Netflix, Inc.

Good afternoon and welcome to the Netflix Q3 2022 earnings interview. I'm Spencer Wong, VP of Finance, 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 Doug Ameth from JPMorgan. As a reminder, we will be making forward-looking statements and actual results may vary. With that, let's jump into it. Doug, over to you for your first question.

Great. Thanks, Spencer. And great to see all of you. And thanks for having me join you again today. So let's jump in with advertising. Obviously, a lot of discussion here heading into the launch. You announced details for the new basic with ads to your last week launching in the US and 11 other markets. Can you help us understand how you arrived at the price point and the product features for basic with ads?

Yeah, Doug. So, you know, a lot of what we're thinking in terms of setting pricing for basic with ads and how we think about pricing in general anchors on, you know, what's the value that we're delivering consumers. We're trying to work very hard to translate the dollars that they give us into incredible shows. And you can see sort of, you know, in Q3 some Great examples of the series that we're delivering there, the films we're delivering there, and at the Q4 slate, it looks incredible as well. And then specifically with regard to ads, we modeled out essentially what we think the expected revenue is on the variety of different countries that we're launching in to make sure that you know in a combination of the subscription uh price that we're charging for basic with ads plus that anticipated monetization we'd be roughly call it um unit economics wise revenue um positive to neutral uh and then when we look at then the fact that we think that this lower price uh will consumer facing price will bring in a lot more members then we're quite confident in the long term that this will lead to a significant uh incremental revenue and profit stream