So that’s really what we are working towards.And then long term, we just — we don’t see ourselves approaching a near-term ceiling. There’s lots of proxies out there. Entertainment services and networks at scale traditionally have been well above our roughly 20% operating margin.So we believe we have a long way to go and we have some inherent advantages. We are a truly global entertainment network, perhaps the first, with really healthy leading engagement and a really scalable content model. So we believe we have got a long way to go, but not really putting more specific guidance out for now.Ted Sarandos Just if I could add an example of that — of the scale of the business being global, is that every one of our big content wins start as a local win.
And then in success, they roll out and they get regional, then they reach the diaspora, then they get global and it’s huge success, and there’s no marginal cost to all that additional audience when we get it right.So by driving — creating those stories that drive growth of the business in local territories, it provides content into the pool that people can fall in love with and it’s just as likely that we can get a gigantic hit from anywhere in the world and that’s really the scale of our operating business. And to go back to what Spence said about, the potential for — to even grow margins beyond where we are at today is very, very high.Jessica Reif Erlich Could you give us an update on your capital return plans, I mean, how are you thinking about — you announced the $1.2 million buyback in Q1.
But relative to your free cash flow and an incredible balance sheet, this — you have a lot of capacity. So can you give us any color on how you are thinking about capital returns over the longer term?Ted Sarandos Sure.Spence Neumann I…Ted Sarandos Spencer, do you want to take that one?Spence Neumann Yeah. I can take that one. Thanks, Jessica, for the question. And we are happy to be fully investment grade as of Q1. So that’s a nice milestone for the company. And you are right, there’s no change to our capital allocation philosophy. So we are still targeting to maintain minimum cash equivalent to roughly two months of revenue.Based on the Q1 numbers, it’s about $5.4 billion of minimum cash. We ended the quarter with about $7.8 billion on the balance sheet so we do have about $2.4 billion of excess cash.
So that is why we did indicate in the letter that our share repurchases will accelerate over the course of the year.And then one other minor thing I forgot to mention in my intro, that this video interview will include forward-looking statements and actual results may vary. So I do want to say that and here’s evidence that this video interview is actually not scripted. So back to you, Jessica.Jessica Reif Erlich So, Ted, how are you preparing for a potential writer’s strike, potential or likely?Ted Sarandos Well, Jessica, let’s first to say, we respect the writers and we respect the WGA and we couldn’t be here without them. We don’t want a strike. The last time there was a strike, it was devastating to creators. It was really hard in the industry.
It was painful for local economies that support production and it was very, very, very bad for fans.So if there’s a strike and we want to work really hard to make sure we could find a fair and equitable deal so we can avoid one. But if there is one, we have a large base of upcoming shows and films from around the world, we could probably serve our members better than most.And we really don’t want this to happen, but we had to make plans for the worst and so we do have a pretty robust slate of releases to take us into a long time. But just to be clear, we are at the table and we are going to try to get to an equitable solution so there isn’t a strike.Jessica Reif Erlich And beyond the strike, just once you get past that, how do you expect content spending to change over the next few years, you have kind of been at the $17 billion cadence.
Does it depend on revenue growth? Can you give us some color on how you are thinking about that?Ted Sarandos Yes. It depends on revenue growth. And also keep in mind that the way that revenue or the way that content spend hits us, it’s with starter productions and deliveries. We still worked through or we came through or comping off of those post-COVID floodgates opening and so that does throw — makes the content spend a little lumpier. We expect to be back to about the $17 billion level in 2024 and the rate of growth depends on the rate of revenue growth for sure.Jessica Reif Erlich Okay. Just one…Spence Neumann Okay. Just to add to Ted’s point…Jessica Reif Erlich Yeah.Spence Neumann …because I totally agree with all of that. And — but again, it’s — there’s a big opportunity ahead so I just want to reinforce that.
We are not going to — we said, we would stay at roughly $17 billion on average over a few year period over that 2022 to 2024 period, but there’s a big entertainment market to go after beyond that. So as we reaccelerate revenue, we see a lot of opportunity to grow into that viewing and engagement and business opportunity ahead. So we expect to be there and we just have to build into it.Ted Sarandos Absolutely.Jessica Reif Erlich Do you have any thoughts on revisiting your film strategy? In terms of like theatrical output, as well as distribution, you have had so much success at the Academy Awards. So does that change anything for you? And you also recently had a restructuring in this division, is there anything to read from that?Ted Sarandos No. Jessica, the film division is doing great.
They really are building some great films. As you pointed out, the success at the Oscars was great. But the thing even better than that was the movies that won so big were also very, very popular with fans.So this is award-winning critical acclaim and enormously popular with fans, even, like I said, with All Quiet on the Western Front was that, Pinocchio certainly was that and we are really proud of the films that were in the mix, because they were loved by fans.So we are really happy with the investment in film. Of course, we are trying to improve it, like we do with all of our films. But our release strategy, remember, there’s a lot of ways to create and collect demand for a film.Driving folks to a theater is just not our business. We create that demand.
We collect that demand on our subscription service with our members. And I think having big new desirable content, including feature films in the first window drives value for our members and drives value to the business. So no major changes in play, except for trying to continue to improve the films for our members and make a big splash with films that are loved and watched.Spence Neumann And…Jessica Reif Erlich Obviously.Spence Neumann … it’s really leaning into advantage — we believe an advantage we have of delivering that value to our members, but because of our reach and our scale to have over 230 million paying members at our average revenue per member, it affords the opportunity to invest in these big movies, bring them to our members at just one other piece or area variety of content and must-watch content and entertainment for members.
So it’s really kind of leaning into that advantage.Ted Sarandos And I think it’s tempting to make the comparison between the services, but the other services don’t have that scale, as you pointed out, Spence. They don’t have the revenue base or the viewer base to support with a single window the way we can support even big budget films with a single window on Netflix.Jessica Reif Erlich How is your live strategy evolving? And Chris Rock was a huge hit, but Love is Blind had some technical issues. Is live a big advertising driver, do you need to invest more to beef up your technical capabilities?Ted Sarandos Greg, do you want to grab that?Greg Peters Yeah. I will kick it off. I would start by saying we are really sorry to have disappointed so many people.
We didn’t meet the standard that we expect of ourselves to serve our members. And just to be clear from a technical perspective, we have got the infrastructure, we had just a bug that we introduced actually when we implemented some changes to try and improve live streaming performance after the last live broadcast, Chris Rock in March.And we just didn’t see this bug in internal testing, because it only became apparent once we put sort of multiple systems interacting with each other under the load of millions of people trying to watch Love is Blind.So we hate it when these things happen, but we will learn from it and we will get better and we do have the fundamental infrastructure that we need. And I would say the good news is that ultimately, 6.5 million viewers watched and enjoyed the show.
Then I will turn it over to Ted to talk about more of the strategy side.Ted Sarandos Yeah. Look, we have said we want to use live when it makes sense creatively, when it helps the content itself. So a Reunion Show that’s going to generate news and buzz, it really does play better live when people can enjoy it together.Certainly, the Chris Rock Standup Show played out so well, because so much anticipation for what he’s going to say in that set. So when we have the opportunities to do projects like that, we like the fact that we have the option to do it.As Greg said, we are super disappointed to not be able to come across with the live product for everyone who wanted it on Love is Blind Reunion, but we are super thrilled that people love the show.
