But I can't tell you that we had the same eyeball on it to tell you that it was going to be the biggest title in our history around the world. And to your point, the Korean outside of Korea has been phenomenal and everywhere, everywhere we operate. So if you look at these numbers, they are, the internal viewing looks a lot like a local language show in any country you look at it. It was enormously successful. And that's, you know, 10 years trying to sell the show, our team recognized something that nobody else did, and created an environment for that creator to make a great show. So, you know, how something can go viral is really hard to predict. But it's super powerful when it happens. And the show has to deliver the goods to be able to deliver that much viewing and to have people talk about it in such shorthand that you can spoof it on Saturday Night Live because it's so in the zeitgeist. I already said it for you. And it happens. So we feel it when it's happening. And you know, when it's happening, it's a little hard to predict sometimes. Sometimes you think you've got lightning in a bottle and you're wrong. And sometimes you think you've got a great Korean show that turns out to be lightning in a bottle for the world. But remember, it's that came from Korea, which is super phenomenal. But we've had successes not on that scale, but like that with La Casa de Papel from Spain with Lupin from France, with the film Blood Red Sky from Germany, from sex education in the UK, where the stories of the world can increasingly come from anywhere in the world. And this is a thing that we really work on day in and day out. And the teams that are doing that around the world, the thing that they're mostly focused on is a great, great windfall when these things happen. But they're mostly focused on a bunch of shows you never heard of, but that are hugely, hugely impactful in territory. Cinco de Neon Brazil, Chestnut Man right now in Denmark for us is an enormous success. Coming up in the quarter, a spin-off version of Call My Agent from India, the Italian film The Hand of God, New Season with Luis Miguel. So these are all shows that are meant to be hugely impactful and loved in territory. And if they really catch on, they travel a lot. But they're really focused on making a difference. And around the world, non-English content viewing has grown three times since we started in 2008, making content. So I started thinking about the impact of that and the impact of that growth and the idea that we could put new storytellers into the world from everywhere in the world, and they will play the way TV and film is made in the future.

Yeah, no, I mean, my guess would be you're reaching close to a billion TV fans globally with your content. And that can obviously generate a lot of virality for a great piece of content. As you said, the content has to deliver. What does a success like Squid Game and all of the other international hits that you've talked about, what does that mean for your ability to acquire the best stories going forward, especially in international markets where there aren't as many global buyers of content?

Yeah, look, the best content is always been competitive. And ever since we got into this, we've been navigating these waters of really competitive spaces to find the content. The one thing we can promise international creators is the possibility of having a Squid Game experience, where the star of your show in Korea can go from 400,000 social media followers to 15 million in five days. It's that kind of thing that happens on this, that can happen on Netflix because we have this really engaged fan base, and we have this UI that recognizes and helps them figure out how to find the show they're going to love, even if they never watch the show from Korea. I think it's an amazing proof point of the content, but it's also an amazing proof point of the delivery system that helps people find content.

Right. I mean, you're nine years into your original content strategy, Ted. You've had a steady stream of hit shows. You have a high share of the top IMDB shows at any given time. You seem to have at least one show a year that everyone is talking about. Can you talk about why we haven't seen that consistency of success in original films yet? Is there anything inherently different about getting a hit film versus a hit show? If there are, how can you address those differences over time?

Well, remember, we're a few years behind in the film business, the way we, from our TV business, but we only started making meaningful budget original film about three years ago. In that time, we've had five Oscar-nominated best pictures and some big, big films in terms of viewing. You see that in the letter where we published some of those numbers. I think it's interesting that that's going to continue to grow. I don't have any doubt that we're going to see that kind of excitement in the culture around our movies as we have our TV show over time. It's interesting that people love to talk about their favorite TV show in a different way than they do movies. I think maybe it just feels a little bit louder, but as you see in those numbers, we're getting big viewing on our original films. Some of our biggest bets yet are coming in the fourth quarter of this year and the first half of next year.

