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spk01: Good afternoon and welcome to the Netflix Q1 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 Chief Product Officer Greg Peters, and CFO Spence Newman. Our interviewer this quarter is Nidhi Gupta from Fidelity. As a reminder, we'll be making forward-looking statements and actual results may vary. With that, let me turn it over to Nidhi for her first question.
spk00: Thanks, Spencer. Thank you all for having me. Great to be with you. And thank you all for all the great work over the years. It's been great for us to be on this journey with you as shareholders. So with that, let's just jump right in. Obviously, you were comping a really big Q1 last year with 16 million net ads. The net ads this quarter came in below your expectations and below the streets expectations. Any additional color you can provide on what caused this?
spk03: Hey, Nidhi, it's Spence. I guess I'll take this one first. Hopefully you can see us. It looks like it's a little frozen. Maybe it's just frozen on our end. But look, so in terms of Q1 performance, it really boils down to COVID, frankly. As you know, the extraordinary events of COVID have had a big impact on the world, continue to have a big impact on the world. And for us, at a minimum, creates just some short-term kind of choppiness in some of the business trends that we see in our business. So In particular, we had this huge pull forward in 2020 in terms of our subscriber additions, nearly 40 million paid net ads in 2020. And we also had a near global shutdown in production, which we've been ramping safely and at scale through much of last year and into this year. But it did push some key title launches into the back end of this year. So The combination of those two things does create some noise. It's super hard to obviously kind of forecast quarterly subscribers in a typical quarter for us and particularly hard in this environment. In fact, on page two of our earnings letter, we show our actuals relative to forecast, which in our guide is our internal forecast for subscribers. And And, you know, because it's our forecast, we're going to miss every quarter. It's just a matter of whether they're bigger or smaller misses. And we can see over the past five years, our biggest kind of misses to forecast, either up or down, you know, most of those big misses, the biggest were in the past five quarters relative to the past five years, and that was these five quarters of COVID. So it's just a difficult time to forecast the business. But the key is the business remains healthy. Our engagement, our viewing per household was up year over year in Q1. Our churn was down year over year. And the business is still growing. So even at 4 million paid net ads, if you kind of take COVID out and look over the past two years, we've grown from two years ago at about 150 million members to almost 210 million now. So that's nearly 40% growth and about just under 20%. over an average over each of those two years which is in line with the past couple years so the business remains healthy and that's because the long-term driver is this big transition from linear to streaming entertainment and that remains as as healthy as ever but you do see little little um kind of noise in the near term but a lot of long-term clarity thank you that's helpful
spk02: Nidhi, we had those 10 years where we're growing smooth as silk and then just a little wobbly right now. And of course, we're wondering, well, wait a sec, are we sure it's not competition? Because obviously there's a lot of new competition. And we really look through all the data, you know, looking at different regions where new competitors are launched or are not launched. And we just can't see any difference, you know, in our relative growth in those regions, which is what gives us confidence that it's intensely competitive. But it always has been. I mean, we've been competing with Amazon Prime for 13 years, with Hulu for 14 years. It's always been very competitive with linear TV, too. So there's no real change that we can detect in the competitive environment. It's always been high and remains high.
spk00: Well, it's encouraging to hear that your churn was actually down year over year, and you did announce some price increases in Q4 and Q1 in a few markets. So maybe just talk about how well the subscriber base has sort of absorbed these price increases in the current environment.
spk04: Sure. Greg, do you want to go first? Yeah, I can take that one. So we're seeing results that are very similar to what we've seen over the last two years, which is that if we wisely invest in great stories and we increase the variety and the diversity and the quality of our program, which Ted's team is assiduously trying to do in every country around the world, we also invest in better product experiences that make it more delightful and easy to connect with those stories. We're just delivering more value to our members. If we do that well, then we can occasionally go back and ask them to pay a little bit more to keep that positive cycle going. And so having said that, I just want to reiterate, we think we're still an amazing entertainment value. We want to remain an incredible value compared to our competitors and the competitive offerings that are out there broadly. So even as we continue to improve the service, we've got that in mind and we want to make sure that we're accessible to more and more people on the planet through that process.
