Netflix, Inc.

Welcome to the Netflix Q2 2024 earnings interview. I'm Spencer Wong, VP of Finance, IR, and Corporate Development. Joining me today are co-CEOs Ted Sarandos and Greg Peters and CFO Spence Newman. As a reminder, we'll be making forward-looking statements and actual results may vary. We'll now take questions from the sell-side community that have been submitted and we'll begin with a set of questions on our Q2 results and our forecast. So the first question on our results come from Doug Anmuth of JP Morgan. So Spence, Doug asks, can you provide some color on how churn is trending and perhaps share some color on what drove revenue growth in the quarter?

Yeah, sure. Thanks, Doug. And thanks, Spencer. We're pleased with our performance in Q2. There was strong performance across the board, good momentum across the business, strong revenue growth, member growth, and profit growth. In terms of that member growth, in turn, I'd say that the kind of outsized paid net ads in the quarter was primarily driven by a stronger acquisition, a little stronger than we expected, but also very healthy, continued healthy retention in the quarter. and that's across all regions. In terms of growth generally, there's probably kind of three key factors that drove member growth. First, strong performance of our content slate, the wide variety of titles that delivered across genres and regions, and I'm sure we'll talk more about that. There was some positive impact from paid sharing that continues. As we've said on recent calls, it's tougher and tougher to tease that out. We're clearly seeing healthy organic growth in the business, but we're also continuing to get better and better at translating improvements in our service into business value, including getting better and better at converting unpaid accounts. And at least on the paid member front, we're also probably benefiting from that attractive entry point in terms of price point and feature set for our ads plan. So you put all that together and it was a nice quarter for subscriber growth, but even more importantly, a nice quarter in terms of driving healthy revenue growth and healthy profit growth. So 17% reported revenue growth and margins that were up five percentage points year over year.

Thanks, Spence. Doug also has a follow-up question on the results. Netflix noted that India was our number two and number three country in terms of paid net ads and percent revenue growth in the second quarter. Do you feel like you're hitting more of an inflection point in that market, or is that more about a very specific successful content slate in Q2?

Ted, do you want to take it or? Yeah, well, look, I think India's growth is a story that we see around the world playing out very similarly. So you look at the content, the product market fit is what drives our ability to attract members and retain members and monetize with them as well. So I feel like what's going on in the quarter has been this ongoing build. We had this great show here on Monday. Sanjay Leela Bansali, SLB, is one of the most celebrated filmmakers in India. And he took on this incredibly ambitious series and brought it to screen on Netflix, directed every episode. And it's our biggest drama series to date in India. So on top of that, our original films and our licensed films as films in the pay TV window, immediately following theatrical, have continued to thrill our members. So we pick them well, we program well, we prove the product market fit. We improve engagement, we grow members, we grow revenue. It's the same formula, I think everywhere else, everywhere we go. And there's certainly plenty of room to grow in India as long as we keep throwing our audiences there.

Thank you, Ted. Our next question on the results relate to operating margin. And the question comes from Jessica Reeve-Ehrlich of Bank of America. For Spence, how should we think about the pace of margin expansion going forward and the drivers of the margin outperformance this year?

Oh, thanks, Jessica. Well, you know, when we think about margin expansion, we're obviously pleased with how it's trending so far. You know, our focus kind of stepping back, our focus is to sustain healthy revenue growth and grow margins each year. You know, so we feel good about what we've been delivering. As you see in the letter, we're now targeting 26% full-year operating income margin. That's up from our prior guide of 25%, and it's up five percentage points year over year, assuming we kind of land there. But the amount of annual margin expansion as we look forward is It could bounce around each year. And we've talked about this in recent quarters. It could bounce around because of foreign exchange in a year where that moves or other business considerations. But we're committed to grow margins each year. And we see a lot of room to continue to grow profit margin, absolute profit dollars, and do that over an extended period of time for years to come.

Thank you, Spence. Our next question comes from Steven Cahill from Wells Fargo, and it's regarding free cash flow. So the question is, Netflix has raised their full year revenue and margin outlook, but did not change their free cash flow forecast of approximately $6 billion. Is this just a pull forward in cash content spend, or is there anything else that is impacting your free cash flow guidance?