Great. Switching gears to engagement for a second, you've been doing a lot more with mobile in recent years. You've obviously got the mobile-only plans. You're launching mobile games now. You've launched mobile trailers a while ago. Fast laughs recently. Is it a strategic priority at the company to grow mobile engagement specifically? Well,

I think the strategic priority is to meet our members where they're at. The vast majority of our members engage with us on a mobile device. We want to make sure that when they're at that moment, and sometimes that's when they're out and about, that they have the opportunity to get a great Netflix experience with their mobile phone. That could be trailers, fast laughs, something because they were watching it and they're home when they left and they had to go out. Then we get to have an uninterrupted experience there. We definitely want to target those devices and do the sort of best we can in terms of giving our members great experiences on those devices as well.

You mentioned mobile games. Great to see you launch some games in the quarter. Greg, maybe talk to us a little bit about what you've learned from the experience of both producing and launching those games, both the mobile games in Poland, Italy, and Spain, as well as the Oculus game.

Yeah, I would say we're incredibly early in this process. Mostly what we've done to date is about essentially making sure that all of our systems are working as we expect. It's really about proving to ourselves that we can do the delivery in the way that we want. We're building all the systems around it. The same things that's made our service very powerful for recommending movies and TV shows, what Ted mentioned, connecting great content creators into this audience, that's the capability that we need to build on the game side as well now. We're really just sort of checking off the first bits of that process, and that's going well. We've got a positive trajectory. I think what you're trying to get to, which is all the much more exciting questions that come behind that, which means what's the business value, how do we think about engagement, what are specific genre or title performance, we're still many months and really, years into learning incrementally about all those details. So really more to come there.

As the management team, you've always been laser focused on the consumer, which has led to a lot of success in TV and films. And I'm curious, how can you improve the consumer experience in games? What kinds of new game experiences or new distribution models can you enable, particularly early on, not having to worry about direct monetization?

Yeah, and I think it's important to note that, first of all, we're going to learn our way through that just as we have in the other content categories that we've served. And we'll learn by basically putting stuff out there and then having our members tell us what's working and what's not. But we're excited about the idea that by taking away what we see as distractions from the core enjoyment experience associated with other models like advertisements or in-app monetization per title costs, that we can really give our members a much easier direct enjoyment experience with games, just like we have with TV shows and movies. And there's a great flip side to that coin as well, which is that our creators can really put all of their energy, everything they're excited about into making that maximal enjoyment experience for the users, the players of those games, without having to worry about those other things that they have to in other models in terms of monetization. So that's one really key area that we're excited to explore. And another one is that we think that this just connects really well with the other work that we are doing. We're creating all these amazing universes and worlds and characters and storylines, and we can attach to the passion and fandom that our members have on viewing those on the video side with game experiences and allow them to go deeper and explore spaces that they wouldn't have otherwise seen on the video side. And so we really think there's a good connection and synergy there. And over time, we'll try and bring those closer together and sort of let those two worlds more influence each other and have a more direct connection. But again, that's something that, you know, as years in the making, we've really got to iteratively explore. And, you know, none of us know exactly what that will look like because we'll have to sort of find our way as we go.

And Nidhi, imagine three years from now and, you know, some future squid game is launching and it comes along, you know, with an incredible array of interactive gaming options, and it's all built into the service. And then, of course, you've got your off Netflix aspects, the experiences that we're building out, consumer products, all of that coming together. So, you know, a company like Disney is still ahead of us in some of those dimensions of putting that whole experience together. But boy, are we making progress. And so exciting over the next three to five years, kind of closing that gap and hope to pass them on, you know, that spectacular all around experience.

That's great color. And, you know, you mentioned squid game and this idea of kind of building the worlds and the experiences around the IP. How tightly do you want to control the IP for games and experiences that are created, you know, on other platforms? Roblox, for example, has a lot of squid game inspired activities and games right now. How do you think about that going forward?

Well, it's just tremendously exciting to see something like squid game, you know, blow up in the cultural zeitgeist. There you go, Ted. I stole your word here. And then how that basically shows up, that passion for the title shows up in all these different places. We definitely want to be part of, you know, some of that passion and the games and the interactive experiences we do will be designed and, you know, we'll get better and better trying to make sure that those are available and land and are ready to be compliments when that happens. But, you know, there's no, I think, monopoly on that, that passion. And so you'll see it in other places. And, you know, people are sending around TikTok videos or they're doing their own sort of mini games and Roblox or things like that. I think that's great. And I think that we should celebrate that, that fandom and that excitement as well.