spk03: Great. And, Nidhi, the only thing I just add to what Greg just said, I agree with all that, is just very specifically in terms of what we see in the numbers on the churn side, our churn is actually below pre-price change levels already in the U.S. and in most of the markets where we have adjusted prices. And, you know, just some of the newer ones haven't come all the way back down, but they're rapidly getting there.
spk00: That's great. Can you talk a little bit about what you're expecting in terms of subscriber growth as the world reopens? I don't know if there's anything you're seeing in your more open versus less open markets that would sort of give you a window into this, but how are you thinking about that and what's sort of baked into you guys?
spk02: Well, tragically, Nidhi, many countries have opened and closed over the year. And we've got many countries right now that are in real crisis. Fortunately, the US, not one of them right now. So we've got a lot of evidence on that point. And there was the initial surge of COVID, which was quite large in subscriber growth. and viewing but since then every opening and closing including the u.s over christmas um really didn't generate any noticeable material effect um so i don't think there's any material effect we're going to notice about future openings and closings again because we've been through in many countries pretty intense surges unfortunately yeah
spk03: And the only thing I'd add, I guess, to Reid's point, specific to your question on the Q2 guide, Nidhi, is related to that. It's very similar to what we saw in Q1 is what's reflected in Q2 in terms of still working through that pull forward, still working through some of the pushed slate of some of those big titles into the latter half of the year. And also, it's a bit of a seasonally soft period for us. So those are all playing into it. But the good news is, as I said, the core underlying metrics are very healthy and there's this clear catalyst to a re-acceleration of growth and towards that back end of the year as those big titles start to launch and strength of slates and we come out of that pull forward. So feeling good about the long-term trends.
spk00: Do you feel like Q1 and Q2 sort of encapsulate the pull forward that you're expecting? I know it's really hard to forecast when you add 26 million subscribers over the course of two quarters last year, but just how are you thinking about how the second half might shape up with the additional content as well as, you know, maybe some of the pull forward behind us.
spk03: You guys want me to take it?
spk05: Go for it. Go for it. I'll just say one of the things to keep in mind is that, you know, we normally, what we have to do kind of day in and day out, week in and week out, year in and year out, is deliver programming that our members love and value. And the shape of that gets determined, you know, sometimes two, three years in advance. So you go into these production cycles, you go into planning cycles, and you've got a pretty smooth release of high profile projects and smaller kind of passion projects and all those things. And what happened, I guess, in the first part of this year is a lot of the projects we'd hoped to come out earlier did get pushed because of the post-production delays and the COVID delays in production. And we think we'll get back to much steadier state in the back half of the year, and certainly in Q4, where we've got the returning seasons of some of our most popular shows like The Witcher and You and Cobra Kai, as well as some big tempo movies that came to market a little slower than we'd hoped, like Red Notice with The Rock and Ryan Reynolds and Gal Gadot. and Escape from Spider-Man with Chris Hemsworth, big event content. Now, all that being said, in every quarter of the year, we release more content than we did in the previous quarter, in the previous year's quarter by quarter, and in every region. It's just that I think the shape of the mix of the content is, you know, become a little more uncertain. And then the long-term impacts of the COVID shutdown are also becoming a little more uncertain in that timeframe in the first half of this year.
spk00: Great. Well, I'd love to shift to the big picture now that I've beaten you up about the quarter enough. So, you know, you're at over 200 million subscribers around the world. You're five years into your original content strategy. You know, you seem to be coexisting really well with possibly the largest direct competitor you might ever see. And your self-funding. Thank you for that. We did notice. Maybe just talk about, with that backdrop, key priorities for each of you in 2021 and really just the next two to three years as you see them. Maybe we can start with you, Peter.
spk02: You know, probably your reference was to Disney, but our largest competitor for TV viewing time is linear TV. Our second largest is YouTube, which is considerably larger than Netflix in viewing time. And Disney's considerably smaller, but we're sort of in the middle of the pack. But in terms of what we focus on, it's the same things that we've always focused on, which is our member satisfaction drives retention and word of mouth and drives our growth. So it's where can we find the story that you talk about even more that you connect with? Where can we improve our choosing where the best things are recommended for you? And then ultimately the content of, you know, can we have stories that are just incredibly compelling? And we're just, you know, quarter by quarter learning more lessons on each one of those, which is what improves the member satisfaction, which is what really drives the growth.