I'll tell you, though, nothing else impacting it. We, you know, as we've noted, as you noted, we continue to expect approximately six billion in free cash flow for the year. There's always some uncertainty in terms of timing of things like content spend, sometimes timing of taxes. So that kind of keeps us right now holding at approximately six billion, but no other read through beyond that.

Thank you, Spence. We have our quarterly question on page sharing next from John Hoodlick of UBS, which I'll direct to Greg. The question is, do you still have upside from the page sharing initiative? And have you moved forward on mobile page sharing? And if so, how big of an opportunity is this?

Yeah, Spence already gave some commentary on this quarter's performance. I'll talk about it for more from a long-term perspective. And as we said, for a couple quarters now, we're at the point where we really operationalize pay sharing. So it's just a standard part of our product experience. And we think about the improvements there. And to be clear, we do see still some significant areas for improvement there. But we see those as part of all the opportunities, essentially, we have to improve the product experience. So we're constantly prioritizing all those opportunities based on what we think is the expected value. And just to give you a sense of how wide that is, even things that we've been working on for over a decade, like our signup flows, sort of the user experience that a consumer has when they want to sign up for Netflix, we have found multiple improvements just over the last couple of quarters in those flows, which have delivered material incremental revenue wins. So we're going to continue to look at all these opportunities. We're going to improve things for members and for the business. We'll iterate, we'll improve them. And we think of this as just a constantly improving value translation mechanism. So we want to take all the value that's created by Bella's teams and film and series. We've got more live events, games, and we want to translate that more effectively into revenue so we can continue to invest and keep that flywheel spinning. And if we can keep improving that value translation mechanism each quarter and keep improving the entertainment offering that it operates on top of, those two things compound and drive the business. It'll drive the business through the rest of the year. It'll drive through 25 and beyond. And that really allows us to more effectively get... more of those 500 million plus and growing smart TV households around the world that aren't currently members to sign up. And it also drives our other levers of growth, like plan optimization, extra member, ads, revenues, and pricing into more value. So I think about this as more of the constant work we are doing to improve for decades to come.

Thank you, Greg. I'll now move us along to a series of questions about advertising. And we'll start first with Barton Crockett of Rosenblatt. And I'll point this question to Spence. You say that advertising is not a quote primary unquote driver of revenue growth yet. Can you provide a little more clarity on what that means for both 24 and 25?

Yeah, sure. Thanks. So stepping back, I'd say we're very pleased with how we're scaling our ads business. We talk about that in our letter. We've been primarily focused on scaling reach. But if you think about even just the revenue portion of ads, it is growing nicely. The rate of growth, it just happens to be growing off of a relatively small base because we're We're starting from only 18 months into ads. So to have the kind of a primary revenue impact across a business that has been primarily subscription for a long time, that just takes some time. So we're scaling well through reach, through engagement, through growing inventory. And that represents opportunity for us over a multi-year trajectory to have a big and increasing revenue and profit impact on the business. Again, stepping back, we feel really good about our position, our ability to sustain healthy revenue and profit growth. Ads is kind of one more tool in our tool chest there. And we're doing the hard work now to improve our service across the board so we finish the year strong in 24 and drive growth into 25 and beyond. We're small in every measure. We talk about it a lot. We're small share of TV time. We're small in terms of penetration of connected TV homes. We're small in revenue market share. And we're going to grow in those areas across the board. And ads is going to be a bigger piece of that puzzle. Just we won't have it be primary in 24 or 25, but it contributes. It's a meaningful contributor. That's what we've said. And that's what it is doing. And then when you get into 26 and beyond, it can be even more meaningful and hopefully becomes the point where it is a primary contributor, given all that engagement and reach that we're building.

Thank you, Spence. A follow-up question on advertising comes from Ben Swinburne of Morgan Stanley, and I will direct this to Greg. Looking into your advertising revenue ramp into 2025, what are the key areas that need to improve to bring in significantly more revenue? Can you talk about the opportunities and challenges scaling up your direct sales efforts and leveraging third-party sources of demand, primarily programmatically.