Yeah, that makes sense. What do you think will be the hardest part about creating great games? What are sort of the skills and assets you feel like you already have versus what you need to attain? And maybe, you know, you can sort of comment on Night School Studio in the context of that. You know, why was that the perfect acquisition for you when you sort of surveyed the landscape?

Yeah, well, it's a whole different muscle, right? And creating games is this alchemy of a whole variety of stuff where you have engineering and you have the design and the story and then you have sort of a data element, especially in games that are sort of living and evolve as players interact with it. So we've never done that before. And so the hard part is going to be putting that together and really learning how to be successful at that. And, you know, again, back to your point previously, we've only been in the originals game for less than a decade. And we've done a pretty good job at building the capability to be better and better at that. And so our plan is to essentially follow that same trajectory and apply the same approaches that we have and really be focusing as a learning organization or how do we advance those skills? And I think we're going to take a bunch of different approaches to try and be successful in that space, just like we did in movies and TV shows. If you think about license to partner produce, to self produce, there's multiple avenues that we get to to producing incredible entertainment experiences for our members. I think we're going to take a similar approach with games, which will have multiple different approaches, including an internal game development capability. And that internal capability really allows us to sort of push the edges on what is interactive storytelling and how do we bridge that more tightly with the linear storytelling that we're doing on the video side? So we want to build that up. And one of the ways to sort of accelerate that process is when we find the right opportunities through acquisition, and that's what we did with night school. And we're tremendously excited about that team in specific because they've really, you know, the core of what they've done is to try and explore story and narrative essentially as the central game mechanic. And we think that fits really, really well with what we're trying to do. And so it's been great to get them, you know, on board and involved and to hear their thoughts and ideas. And I expect it'll be a sort of a rich partnership over years to come.

Greg and Spencer, how do you want to set Nittie's expectations in terms of future night schools?

Again, it's something that will be opportunistic. So I would say don't expect us to go on a tearing buying spree or, you know, something like that. You know, this will be one of the tools that we use. And, you know, we'll use it opportunistically when we find a great opportunity out there. And Spencer, do you want to elaborate on that?

I think you hit the nail on the head, Greg. I think, you know, Nittie, as you can tell from our track record, we are barely selective when it comes to M&A. But, you know, as Greg said, when an opportunity presents itself where we feel like we're aligned, you know, with the company, I think that's an opportunity we'll take. But again, you know, it's not, you know, nothing more than that.

And the only thing I'd add just more broadly, Nittie, is just that, and Greg talked about this, touched on this, which is this is going to be, we're learning into this. So this is in terms of business impact over time from games. This is not just months, but years of building. So even in our most kind of ambitious success scenario, it will be years, we would expect, before this could have a meaningful impact on our business. So very excited for the long term. We're going to be patient. We're going to move quickly and learn quickly. But this is a multi-year build.

Well, we're excited to see what you build. Moving over to you, Ted, you know, you announced the acquisition of the Roald Dahl Story Company. This quarter as well. Can you talk about your vision for this IP?

Yeah, I think the the the Dahl's characters that were created over the years have had an incredibly enduring staying power for kids and parents. They've done really well and in feature film. And I think we had an interesting take when we entered into our commercial relationship with with the storytelling with the Dahl Storytelling Company to make a very kind of feature feature quality animated series based on these characters and books. And through that process, we went through the organization, our live action film, TV teams, our film series teams, and everybody going through saying, and it was enough interest and desire to create in this universe. We thought it would make sense for it to be to all reside here in Netflix, creating stories for the world from this universe with these really richly developed characters that have done great, like from James and the Giant Peach to BFG and of course Willy Wonka and all the characters that are coming from that. We're doing an origin story series on the from Willy Wonka. And we've had so much creator interest from all of our overall partners that want to tell stories in this world that we thought it was a partnership to to move forward on and bring it inside of Netflix and see if we couldn't preserve these great stories for for the future. And I think we'll tell will create value in our game in our game world certainly can continue to create good value in the publishing world. And our consumer products group is just just digging their teeth into it now.

Ted, maybe more more broadly, what have been sort of your key learnings developing the kids content vertical over the last five years or so? What does it take to really succeed with this audience?