spk05: And I'd say one of the things to keep in mind is over the years, media companies have been really great at exporting Hollywood content around the world. And I think I'm proud of how we've done that as well with shows like Bridgerton with over 100 million starters and movies reaching these enormous audiences all over the world. uh but the one thing that we really have done you know really have sharpened our our skills on uh the last couple of years has been creating content from anywhere in the world and playing it all over the world and the great thing about that is is those those stories that are coming from all over the world like we saw with lupin this year uh this quarter it was our biggest new series on netflix in the world was Lupin from France. And the show was not like a watered down French show. It was a very French show. And what's really been great about it is as you tell stories from around the world, the more authentically local they are, the more likely they are to play around the world because people recognize the authenticity of the storytelling. And that's something that we've been really focused on, as well as continuing to offer a very big variety of content from Hollywood to the world as well. But we've got new seasons of really popular shows from around the world, like Elité in Spain, La Casa de Papel coming up, The Naked Director from Japan, which has been an enormous hit for us, The Gift from Turkey. So our ability to do this around the world at scale and be able to bring those stories to a big global audience is something that we're really incredibly proud of and we'll keep working on over the next couple of years.
spk04: I'll pick it up from there. I'm also super excited about that aspect of our business to find stories from around the world and connect them with audiences from around the world. A companion piece of that is making sure that we increasingly are understanding what our members' needs and the members we haven't signed up, consumers' needs generally in more and more countries. They all have unique constraints that they're working through. They have unique expectations from the service and Our job is to learn more and more and more about what those are and make sure that we are being able to offer the service in a way that feels natural, that feels delightful to them. And whether that's having the right payment method so that consumers don't have to think about what hoops they have to jump through to actually sign up and pay for the service, to how we present the content to them, regardless of what country it comes from or what language it's in, but present it in a way that allows them just to get into the story of it and realize the plenty and the amazing diversity of storytelling that exists across the planet.
spk03: Yeah, I think everyone's pretty much hit it, Nidhi. I'll try to add, I mean, I get super excited about just this giant transition to streaming entertainment. Streaming is entertainment. It's the now and the future. And, you know, we talked a little bit in the letter about, you know, our business and how it's transitioned over the last 10 plus years from you know, from DVD by mail to streaming, from U.S. only to global, and from licensed content to original production. But what's helped is just our velocity of decision-making and our focus has served us well. And there's just, you know, we're sitting here where we're still less than 10% TV view share even in our biggest markets. So there's just this big, long runway of growth if we stay focused and keep getting better. And so I just, I love the opportunity to keep kind of continually getting better, improving our creative excellence, our operational excellence, and just maintaining that speed and velocity even as we get larger as a company.
spk01: And on the IR side, Nidhi, I'd say my main job is to continue to make sure you're happy as well as our other shareholders. But I think what that means is just making sure that you all understand what we're doing and why we're doing it from a strategic standpoint. And my broader finance role is supporting Spence on the finance side just to make sure that we're allocating capital as wisely as possible and then continuing to support Ted and Greg and the other business units from a finance support standpoint.
spk00: Great. so ted i'd love to uh dig a little bit deeper with you um film has been a recent success for netflix um 36 oscar nominations congratulations that's an incredible feat so my question is over the long term do you think netflix can be the primary or dominant way that people consume films and if so what does it take to achieve that
spk05: i don't know about dominant but i would say it's going to be a continually material way people view films uh this is where the audience is kind of going uh and what we find is that we're not really kind of changing the way we make films for the way people watch films so they're watching the kind of films they would have gone out to the theater to see but in many cases in the convenience of their timetable and in the comfort of their home, where they can really enjoy a great new film. And it could be a film of enormous scope, certainly competitive to the kind of things you see in the theater. You mentioned the Oscar success, and that's certainly one flavor of filmmaking that we're super proud of. Mostly we had 17 different films with an Oscar nomination this year, which is super incredibly exciting. But also the fact that we can do these very large scale action movies that audiences love around the world, at the same level that they're being produced for the theater. So I do think that that's going to continue to be more and more meaningful to viewers as to what percentage of the films that they see in or out of the home.
