Greg Peters: Yes. As we had talked about previously, we largely put price increases on hold while we were rolling out the paid sharing work because we saw that as a form of substitute price increase. Now that we’re through that, we’re able to resume our sort of standard approach towards price increases. You’ve seen us do that in the U.S., U.K. and France. Those changes went well, better than we forecasted. And we’ll continue to then monitor other countries and try and assess when we’ve delivered enough additional entertainment value, we look at engagement retention acquisition as a signal is there. so that we can go back to members and ask them to pay a bit more to keep that positive flywheel going. And we can invest in more great film series and games for those members. So the summary statement might be back to business as usual. And Spence, I don’t know if you wanted to add anything there?
Spencer Neumann: I think you nailed it, you’re on a roll. So it’s good.
Spencer Wang: Great. I’ll move us along now to a couple of questions on competition and the competitive landscape. The first question comes from Maria Ripps of Canaccord Genuity. With ads coming to Prime Video at the end of this month, and given Amazon is making it the default option for its prime members, could you talk about how you are positioning Netflix relative to the competition when you’re speaking with advertisers? Could you also comment on if Netflix considered making the ad tier the default option similar to Amazon? And what were some of the puts and takes about that decision? So I’ll turn that one over to you, Greg.
Greg Peters: Yes. We did consider making it the default option. But given our long history of not having ads, we thought it was better for our members rather than force them into a change and give them ads. But better to attract them to the ads plan for the ones that wanted it based on the benefits, more streams, higher resolution downloads and of course, the lower price to be able to access all these incredible stories. So I mentioned the growth numbers we were seeing previously and the rate of growth we are on. So I think that approach is generally working well for our members, and we haven’t seen any big backlash as a result, which is positive as well. And then in terms of competitive positioning, probably the most important thing to start with is the market’s big, right?
We talked about over $25 billion in CTV ad spend alone. So there’s room for multiple players, clearly. And when we think about how we compete for some of that ad spend, I really think we need to play to our strengths. We’ve got an incredibly engaged audience, the most engaged audience who are watching the most culture-defining films, series and live events. That is an important place for brands to be, and it’s something that differentiates us from our competitors. So that’s the space that we’re going to play in.
Spencer Wang: Super. Another question on competition. This one probably best for Ted and Spence to take. It comes from Eric Sheridan from Goldman Sachs. How does the current competitive landscape or content impact the trajectory of Netflix’s own content spending in 2024 and beyond? Is it possible that the company could widen its competitive moat on the same or lower absolute amount of content spend?
Ted Sarandos: I think it’s always been a competitive place for the top programming. I think that will continue. And that’s really what I think what you’re talking about is whether when the top titles come to market when the big packages come and everyone’s duking it out for them is going to remain to be pretty competitive. I think that we are reinvesting at a very healthy rate. We see that in the engagement. We see that in the retention, and we see that in the subscriber growth. So I don’t think this would be the time to try to test that. And Spence, do you think differently, but…
Spencer Neumann: Yes. I would just say – just to reinforce that, I mean, we’ve seen the benefits over time of continuous improvement, great execution and focus and kind of gradually building our business and doing it really well and thrilling our members. And so you see it like we are increasing our content spend and coming out of the strikes in ’23. We’re trying to get back up to as much as $17 billion of cash content spend this year. And as we’ve also said over the last few years as we kind of reaccelerate our revenue growth, which we’re seeing in the business, we hope to sustain that healthy revenue growth, grow profit and profit margins over time and then reinvest a good portion of that back in the business, which means increasing our content spend.
So we do plan to do that, but we want to do it in a smart, judicious, responsible way. And obviously, today’s even announcement with WWE is a case in point. We believe we have room to do that while still staying very disciplined in terms of our overall content spend in our business performance.
Ted Sarandos: Yes. I think the perception of overserving thrilling content to our members has served us pretty well.
Spencer Neumann: Yes. And we’ve got lots of room to grow, obviously. And so we just want to do it in a disciplined way. No question, yes.
Spencer Wang: Another question from Eric Sheridan from Goldman Sachs. A bigger picture question. Given the scale of audience that has been built by Netflix, how do you think about the potential for new areas to widen your exposure to verticals or formats of media consumption? I think maybe Eric is referring to short-form content or, things like that, Ted.
Ted Sarandos: I would kind of call back to something that Greg alluded to earlier. In the areas of business that are in our core, movies, television and now games, the – that business, we’re getting – we’re capturing about 5% of consumer spending. In our most mature markets, we’re getting about 10% of TV time. So in our very core business, we still have an enormous room to grow. So when I look at that, it doesn’t make me think about searching for more inorganic growth in different kinds of programming. There’s so much room to grow in this bit of programming that we’re kind of hopefully getting better and better at it for our members every day. So there’s a lot of adjacent businesses that are not necessarily competitive and are certainly complementary in some ways.
Some of those platforms that you’re talking about maybe in the user-generated space have turned out to be great marketing tools for our professional content. So I think we’re rightfully focused, I think, on the core of professional storytelling.