We've said many times our number one priority, first priority is scale. We've been heavily focused on that. The great news is we've seen great progress in that regard. We've been scaling our ads member base very quickly from zero two years ago to where we are today. And we're excited to say that we're on track to achieve our critical scale goals for all of our ads countries in 2025. Clearly, we expect further growth beyond that, but that represents a great threshold to get to and then to build more scale and more attractiveness from there. So that allows us to shift more of our energy now on more effectively monetizing that rapidly growing inventory. And there's sort of two main fronts here. One is our go-to-market capability. So we're adding more sales folks, we're adding more ads operation folks, building our capabilities to meet advertisers. A big component of that is giving advertisers more effective ways to buy Netflix. It's a big point of feedback that we heard from advertisers. So by adding demand sources that are already integrated into their processes and their systems, that just makes it easy for them to buy. In some cases, that was a threshold item for them to buy on us. So we're going to expand the number of buyers as a result of that. and then the other big area of growth for us is the sort of product and technology stack we mentioned we're building our own ad server now we're excited to launch that in canada this year and then the rest of our ads markets in 25 that unlocks a whole set of innovations that we expect that are focused on a better user experience for our members on those ad tiers and better advertiser features so think a lot about this is targeting relevance more capabilities in that space as well as uh thinking about you know how do we do roi row ass incrementality measurements all the things that we want and ultimately really this is about bringing what has been amazing about digital advertising in terms of targeting relevance measurement etc and what we think is amazing about tv advertising which is an incredible creative format better creative format in many cases than digital as well as the ability to put those advertisements next to

content to titles stories that are um you know impacting the social conversation which is important for appetizers so lots of work ahead we've got years of work to do but that's the line that we're moving forward with thank you greg uh from stephen cahill um his question is given what we think are pressures on avon cpms and the 10 hours per account per month of viewing time you disclosed at the upfront for ad supported members What's the likelihood that ad-supported arm drops below ad-free member arm in the second half? Would you consider raising the price of ad-supported tiers as an offset?

Okay, so perhaps starting by just providing some clarification here, our engagement on our ads plans is very similar to what we see on our noun ads plans. That's close to the approximately two hours of viewing per member per day across all the plans that you can calculate globally from our engagement reports. You should think of that as roughly, you know, how our ads plan members are engaging as well. and then on terms of ads arm so ads arm which is of course the combination of the subscription amount plus the ads revenue currently because we've been scaling so rapidly uh we are not we're racing behind essentially to fulfill all of that increasing inventory and we're we're lagging in that regard so currently our ads arm is lower than our non-ads arm And that's obviously we look at that as both, you know, it's a go do, but it's a revenue growth opportunity for us as we scale into that. That represents an opportunity to accelerate our revenue growth as well. So you mentioned price. We think about pricing for our ads tier very similarly to how we would think about pricing for our non-ads tier. First of all, I just think it's worth noting that we love having an entry price that's lower. That means we are more accessible for more people. in our ads markets, that's a great thing because they get access to all the amazing storytelling that we are doing there. But in terms of raising that price, we think about it similar to how we think about pricing in general, which is it's our job to increase the value that we are delivering all of our members. We've got more amazing film, more series. the live events that are coming more games and when we have signals from our members this is uh you know the amount of acquisition that we've got going on engagement what our retention and churn looks like then we find the right moment to ask uh our members to pay a bit more to keep that flywheel spinning and we'll think about that uh in the ads context just like we would in the non-ads context

Thank you, Greg. John Hoodluck from UBS asks, can you provide an update on the CTV ad environment and update us on initial feedback from advertisers on your ad tech initiative? What features do you expect to add with the ad tech build and anything you can tell us about the costs associated with it?