spk00: So over the years, you've been really successful at getting a high share of kind of most watched TV shows, whether I look at IMDb top shows or most searched shows on Google. Do you have to do anything fundamentally different in film to achieve that same level of high share
spk05: Yeah, it's not dissimilar in that people just have very diverse tastes. So you really kind of want to try to hone in on... We've always kind of set out to do your favorite film, your favorite show, whoever you are, wherever you are, and whatever mood you're in. So that's why we kind of go at it from so many different angles. And it's a very unusual thing where you have Mank sitting next to the Tiger King on the shelf for most media companies. But we have very specialized teams that focus on being...
spk02: best in class of each of those things that they do and that's i think why we've had those results we're talking about and nitty i think we would say too we would want need to spend more so we spend a lot more right now in series than film um but you know that will grow as the total budget grows and then it's also the experience curve we've been doing series longer and we're more dialed in about what goes really big and what hits and we're getting there on film and also on animation, also on kids. Each of these have their own experience curve that we're progressing down.
spk00: Can you share any more details about the Sony deal? I guess more specifically, what is the rationale for the deal and what does it get you that your original story that she doesn't achieve for you?
spk05: Yeah, well, what's really exciting about that deal is that we're going to be producing global original films from Sony's IP library and their development slate for Netflix. That's really an incredible opportunity. Access to IP that we wouldn't otherwise have. And it's a big global programming strategy over the next five years. The domestic pay one deal that is also part of that I think complements and adds to it, but only for our domestic subscribers for five years. And we do think that that's a great thing. And it complements our growing output of original film as well. And we've had their output prior and through other deals over the last several years. It's been great. They're great films. People have diverse tastes, like I said. And I think this adds to that, doesn't compete with it.
spk00: Great. Greg, switching gears to pricing, your price range around the world has really widened over the years. But the reality is in terms of willingness to pay, there's probably households in the US that are willing to pay you $50 a month and then households in India that can't pay you more than $5 a month. So assuming over the long term that you can sort of match everyone's willingness to pay around the world, What do you think your revenue distribution will look like across these different price points?
spk04: Well, as you point out, you know, our spread has been growing wider. And I think that that's part of that story. You know, we're really trying to find, you know, a set of plan types with the right kind of features. And, you know, we know folks are some folks have gigantic TVs at home and some folks are watching on their mobile phone. Some folks are approaching the service as an individual. Some folks are approaching it as a family. So there's just so many different needs out there. And so we're really going to try and match those feature sets at the right price points to that really wide group of folks. And we know that that inevitably means that we're going to really sort of see an expansion of that. And an important part of that is making sure that we are continually expanding. Looking at how do we broaden accessibility? So how do we bring in price points that are low enough for more and more of the world's population to be able to access a service to enjoy the kind of amazing stories that that we are creating? You've seen us do that with rolling out the mobile plan, for example, in several countries in Asia. That's sort of we find a good balance of features and price points there. We're going to just do more and more of that. But I think the broad trajectory is the one that you've seen, which is a widening of the breadth of our offerings and price points associated with them.
spk00: Related to that, your content investment in Asia has ramped up pretty significantly. I think you announced this quarter $500 million in Korea, 40 new films and series in India. Obviously, Japanese anime continues to ramp. I'm curious what's sort of giving you the confidence to invest this aggressively in Asia, particularly in a market like India, which is still a low share of global GDP and willingness to pay for premium content seems pretty...
spk05: Well, remember, I think it's the product market fit is what we're always looking for. Are we programming the service in a way that consumers value it and love it? And it's a bit of trial and error at the beginning of each of the territories as we've rolled out. Remember, we started launching in international territories with no original programming in local language with local producers, and now we're producing in most corners of the world. And I do think, you know, our confidence in investment in Korea and India and Japan has been the success of the investments to date, and that it gets us closer and closer to that product market fit that we have in our more mature markets. So I do think like, and what we've seen in our Korean originals and our Japanese anime is that they play really well around the region as well as in country, and occasionally can be very, very global. And they're in their interest and desire. And the fact that we can bring a global audience to those creators in each of the territories has been really attractive.