It's still a long time out. Our investment feels like it's been we've been at this a long time but the production cycles on these feature films by way of example it can be three to five years. So that's the learn is we're a pretty impatient lot. So we're trying to run as fast as we can. So we've got this one part of the business that it's going to take a little bit longer to prove itself out or not. What I found is though that we've got you know some of the greatest storytellers on the planet making their next projects at Netflix and we're really excited to see how they're coming together. What I believe is that you don't need necessarily this enormous machine to create brand loyalty around kids characters and kids film. We've had great success on without any of the machine without any machine just being able to be a very important part of viewing life. So I think we've got to really focus on like we do everything else on how good is the storytelling? How good is the execution? How great is the production value? Are we advancing the art of animation or the animation world which will continue to attract the best and brightest? And those things I think we're all on the right track for and I think it's going to take a couple more years to for it to really play itself out.

Well you will definitely have an audience for your you know a couple of you mentioned consumer products. You you know recently launched an e-commerce site as well as a partnership with Walmart. Can you talk about how developed your plans are for consumer products and what are you trying to achieve over the long term?

I believe that the the consumer products is a really a great way to enhance the relationship with content and fans. So you can like like Reid and Spencer are modeling for us right now. If you're if you're loving squid game and you show up in that track suit you're going to be to talk to the dinner party. So the ability to do that I think is really we have it in our wheelhouse to be able to do it and to grow it big. I don't think you know even a huge success against the the revenue and margins of the of the core business that it'll look like it'll make much difference in terms of the core for us is that it gets very very big so that it enhances the talkability and Zeitgeist moments around our content and gives fans a way to express that fandom in a way that amplifies it and attracts more fans.

Great. Spence switching gears to margins always a fun topic. You know as you invest in gaming and some of these other initiatives that we've been talking about on this call. How comfortable are doing that within kind of the 300 basis point margin improvement per year particularly if revenue growth sort of slows below the 20 percent level?

Sure well you know as you point out we're we're you know our revenue growth remains healthy. It is but it is right around at that point so with our guidance we're guiding to roughly just a tick under 20 percent 19 percent revenue growth for the year. Still very healthy revenue growth. I mean for that's on a base of roughly 30 billion dollars of revenue so if we can sustain anything around those levels that's that's pretty rare air at that scale and and so we'll work hard to do that and that comes down to what I said before. Ultimately what we can how we control that is you know our best control it is to make our service better and better every day through this amazing variety and quality of content and better discovery that content and and connecting with our fans around the world. So that's that's what we're focused on if we can do that and we can kind of manage our business in a prudent scrappy way. We're committed to doing so for the next few years at least we're committed to making those trade-offs growing healthy strategically investing in the business and growing our margins at that roughly three percentage points per year on average on a kind of a on a multi-year basis.

And and longer term you know when you think about what it takes to fulfill the content needs of everyone you want to reach every day of the week do you look at your current you know kind of 17 billion dollars of cash spend and say well it's easy to imagine that being you know 2x or 3x that level to achieve what we want to achieve. You know I remember Spencer used to throw out an estimate that there's something like 100 billion dollars being spent globally per year to produce content and I'm sure that number is is higher now but is that sort of the context you think about and do you feel like you're still relatively early or fairly far along?

I guess you have been you know

I'll take it go ahead.

We always know that Ted will find ways to spend more on content. So no the short of it is that we think we're still early days and when we talk even in the letter about you know the secular growth years this transition from linear to streaming entertainment even in our most to kind of mature markets like the US which we show in the letter were at between six percent of TV share in terms of screen time and so and you know in categories we talked about you know gaming we're literally just getting started so who knows where that's going to take us. Animation we talked about we're just a few years into a long cycle. These non-English language series and films around the world were we're now producing in roughly 45 countries around the world be more than 50 next year but again still early days so we think we have a super long runway here to address those you know upwards of a billion you know pay TV households or broadband households every measure around the world so you know we look at is are we continuing to grow in a healthy way driving acquisition retention more viewing delivering more joy to our members. I don't think there's a precise number there any other than that we have the ability we believe to grow across all those content categories for the foreseeable future some more than others right in terms of pace of growth so some of those are just earlier and higher growth but we're growing across all those content categories and we don't we don't see a ceiling at least for the foreseeable future.