Sure, there's a lot of excitement amongst advertisers about the work that we're doing. I'd say that the primary one, and again, one that we're responding to, which is sort of very tactical and immediate, is being able to provide advertisers more ways to buy on Netflix. So those demand sources is something we heard very clearly from advertisers that it was either a real improvement for them or it was a necessary point for them to be able to buy on Netflix. So then beyond that, we hear lots of enthusiasm for the things I mentioned before, increasing ads, relevancy, targeting, personalization, better measurement, incrementality, all these things that we'll be building over the next several years. Lots of excitement about that. The biggest negative feedback we get is that we aren't there right now. So advertisers want us to have all those features in place today. We would love to have all of those features in place today for sure. So we've got the hard work ahead of us of building those as quickly as we possibly can and closing that gap as soon as we can. But it's years ahead of us to go ahead and keep building these things. And quite frankly, as we build those features, I am quite certain that there'll be more that will come onto the roster that advertisers will be asking for us and more that we'll be excited about doing.

Thank you, Greg. And our next question is for Ted, coming from Rich Greenfield of LightShed.

Spencer, sorry to interrupt you. We didn't really ask the answer, the kind of cost thing, unless I missed it. Did I miss it in terms? Sure, I can chime in if you like. All of what Greg talked about in terms of investing in the business, suffice to say that is all embedded in our margin guidance. So we make trade-offs all the time with the business. We're Our expenses are up 7% year to date, where if you kind of step back, we're on track to be, you can do the math, it's probably north of 28 billion in total expenses across our business for the year. And we're still expecting to deliver five percentage points of margin improvement. So we try to run the business like owners, make smart trade-offs and invest into growth, like live, like ads, like games, like product innovation and ads as part of that, both for this year, as well as into next year, where again, we expect to drive revenue growth and increase our margins while investing into ads. Thanks for catching that, Spence.

Yes. Thanks for keeping us honest, Spence. So next question is for Ted coming from Rich Greenfield of Lightshed Partners. Is your recent agreement to stream two NFL games on Christmas Day signaling that you need live sports to build a robust advertising business? Or are you trying to create a regular cadence of high profile live events to bring advertisers onto the Netflix platform who will then spend across your broad array of entertainment content?

Thank you, Rich. It's a great question. And let me back up a minute. We're in live because our members love it and it drives a ton of engagement and it drives a ton of excitement. And those two things are very valuable. So the good thing is that advertisers like that too, and they like it for the exact same reason, the excitement and the engagement. So everyone's interests here are perfectly aligned in that way. What we signaled to the world when we went live with the Chris Rock selective outrage special last year ago is that this company, Netflix, who you love for on-demand viewing of your favorite TV shows and movies, is also, I say also, going to surprise you with amazing, exclusive, buzzy live entertainment. And since then, we've launched a golf tournament with the greatest, the biggest stars in PGA golf and Formula One drivers, a tennis match with two, like, generational titans of professional tennis, Nadal and Alcarez, a live comedy with Cat Williams, an entire week of groundbreaking live talk show episodes from John Mulaney, that epic roast of Tom Brady, our biggest live stream yet, And still to come, we've got a live show with Joe Rogan. We have this hot dog eating grudge match between Chestnut and Kobayashi that people are remarkably excited about. We have this long awaited boxing match between Mike Tyson and Jake Paul in November. And on Christmas Day, not just one, but two great NFL football games. So I would call that a really fast ramp and it leads right into a weekly live coverage of WWE. So it's that thrilling excitement, engaged watching that people are really thrilled about and we're thrilled about and that we're thrilled that our advertisers are excited about it too.

Thank you, Ted. Rich has a part two to this question, not surprisingly. How do you thread the needle on licensing sports to drive advertising spend without becoming beholden to leagues at renewal?