spk02: And Nidhi, we've had enough success in Japan and South Korea for you guys to think about it like Germany or France. Like it's a big developed rich market. We've got that wired. You know, India, we're still figuring things out. And so that investment, you know, takes some guts and belief, you know, forward looking. But the other investments you should think of just like India. rich European country whose content exports really well. And, you know, we're just getting a little better every month on it.
spk03: Yeah, and I just add to that, and you can kind of see that in the numbers, too, Nidhi, even in what we release on the regional numbers. The APAC region was about a third of our member growth this quarter, and also still kind of healthy revenue growth, including average revenue per member. And that's in part because as we improve the service, as engagement is up and churn is down, we can occasionally take price increases, as Greg mentioned, and that happened recently in Australia, New Zealand, and Japan, and And I think our members are clearly appreciating the value of what we're delivering them. So the business is scaling and scaling well.
spk00: Yeah, that's helpful. So, Reid, is that gut or belief when it comes to kind of these lower ARPU or just newer markets? Is it that eventually you'll be able to play the kind of low ARPU high volume strategy? Or is it, you know, over the long term, incomes will rise in these markets, ARPUs will rise and the math will sort of work?
spk02: I think on that we're still learning. We've done some pricing experiments in India that Greg could talk about. And I would say we're still mostly focused on getting a content fit and getting broader content. So that's why I say that one is a more speculative investment than, say, Korea or Japan. which again, five years ago was very speculative when we did those. Okay. But we've kind of, we're over the hump on that. We've got, you know, we've got a great match and we're still working on India and we're super exciting. And, you know, again, right now this month, things are terrible in, you know, the COVID spike, but outside of that, we've been really producing a lot of great new content that's currently shut down. Greg, do you want to talk about like geo or any of that?
spk04: And maybe a couple of things there, you know, we recognize that we don't know a lot yet, you know, compared to how much we're going to learn over the next many, many years. And so our job is to really try and be innovative and, you know, push and experiment. And so whether that is, you know, pushing on, you know, the actual model in terms of like multi-month or sachet and sort of, you know, explore the ranges of that kind of offering. But then also, something that we've seen that is quite successful for us in pretty much all the markets we serve around the world is leveraging go-to-market partners who have existing relationships with consumers as a way to expose them to the Netflix service and then have them make it easy to pay. And of course, the ultimate and easy to pay is it's just included, the sort of bundle offerings that we've been doing more and more of. And Gio is a great example of a partner we've been working with there to really bring, you know, the service to a new demographic at a very, very low price associated with low cost mobile plans that they're offering, as well as, you know, home based IPTV plans. And those have been successful for us as well. So, you know, it's constantly just trying to push on all those different edges and really figure out, you know, what is that right price point, the right offering and the right way that works for the local members and consumers.
spk05: I would just add that India is a tremendous opportunity. And I think Netflix offers a tremendous opportunity for the creative community to connect with enormous audiences. And it's just like all great opportunities. It's a long journey and it's a challenge. And we think it's worth it. And that's why we're investing early and trying to stay ahead of it. And I think we'll be able to see those kind of results that we've seen in other places in the world as we continue to learn more and more and more.
spk00: Great. Well, I am a big consumer of your Indian content, so keep it coming. Greg, you know, you've started to run some tests in certain markets, I think maybe just the U.S., limiting account sharing. Can you can you talk about the size of the opportunity here and why now is kind of the right time to start tightening the screws on that?
spk04: Yeah. First of all, we recognize that our members are in different positions, again, and they have different needs from us as an entertainment service. And we're really seeking that sort of flexible approach to make sure that we are providing the plans with the right features and the right price points to meet those broad set of needs. So we're going to keep doing that. We're going to keep working on that, working on accessibility across all of the countries that we serve. But we also want to ensure that while we're doing that, that we're good at making sure that the people who are using a Netflix account, who are accessing it, are the ones that are authorized to do so. And that's what this sort of line of testing is about. It's not necessarily a new thing. We've been doing this for a while. So you may see it pop up here and there in different ways. But it's sort of the same framework that we use that I think you're familiar with in so much of how we think about testing. continuously improving the service, which is, you know, we iteratively work, we use the tests and the test results to inform and guide how we proceed and just sort of, you know, continually try and make that better and better.
