Spence Neumann: Sure. Thanks, Greg. So in terms of ARM and your question, Rich, in terms of how we’re doing now relative to what we discussed when we first launched the business. And as Greg said, we’ve been growing our inventory at quite a fast clip. And so, monetization hasn’t fully kept up with that growth in scale and inventory as we’re still early in building out our sales capabilities and our ad products. But that is an opportunity for us, because we’re still a very premium content environment, a very highly engaged audience that’s at an increasing scale. So our CPMs remain strong and we’re building out our capabilities, as Greg talked about. So the revenue is going to follow engagement over time and it’s already kind of growing nicely, which is great just off a small base.
So then really as Greg said, what that means for ARM is right now, it is a bit of a drag on our ARM because of we’re kind of under-monetizing relative to supply. But over time, we expect to be similar in revenue on our ads tier, a combination of subscription as well as ads revenue with those kind of non-ads offering. So that’s how to think about it, but we’re building to it over time.
Spencer Wang: Great. Last question on advertising comes from Jon Hollick at UBS. How are you approaching this year’s upfronts? And do you believe the base of ad-supported users is now of the scale that upfront commitments can drive a meaningful change in advertising revenue and be a contributor to ARM growth in 2025? So perhaps Ted, maybe you could start and then Greg follow after that.
Ted Sarandos: Yes, of course. Look, first and foremost, this is our second upfront. We’re really excited to go and share with advertisers this incredible slate that we’re very, very proud of. So they’re going to get a look at some of the shows that are upcoming right away like brand new seasons of Bridgerton and Sweet Tooth and The ’90s Show, some of our big unscripted events upcoming like our Tom Brady Roast by way of example and brand new shows like Dead Boy Detectives and Shane Gillis’ new show Tires, Eric, a great new limited series out of the U.K. with Benedict Cumberbatch that we’re super excited about. And then, they’ll even get a longer look at what’s all coming up in the second half of the year, which is again returning seasons at Cobra Kai, Emily in Paris, The Night Agent, Outer Banks and Squid Game, our big one and a brand new season of Monsters from Ryan Murphy, which is The Lyle and Erik Menendez Story this year, which is going to be really incredible thing to share with our advertisers.
And brand new original series and limited series like American Primeval from Pete Berg, Heartburn with an all-star cast, Nicole Kidman and Liev Schreiber, Senna, which is this great limited series on the Great Brazilian Formula One Driver that we’re really excited about. And also, I look at our early – at our movies coming up that we’ll end the year with like Eddie Murphy in his most iconic role, Axel Foley and Beverly Hills Cop Axel Foley, Carry On, a big new animated feature, Spellbound. So we’ve got a lot of entertainment in store for the audience at the upfronts.
Greg Peters: Yes. I think this is an opportunity to reengage with advertisers and look at the fundamentals of what our offering is. I mean, first and foremost, that’s an incredible list of titles that brands want to be connected with. It’s just super exciting to hear that roster. We’ve got great engagement from our members on our ads tier. We’ve got an opportunity to grow that even further. We think that’s connected again to the power of those titles. We’re rapidly growing scale, as we mentioned. That’s the number one request we’ve had from advertisers. So that’s exciting. We’re making progress on technical features like measurement, on ads products. So we’re excited to get that out there. And really, this is just an opportunity to bring all of that progress in a package to advertisers and then of course, to get input from them because we know that they’re going to have comments and they’re going to have things that they’re going to want us to continue to work on.
And then really then just to continue that journey, because we know there’s plenty more to go do to realize the potential we have in this space. And so, I would say, we’re continuing to grow here. We’re growing off of a relatively small base in terms of the impact against already big and substantial business. So even though it’s growing quite quickly, it takes a while to grow that into the point where it’s material. So we look forward to that increasing in ’25 and then increasing further ’26 and beyond.
Spencer Wang: Great. I’ll now transition us to several questions around content. And this first one, I’ll direct to Ted. It’s a rare question around why don’t we spend more. Given what seems like a very favorable current backdrop for Netflix to acquire and license content, why not lean in even more aggressively? Could it make sense to spend more than $17 billion in cash content this year?
Ted Sarandos: Yes. Look, independent of the availability of licensed content, you should look at it, I think we’re – we’ve always been very disciplined about the way we invest in the business and how we grow it. And we can get a lot of bang for our buck by spending our money well and producing our shows really well and also by acquiring the right content. And the floodgates have opened a little more on licensing for sure. But again, we’re very focused on the ones that we think will drive the business. So I think we’re at our current level of spending at our current level – rate of growth and we’re pretty comfortable spending just behind that anticipated rate of growth.
Spencer Wang: And Ted, Jason Helfstein’s follow-up is also about licensed content or second-run content. And his question is, how would second – more second-run licensing impact your margins and free cash flow?
