If we continue to improve our core offering, that means more diversity and more quality from our members’ perspective in our films and series, now adding the live events programming to add even more value, continue to grow games and the entertainment value that we’re delivering through those, then our paid sharing work and our ads work creates a more effective engine to translate all that value into revenue growth. And will support increased conversion of our addressable market in many years to come.
Spencer Wang: Thanks, Greg. The next question is from Doug Anmuth from JPMorgan. And I’ll direct this one to Spence. The $13 million plus pay net adds in Q4 was strong overall and across all regions, but EMEA seemed to drive particular upside. Is there anything specific to point out there, perhaps the ad tier or specific content or localized pricing perhaps?
Spencer Neumann: Yes, thanks. Well, actually, EMEA is sort of a perfect example of a little bit of what Greg was just talking about. So first, it starts with great slate performance, a great content performance. We had a really strong slate across EMEA from The Crown finale in the U.K., to – in France, we had Blood Coast and Lupin and Class Act. We had Berlin, Elite and Nowhere in Spain and Poland, 1670 and much more, frankly. So it starts with that strong slate. And then by channel, Greg’s last answer that kind of better value translation engine, if you will, which drives even more growth through our paid sharing solutions and our monetization engine. So that helped as well. So it really all came together in EMEA this past quarter. And I’ll say, very importantly, it’s not just net ads. It’s again, our primary focus is on revenue growth. We had very strong revenue growth as a result of that in EMEA this past quarter. 13% FX neutral growth in Q4.
Spencer Wang: Thanks, Spence. Doug also has a follow-up question around paid sharing, which I will direct to Greg. How far along are you in terms of the paid sharing benefits? Do you still believe paid sharing will add subscribers for several more quarters? And is there any way to quantify what percentage of the 100 million borrower household population have either become extra members or full paying subscribers?
Greg Peters: Yes. As I mentioned, we’ve gotten to the point where paid sharing, the paid sharing product experience is just something we do at this point. But also, I think it’s important to say that like many other things that we do, we also see a real opportunity to continue to materially improve that value translation engine. So we definitely delivered interventions to new cohorts in the last quarter. We’re going to continue to deliver to new cohorts in 2024. But increasingly, I sort of don’t think about it as like going after these certain pools, but more about just finding the most effective way to convert folks who are using the service, the right call to action, the right nudge at the right time. And those might have been historical borrowers or folks that are new to the service as well. And we’re going to continue to improve that engine. That will continue to improve our growth for years ahead, not just 2024.
Spencer Wang: Great. I’ll now transition us to a series of questions around advertising. For Greg, Dan Salmon from New Street Research. His question is, what are some of your most important milestones for the advertising business in 2024? Do you have a target level of MAUs or ad member households, what sorts of improvements to ad tech or measurement are you seeking and perhaps any new country launches for your ads plan?
Greg Peters: Yes. Our top ads priority, you’ve heard us say before, I think you’ll hear us say it again, is scale. We saw a 70% quarter-on-quarter growth last quarter. That’s after 70% quarter-over-quarter for the quarter before and then 100% the quarter before that. So that’s a good trajectory to be on. We’re now at 23 million MAUs, and we see that continuing to grow in the quarters ahead. As to your point about what’s the target, every market is different. There’s not a magic MAU number, but I think it’s fair to say that we’ve still got plenty of room to grow in all the markets that we operate in. And we’re focused on the additional work that we can do in that space. That means making the ads plan more attractive. We’ve added streams, higher resolution, downloads.
It means engaging partner channels. You see us do more of that. Shifting our plans and pricing structure in other places where we think it’s appropriate. So all that works ahead of us. We know we can do tremendous amounts in that space, and we’re going to go do it over the next quarters. Second priority, you mentioned this, which is really growing the technical advertising features and growing our go-to-market capabilities. And these are features like targeting, improved ad relevance. That’s good for members. It’s good for brands. We’ve got tons to do on improved measurement. We want to launch more ads products. We’ve got binge ad sponsorships now. And we have to build increasingly the capability to be better partners with advertisers and serve their needs.
So this is better sales teams, ad operations and just more capability to meet brands where they need us and how they need us. So we’re focused on the long-term revenue potential here. We’re very optimistic about it. It’s a huge opportunity, $180 billion of ad spend ex-China and Russia, $25 billion alone on Connected TV. We know ad dollars follow engagement. We’ve got the most engaged audience. So we believe we’re well positioned to capture some of that ad spend that shifts from linear to streaming.
Spencer Wang: Great. And Greg, any thoughts to Dan’s question around launching an ads plan in other countries in addition to the 12 countries we’re in today?
Greg Peters: Thanks for reminding me on that one. I would say we got a ton of work ahead of us on just getting to the level of maturity and impact to the business from the countries that we’re operating in today. I would say, never say never on expanding beyond that, but it’s worth noting that the countries that we are currently operating in represent about 80% of global ad spend. So we’re already working in the spaces where there’s the majority of opportunity. We’ll see in the fullness of time, but I’d say we’ve got years of work ahead of us to take the ads business to the point where it’s a material impact to our general business.
Spencer Wang: Thank you, Greg. From Steve Cahall from Wells Fargo. How do you think about the efficacy of continuing to use a third-party relationship for ad sales versus the opportunity to invest in your own ad tech and ad sales infrastructure? Do you have a sense of what kind of investment would be required to transact more directly with advertisers?