spk02: And Nidhi, we will test many things, but we would never roll something out that feels like turning the screws, as you said. You know, it's got to feel like it makes sense to consumers that they understand. And Greg's been doing a lot of great research on kind of how to try variants that harmonize with the way consumers think about it.
spk00: Are there any particular markets where the subscriber or the user to subscriber ratio is particularly high?
spk04: I think, you know, different, every market, every country is different. And so we see different ranges of behavior. And, you know, I think just, you know, how people orient themselves to the service is different, you know, from country to country. So I want to, you know, you know, it's, it's, it's more than just sort of how they think about, you know, how maybe they're, they're, they're working the system or so, or just how that they think about, you know, sharing the service with, you know, extended family or people that they love is a natural part of how they connect with the stories that we're telling. So, yeah. It's all different around the planet and it's different within countries too, as you might well expect.
spk00: If this were, you know, a gap that you could close over the very long term, do you think that there's a bigger revenue opportunity in getting some people to pay more through limiting account sharing or getting everyone to pay more through kind of is like, which is the bigger revenue opportunity over the next 10 years or however long it takes to sort of start closing the gap.
spk04: What I would say is I think the optimal revenue opportunity, optimal business opportunity is trying to figure out a way to best serve our members and trying to figure out the models, the plan types, the right price points, the right features that really work for them in a natural way. And that really is what's informing sort of our investigation exploration and you know i would say you know we don't really know as most of the you know it's often the case when we're sort of going down a path of innovation what the you know the the right place to land is a priori that's why we do this experiments and we do the iterative approach so it's mostly letting um that process unfold and letting our members speak to us about what's really the ideal model for them great that makes sense uh spence switching gears to you uh now that your balance doesn't
spk00: keep me up at night anymore. I can ask a much more fun question, which is, what will you do with all the excess cash? You've been asked a billion-dollar buyback, which is great to see. Maybe just talk about the parameters and sort of cadence of that, you know, this particular buyback and just how you think about buybacks philosophically over, you know, the next couple years.
spk03: Yeah, sure, Nidhi. So, you know, as we've said in the letter, in the last couple letters now, we've We think we've turned that corner. We know we've turned the corner on that cash flow story. So we expect to be about cash flow break even this year and then sustainably free cash flow positive and growing thereafter. And we don't intend to build up a bunch of excess cash on the balance sheet. we will maintain a debt level, a gross debt level at 10 to 15 billion range. We paid down about 500 million in principal in Q1. So our gross debt did come down from the prior quarter. And we think that share buybacks are a way to return value to shareholders in a way that is responsible steward of capital, but also maintains a level of balance sheet flexibility for us to continue to be strategic because first and foremost, our number one priority is to invest strategically into the growth of the business. But then, of course, return excess cash to our shareholders. So we're still maintaining a goal of about two months of revenue as our kind of cash on the balance sheet. And you'll see us ease into that share buyback program. So it'll start this quarter. As I say, I think you'll see us ease into it and We're authorized for up to $5 billion of share repurchase and we'll kind of get the program going this year. Great.
spk00: Reid, you know, you've remained incredibly focused over the years. I remember you telling me recently just the importance of keeping the main thing the main thing, which has obviously led to a lot of success for Netflix. But when I look forward to the next 10 years, which I realize is a very long time, but if you continue to be successful adding, you know, call it 30 million subscribers a year, you'll be at, you know, well over 500 million subscribers in 10 years, which feels like a high level of penetration. So I guess with that backdrop, how important is it to sort of have a second act versus continuing to let the business mature and focusing on capital returns?