Well, hopefully exactly the way we're doing it by making these Netflix events, not necessarily taking on a lot of tonnage from any one league, but actually making these these games events like having two NFL football games on Christmas Day and two great games, the Chiefs and the Steelers and the Ravens and the Texans. They're both going to be great games. And it's a really creates a lot of real excitement with the service. And it's one day of football. So when I look at that and I think along those lines, you'd see how we solved for that in our WWE deal, which was economics that we like and live with and can grow into and contemplate what that expansion of cost and viewing would be over in that case, as long as 20 years if we want it to be. So I think it's really not a matter of there's an automatic disconnect between you can't do sports and have profit. It's very difficult to have big league sports and profit when you offer them in entire seasons. But when you offer them in this event model that we're building on, we're really excited about our opportunity to do that without the risk that you're talking about right now. So, and then beyond that, we're in love with the kind of very profitable storytelling version of sports. So if you can't wait for those football games on Christmas day, you can watch Receiver right now. It just started on July 10th on Netflix, which is part of that storytelling version of sports.

Thank you, Ted. Our next question comes from Kanan Venkateshwar of Barclays. It's a question regarding our engagement. So Ted, could you speak to the underlying engagement health at Netflix and what are you seeing there?

Yeah, look, I think I've talked about this a bit on the last call as well. But, you know, competition for entertainment is super intense and we compete for every second of view time we get. So beyond that, you know, kind of the competitive intensity that's always been out there, we also anticipated some headwinds in our engagement because of paid sharing. Remember, we were taking folks who were watching Netflix and not paying off the service. So we thought that our engagement would go down. We took a deep dive into how that was impacting and how we could isolate the impact and look at it as owner households. So those folks who were not impacted by paid sharing at all. And what we saw was in last quarter is that that engagement was holding steady, so that much of the engagement headwind was coming from that. But now we look forward a quarter. Now, I'm not gonna get in the habit of releasing this as a new metric every quarter, but looking at that same segment again, that segment's engagement is actually not just steady, but up year on year. So we're very excited about that. I think it's a very healthy sign of engagement growth. And even with all of that, so beating down the headwinds of that and beating down competition, we're still about 10% of TV time in every country we operate in. So still lots of room to grow, but very pleased with our engagement, but not fully satisfied.

Thank you, Ted. Our next question comes from Ben Swinburne of Morgan Stanley. Your primary competitor for more passive home entertainment engagement increasingly looks to be YouTube. What are you doing in terms of programming and product to try and take share from YouTube in the future? Or is this not a focus? Are there key verticals like kids programming where you see YouTube as particularly advantaged? Perhaps Ted, you and Greg can tag team on this one.

Yeah, sure. Looking at the Nielsen data that just released for June, what you see there is Netflix and YouTube are the clear leaders in direct-to-consumer entertainment. So us and YouTube represent about 50% of all streaming to the TV in the US. And we use the US only because that's where we have the data. So really what we're focused on here is focusing ourselves on that other 80% of total TV time that isn't going to either us or YouTube. So that's both streaming continuing to expand, which it did in June, so that share of TV time grew against linear. And as linear continues to give, I think there's a lot of opportunity for us to grow as long as we keep executing well. Now, we clearly do compete with YouTube in certain segments of their business, and we certainly compete with them for time and attention. But our services also feed each other really well. So remember, our shows are the most watched and talked about and award nominated. We just came out of 107 Emmy nominations for our slate this year, yesterday. And so our teasers and trailers and behind the scenes clips and all those kind of things are incredibly popular on YouTube. So in that way, we kind of feed each other pretty nicely. Greg, I don't know if you want to add anything.

Sure. I think it's also important to note that Netflix fulfills an important and differentiated need for both consumers who really want amazing spectacle movies and TV shows, as well as an important need for creators who want partners that can share in the risk that's inherent in bringing those stories to life. So you think about You know, shows like Stranger Things or Wednesday, Heartstop or Outer Banks. These shows create amazing view in the fandom and especially with younger audiences. So it's not, you know, just one generation. And it's really hard to imagine how that kind of big creative bet would happen and be possible within YouTube's model. So to Ted's point, it is very competitive out there. And we also feel confident that our model works. It works well for our consumers. It works well for creators. And it works well for our business and helps us generate significant operating margins.

Thank you, Ted and Greg. Our next question comes from Maria Rips of Canaccord. Netflix's CTO, Elizabeth Stone, recently appeared on a podcast where she said that Netflix is exploring how to integrate generative AI into the platform to improve the member experience. Do you think that technology could have more of a potential impact on the content creation or discovery side? How do you think about the relative impact on engagement from improving discovery versus content? Greg, over to you for this one.