And since I threw out that number Nidhi I guess I'll just add on one minor comment which is look I think we feel very confident about the next couple of years given just the trajectory of the business I think we're just going to feel our way along and monitor all those things that Spence talked about right which is engagement and intention and things of nature to sort of judge the appropriate level of spend.

I

got a thumbs up from Reed when I said 2X or 3X so I think we're

early. We really entertain the world you know if we even ex-China if we're able to pull that off and be the place that the whole world goes to for most of their entertainment then you're definitely thinking too small now it'll take a couple decades to get there it's not overnight but you know in the long term we got to be able to monetize it so we have to be able to have the revenue growth and margins but it would be incredibly satisfying if we could build up to much bigger content budgets that we have usefully deployed for our members love across all those categories.

Nidhi we have time for two last questions please.

Great um Greg I'll I'll switch it over to you for a second um you know it's a it's a blessing and a curse but Netflix has grown so fast that I imagine the company has not been able to sort of dot its i's and cross its t's along the way so I'm curious as you look around the company's operations what are sort of the biggest areas of optimizations that you see and maybe more specifically on the on the studio what can sort of taking a tech company approach to studio operations unlock over the time over time and what's kind of the magnitude of gain to be had?

Well as you know it's still we're a work in progress but I'd say we're constantly work in progress because we constantly aspire to be better and better and one of the things I love about working here is just that that you know unsatiable appetite for for improvement in one of the areas one of the biggest dimensions that we're seeing which is I think really apropos to sort of what we've been talking about in this call is how we go from being really a US company that has international relation international operations to really a truly global company and we can see the you know the opportunity there whether it's you know seeing content like squid game or lupin or casa de papel and we really want to just do that more and more and more and so we're working through how do we as a company you know set ourselves up to operate even more effectively in that context and do even more of what you've sort of seen with those titles so that's a big dimension of growth for us and then on the studio side you know we're really excited about how do we you know leverage some of the what we have as you know dna in the company around tech and things like that to try and figure out is there a way to better serve our creators and our creative partners give them a bigger palette a bigger envelope to work from and I think one of the exciting areas around this is again you know that sort of platform if you will of creation that's what I said of tools and capabilities if we can do that well we can sort of give that to everybody all of our creative partners around the world and give them a sort of a bigger place to stand from tell their story and that's pretty exciting.

Great well last question for everyone what is your favorite recent show or movie on Netflix other than Squid Game?

I was going to go with The Maid um just incredible character drama so well put together to the investor audience I'll bet that it's even more pleasing than Squid Game.

I'm going to go with Chestnut Man our latest Danish series so atmospheric and since I haven't been to Denmark in a long time I felt like I was there by watching it.

I could go well you know gosh and and not squid I mean I loved La Casa I'm enjoying Maid but I'm not all the way through um I'll stop there.

Rave stole my thunder on Maid but I would say that the final season of La Casa de Papel is not disappointing I can't wait for the second batch to hit so I could talk about it with everybody it's really it's really like that excitement of a big budget feature in every hour of that show

it's

like really incredible.

For me I got two episodes left of Squid Game um but I would say the other one is uh Sex Education Season 3 was uh was my favorite recent one as well. Dad you want to take us home?

Yeah look I want to say first of all thanks for doing this today we've had uh what I think is a tremendous quarter uh delivering on films and tv shows that people really love and love to talk about and if we keep doing that well that's what fuels our growth. We are focused on delivering value every time one of our members tries to figure out what they want to watch next every time they figure out how much they want to spend for to entertain themselves we want to be in that equation and we do that I think if we focus on that the way we have for films the way we have for series and the way we will for games that we're going to be um delivering hours and hours and hours of entertainment and hours and hours of joy for our members and we're midway through October and MQ4 is still to come we have our biggest film bets we've ever made star-studded crowd-pleasing movies like Red Notice and Harder They Fall and Don't Look Up uh returning seasons our most popular shows like The Witcher uh La Casa de Papel, You, Emily in Paris, Cobra Kai and it's that's just in Q4 uh so if we keep doing what we're doing and you keep coming back we're going to keep you entertained and thanks for for visiting with us.