spk02: Well, you know, YouTube and Facebook and those properties are a multibillion and the Internet is only growing. So where are we so fortunate to get to those numbers that you referred to? We're going to be super hungry to double from there going forward, too. So Outside of China, I think pay television peaked about 800 million households. So, you know, lots of room. And that was several years ago that it peaked. Lots of room to grow. So think about it as, you know, we do want to expand. So like we used to do that thing, shipping DVDs. And luckily, we didn't get stuck with that. We didn't define that as the main thing. We define entertainment as the main thing. and so then we expanded into what ted ted expanded us into original content um and you know first it was original series and then films and and then animation and kids and unscripted and so you know bit by bit we're adding categories so we got a lot of work to do in terms of different types of entertainment that will continue to do that. A lot of work in terms of global production. So I don't think, you know, there will be a second act in the sense that you mean like AWS and Amazon shopping. You know, I'll bet we end up with, you know, one hopefully gigantic, hopefully very defensible profit pool. And then, you know, continue to improve the service for our members by doing that, by expanding in category. So I wouldn't look for... you know any big um you know large secondary pool of profits there'll be a bunch of supporting pools like consumer products that can be both profitable and can support the title brands so um you know that's an obvious one annie we have time for uh two last questions great so i mean just to follow up on that you know people people often view gaming as kind of a natural extension or adjacency for you that's obviously still within the entertainment category as you mentioned
spk00: In what ways is that true or untrue? And is there a way to do gaming in sort of a Netflix style? And Spence, the way in here as you came from that world.
spk02: Exactly. In ways, we're kind of in gaming now because we have Bandersnatch and we have some very basic interactive things. But Spence and then Greg, maybe talk a little there.
spk03: Well, I'll probably let Greg mostly go. I would just say it kind of ties to what Reid said. I mean, we've kind of dabbled in it already through some of our interactive programming, as well as on the licensing and merchandising side in consumer products. And we're a business that continues to learn. And so far, our learning has been it's been good learning. So, you know, we were happy with how it's played out and, you know, hopefully we continue to kind of learn from here. But I don't know, Greg, if you want to add to that.
spk04: I'll just take one more sort of point at it, which is that, you know, we're in the business of creating these amazing projects deep, you know, universes and, you know, compelling characters and, you know, people come to love those universes and they want to immerse themselves more deeply and get to know the characters better and their backstories and all that stuff. And so, you know, we really, we're trying to figure out what are all these different ways that we can increase those points of connection. We can deepen that, that, that fandom and, And certainly, you know, games is a really interesting component of that. So whether it's, you know, gamifying some of the linear storytelling we're doing, like interactive Bandersnatch and the kids' interactive programs, that's been super interesting. We're going to continue working in that space for sure. We've actually launched games themselves. You know, it's part of our licensing and merchandising effort, and we're happy with what we've seen so far. And there's, you know, no doubt that games are going to be an important form of entertainment and an important sort of modality to deepen that fan experience. So, you know, we're going to keep going and we'll get you to learn and figure it out as we go.
spk00: Great. Well, if we have time for one more, my last question is just over the last five earnings calls, how many times would you say Ted has used the word zeitgeist?
spk05: Do I use zeitgeist a lot?
spk00: I only noticed it because I was listening to the previous earnings call to prepare for
spk05: It's a good word. Nidhi, you've got to admit, it's a good word.
spk00: I actually have a real last question, which is, of your Oscar-nominated films this year, which did you most enjoy watching? And I can go first. Mine was White Tiger. I won't ask you to make Oscars.
spk05: I am going to diplomatically pass the question to Reed. Chicago 7 for me.
spk03: White Tiger for me.
spk01: Chicago 7 for me.
spk03: White Tiger for me, too.
spk05: Just so I don't completely wimp out, you should take the time and watch a really beautiful animated short that's Oscar nominated called If Anything Happens, I Love You. That is really, I think, a remarkable bit of storytelling in a way that people can really expand the universe of what they think storytelling can be. And Ted, maybe you could wrap us up. Awesome. Well, thank you so much, Eddie, for joining us for the call and walking us through this. I know that what we're busy doing, and I know that some folks are on edge today watching the news and in certain pockets of the world, like our friends and colleagues in Brazil and India are having a particularly tough time. I know that our hearts and thoughts are with you as well. But thank you. We'll see you next quarter.
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