David Wells, CFO, Netflix, Inc. (NASDAQ:NFLX)
And Rich, one final comment regarding guidance, it is worth reminding folks that the investment community is hyper-focused on whether we’re within 100 or 200 thousands hundred thousand or of our guiding number, but when we are talking our guide for Q1 at 1.8 million domestic members, in terms of growth, the addition of even House of Cards Season 3 is a hundred thousand, a hundred and fifty thousand so we’re talking about on the margin it’s helpful but it’s not the thing — it’s not the big thing that is going to drive the growth in Q1.
Mark Mahaney, RBC Analyst
Let me go back to Ted with two question on original content. Does the success then of Marco Polo lead you to look into more of this kind of relatively blockbuster type of productions? Secondly, in terms of the viewing of the seasons, just to be clear, are you seeing greater viewing of each of the original content — House of Cards, Orange is the New Black — are they increasing every year as you’ve seen really successful series do in the past? Are the audiences building up for each of those?
Ted Sarandos, Chief Content Officer, Netflix, Inc. (NASDAQ:NFLX)
The audience is definitely building season and season for each of those shows. I think if you see in our line up of upcoming shows that we have some pretty epic and pretty spectacular shows upcoming, like Daredevil, like Sensei that are done in a very big scale. Remember, we are releasing 320 hours of new original programming this year alone and in it there’s a mix of big epic spectaculars, some smaller productions, but probably equally loved like comedy from Tina Fey and Robert Carlock, the Unbreakable Kimmy Schmidt, and other shows as well, like Grace and Frankie with Jane Fonda and Lily Tomlin. So we’re not going after one kind of audience or one type of show. Tastes are super diverse, we have a big subscriber base and we’re trying to serve all of them.
Richard Greenfield, BTIG
When you look at subscriber growth, David, obviously you’re looking for slower growth or slower net adds as you look on a year-over-year basis, should investors just assume that a kind of 20% annual decline or the content that Ted’s talking about, is there a potential to reaccelerate that when you can have more adds domestically in 2016 and 2015, and then tied to that, you gave out your first ever margin guidance for 2020 of 40%, was that tied to a specific subscriber number in your head, or is there a pricing flexibility when you think pricing is noticeably higher? How do we think about how you get to that 40% contribution margin?
David Wells, CFO, Netflix, Inc. (NASDAQ:NFLX)
So I’ll take the first part. It certainly could end up higher right now. We’ve learned our lessons on giving four-year guidance on member numbers so we tend not to do that. But what we are saying is, the current trends that we saw in Q3 and Q4, extrapolated forward, are down year-on-year in terms of net addition growth. We have a lot of content as Ted just talked about coming out in Q1 and then in the rest of 2015. So, we certainly could see it jump up, it’s really hard to know but I think the prudent thing for us right now is just to continue to extrapolate the current trend that we are seeing and that was down year-on-year and that’s what you’ll see reflected in our Q1 guide.