Yeah, we've been using similar technologies, AI and ML, for many years to improve the discovery experience and drive more engagement through those improvements. We think the generative AI has tremendous potential to improve our recommendations and discovery systems even further. We want to make it even easier for people to find an amazing story that's just perfect for them in that moment. But I think it's also worth noting that the key to our success stacks, right? It's quality at all levels. So it's great movies, it's great TV shows, it's great games, it's great live events, and a great and constantly improving recommendation system that helps unlock all of that value for all of those stories.

Yeah, it begs the question about the impact on creative with AI going forward, which is hard to predict, obviously. But I would say this. I think that AI is going to generate a great set of creator tools, a great way for creators to tell better stories. And one thing that's sure, if you look back over 100 years of entertainment, you can see how great technology and great entertainment are. work hand in hand to make to build great big businesses you could look no further than animation when animation didn't get cheaper it got better in the move from hand-drawn to cg animation and more people work in animation today than ever in history so i'm pretty sure that there's a better business and a bigger business in making content 10 better than it is making it 50 cheaper so remember i think that shows and movies they win with the audience when they connect You know, and it's when it's in the beauty of the writing, it's in the chemistry of the actors, it's in the plot, the surprise and the plot twist, all of those things. And I'm not saying that audiences don't notice all these other things, but I think they largely care mostly about connecting with the storytelling. And I'd say they probably don't care much about budgets and arguably maybe not even about the technology to deliver it. So my point is they're looking to connect. So we have to focus on how to tell on the quality of the storytelling. There's a lot of filmmakers and a lot of producers experimenting with AI today. They're super excited about how useful a tool it can be. And we got to see how that develops before we can make any meaningful predictions of what it means for anybody. But our goal remains unchanged, which is telling great stories.

Thank you, Ted and Greg. We now have a question from Ben Swinburne regarding product. And the question for Greg is, can you dimensionalize the opportunity from a new homepage? You said that this is the biggest update in a decade, which sounds meaningful. What are the primary areas of improvement you're targeting with this?

Yeah, it's hard to know exactly at this moment how much benefit that new home page will derive. I think it's worth noting that it's less about the improvements that we're going to deliver initially, but it's more about creating a structure that allows us to evolve and advance more freely than the current structure does. And in terms of what are the pain points, what are we trying to solve? A lot of this is getting to the increase in diversity of entertainment that we are now offering. We've been amazing at film and series for a long period of time, but now increasingly we're adding live events into it. It's live events like the Brady roast, which was incredible, but it's a one-off event that we have to create demand for. It's live events like WWE, which are consistent and repeating that we want to make sure that fans of that experience have an easy way to access those things. We're increasingly promoting games as well into our service. So what we found is we need to create structures that allow us to flexibly go from one type of content and entertainment to another in terms of how we're promoting and connecting those. So there's things like that. There's also things like we want to increasingly recognize that we're doing, even in the same content type, we're doing different jobs for our users in different moments. And that could be you know sunday afternoon family uh movie time that'd be a great experience if we want to provide exactly the right discovery and choosing experience for versus maybe late on thursday night when you're coming home and you just want to get into the next episode of the series that you're currently cruising through so it's that kind of flexibility we want to provide this is our expectation is that this new structure will allow us to deliver as the old structure did for you know a decade multiple repetitive material benefits to users in terms of engagement which lead into retention and then revenue but again that'll be a long iterative journey and mostly we're trying to take that first step and set us up for that

And less technical too, Greg. The UI is beautiful. There we go.

We like beauty as well. Beauty is good. It is. It truly is.

Thank you. Next question is from Jason Helfstein of Oppenheimer. What have been the early results from phasing out the basic tier in a handful of your markets? And how does that tie back to success in selling ads? Greg, do you want to take that one?

Sure. As you've seen us do multiple times before, we spent a lot of energy on the right product experience for doing this migration. And then what we do is we roll it out and we test it and we see how that goes and let our members tell us if we did a good job there or not. We make whatever changes and iterations before we then scale it out and roll it even further. And I think it's worth noting here that we feel like in this migration, we've got a very strong offering for our members. Essentially, we're providing them a better experience, two streams versus one. We've got higher definition. We've got downloads. And of course, all at a lower price, $6.99 in the United States. We think that represents a tremendous entertainment value. And it includes ads. And for members who don't want that ads experience, they, of course, can choose our ads-free standard or premium plans as well. And then in terms of performance, I'll just let our actions speak for ourselves. When those things go well, we typically roll it out and that's, you know, we've had the confidence to move forward with that change in the US and France. So that's an indicator of how it's going.

Thank you, Greg. Next question comes from Eric Sheridan from Goldman Sachs. The question is regarding gaming. Can you provide any update on your gaming initiative and user engagement and your ability to scale your gaming efforts?

Sure. Games is a big market, so it's almost 150 billion ex-China and Russia, and not including ad revenue, which we aren't participating in in our current model. And we're getting close to three years into our gaming initiative, and we're happy with the progress that we've seen. We've set ourselves pretty... aggressive engagement growth targets. And we've met those, exceeded those in many cases. In 2023, we tripled that engagement. We're looking good in our engagement growth in 24, and we've set even more aggressive growth goals for 25 and 26. But worth noting that that engagement and that impact on our overall business at the current scale, it's still quite small. And it's also probably worth noting that the investment level in games relative to our overall content spend is also quite small. And we've calibrated the growth in investment with the growth in business impact. So we're being disciplined about how we scale that. So now, obviously, the job is to continue to grow that engagement. to the place where it has a material impact on the business. I think you've seen this trajectory with us before, whether it's been a new content genre like unscripted or film, or maybe getting the content mix right for a particular country. You can think about Japan or India, which we're now an amazing place through the hard work of our teams there. We continually iterate, we refine our programming based on the signals we get from our members. If you look over several years with that model, we can make a huge amount of progress. We've launched over 100 games so far. We've seen what works, what doesn't work. We're refining our program to do more of what is working with the 80 plus games that we currently have in development. And one of those things that really is working is connecting our members with games based on specific Netflix IP that they love. And this is an area that we've been able to move in quickly in a particular space, which is interactive narrative games. These are easier to build. And we place those in a narrative hub that we call Netflix Stories. Q2, we launched Virgin River and Perfect Match. Starting this month in July, we're going to launch about one new title per month into Netflix Stories. And this is, you know, amazing IP like Emily in Paris and Selling Sunset. ahead.

Yeah, I just want to chime in for a second, Greg, if you don't mind. This is why I'm really excited about the opportunity in games, which is the way that it's pretty rare for the new content vertical like this to actually complement or draft off of each other. So every once in a while, we get something like Squid Game to challenge following the Squid Game, the scripted series. But I think our opportunity here to serve super fandom with games is really fun and remarkable. I think the idea of being able to take a show... and give the super fan a place to be in between seasons. And even beyond that, to be able to use the game platform to introduce new characters, the new storylines, or new plot twists. Now, you could do those kind of things, and then they can then materialize in the next season or in the sequel to the film. It's a really great opportunity and a rare one where one and one equals three here. And to kind of replicate some of the success we've seen building fandom with live events and consumer products, this actually fits really nicely into that. So I'm really excited to see where this goes.

Thank you, Ted. Thank you, Greg. Our last question comes from Jessica Reef-Ehrlich of Bank of America. The question is regarding content spend. Ted, you have targeted $17 billion in cash content spend this year. You're increasing your sports spending within that. How should we think about your spending on entertainment or non-sports entertainment? And what's the overall content spending growth going forward?

Well, thanks for the question. I would like to just back up a little bit and say that creating TV and films for a big global audience is a creative process. So remember, we're programming for more than 600 million people around the world who are watching us for a couple hours a day every day. So we've got our work cut out for us. And that $17 billion, all those exciting things we talked about earlier, are all tucked into that $17 billion. And that $17 billion will grow as our revenue grows. It won't grow as fast as our revenue grows, but it will grow to accommodate that. And I think what's really important and where I think we have a real interesting advantage here is that we have these distributed creative teams all over the world. So what's great about that is they are very tightly wound into the creative ecosystem in all these different countries, the star systems, the producer systems, and more importantly, the culture, what fans in those countries really love. So we've got all these folks working at the same time so that in this creative process, which does have you know, hot streaks and cold streaks. They can be operating pretty simultaneously to create a very steady cadence of big, exciting hits. We certainly compete with Hollywood to make the best and most popular programming in the world, but we're also doing that in India, in Spain, in France, in Italy, in Germany, in Korea, in Japan, all over Southeast Asia, in Mexico, in Colombia, Spain, Argentina, and the UK. And the programming that we create in those countries again, all part of that 17 bill, are all designed to thrill the local audience. And when they really, really thrill the local audience, there's a possibility and sometimes a probability that they could find a gigantic audience all over the world, including in North America. So the team in EMEA, particularly in the UK, is doing a remarkable job of this right now. So they have been able to deliver big global hits, but they've been sensational in country. So Baby Reindeer and The Gentleman both landed with Emmy nominations yesterday and have been sensations in the US, but they are a phenomenon in the UK. So more than 50% of all of our members in the UK have watched or are watching Baby Reindeer and The Gentleman. Similarly with One Day, our original film Scoop. So those things that are thrilling the world are super serving the British audience. The same thing just came out of Paris or out of France with Under Paris, which was 90 million views, 157 million view hours around the world, more than half of every French member loves this movie uh same thing with the asunta case in spain uh more than 50 watching in spain and big watching all over the world queen of tears in korea is another example that's happening in apac right now so this kind of like super serving local audiences creating global content around the world gives us an efficiency that i think is getting better and better and a muscle that's getting stronger and stronger that i'm really excited about and how does that play out You know, our slate coming up is unbelievable. So as we've currently forecast, what we're going to deliver for the rest of this year and what we're going to deliver in through 25, just before the end of this year, we've got Squid Game, return we've got emily and paris return you've got a new season of selling sunset lincoln lawyer the diplomat virgin river love is blind ryan murphy has an incredible new season of monsters that tells the eric and lyle menendez story um that's all just coming up before the end of the year uh and then looking forward you know the next you know through 25 you've got new seasons of Wednesday and Stranger Things and Night Agent. We're in production on One Piece. So there's a ton of excitement there just in our series. This week, we kicked off the finale of Cobra Kai, which is going to blow your mind. August 8th, we've got the finale of Umbrella Academy kicking off and a brand new series that we're also thrilled about. Susan Beer's Perfect Couple. This has got Nicole Kidman and... Just a really fun, fun thriller. Nobody Wants This from Kristen Bell and Adam Brody. Black Doves, a beautiful show out of the UK. Beauty in Black from Tyler Perry. No Good Deed, which is bringing Ray Romano and Lisa Kudrow back to TV. Classic Spy with Ted Danson from Brazil. We have Sena from Colombia. We've got 100 Years of Solitude. And then, of course, all those live events I taught you about. And our movie slate is fantastic with Rebel Ridge, Will and Harper, 6888, The Piano Lesson, Carry On. We have got a lot packed into that. Our goal and our mission here is we have to spend the next billion dollars of programming better than anyone else in the world. And there's no one better at doing it than Netflix. So we're excited.

Spencer, how do you not get excited about that? And then also get excited about that. We're going to do all that while, you know, growing content spends lower than revenue. That's a lot of stuff going on. It's all in there.

It's all in there. And the hot dog contest too, Spencer. Don't forget that.

All right. Well, I'm going to leave it at that since it sounds like we're going to have a lot to watch. So we all need a little bit more time. So we'll end the Q2 call here. So thank you, Ted, Greg and Spence for joining us today. Thank you, investors and analysts for dialing into our call. And we look forward to chatting with you next quarter. Thank you very much.