Q4 2020 Netflix Inc Earnings Call
Yeah.
Okay.
Okay, I was really hoping to monitor our comments live here, but on it's just super Super delayed over here. So.
I'm just going to have to Sumer, we're all good.
There you go.
Give me one second perfect.
Okay.
David Gill.
Okay, well welcome if you guys are.
Watching thanks for join Us.
For those who don't know me my name is James you might see me on Might've see me on Youtube occasionally on otherwise known as major O S C.
But low with my new home and we're gonna be going through a lot of cool stuff today.
Yeah, So, let's get I'm going to get the jitters out of here Wood I was hoping to just take some.
Initial questions trying to get an idea of who who is here and you know what everybody is looking to learned today I had a couple of things in mind regarding sound design.
And.
Let's see theory go I got life comments awesome.
Please bear with us.
[noise] Yeah AR at the end of this I am going to probably I'm.
I'm going to post on Facebook.
A bunch of patches that I'll be going through and then we're gonna be creating some as we go so hopefully you're you got a sense on front of you either a cobalt or in argon. Some of this stuff is going to be pretty universally applicable.
And you know some of it might be specific to the argon, but unfortunately, you know there's four days or maybe five.
Of our live streaming so on some days will be on argon. Some day, there will be on cobalt eight jet it'll just depend but Tom.
Yeah.
Let's see here I wanted to go over a couple of kind of fun little tricks I would assume everybody here is I'm familiar with the app, but if you're not.
Definitely get the App the App makes sound design on the on the argon on the cobalt just it's a game changer, so much better.
And it really helps you understand the how this is working in.
Right here.
This is your bread and butter for bolt since really this is where all the action happens.
Tom This bold Barre here would be your Mod you know your mod sources in your mind the destinations and it's extremely it's an extremely fast workflow so let's.
You're wrong VP of IR and corporate development. Joining me today are co CEO Reed Hastings for CE.
And chief content Officer, Ted surrenders.
Oh, and Chief product Officer, Greg Peters, and CFO, Sam Human our income here of this quarter is non <unk> from Barclays. As a reminder, we will be making forward looking statements and actual results may vary with that let me turn it over to <unk> for the first question.
Thank you Spencer.
And good afternoon, everyone.
So maybe expense we could start off with you.
Just given the guidance and of beef during the quarter relative to guidance sequentially. The first quarter tends to be higher in net additions in Q4.
But your guidance is lower despite the fact that you beat for Q4 by a relatively large amount and it feels like the pull forward effect is more or less behind us. So if you could just help us walk through.
Of the thought behind the guidance and the framework that you use for that type of vehicle piece of debt.
Yes, sure Tom will of great to see of happy new year, obviously delayed.
So in terms of the guide you know first of all of them, we guided to 6 million paid net adds for Q1 of you saw.
And obviously, that's still a big number, especially when you think about it in context of 2020 of which was by far of record year with 37 million paid net adds. So I know you mentioned the pull forward I don't think we're declaring that we're necessarily through that yet. So we think theres puts and calls every quarter, but one that Sam.
So meaningful factor for us in the guide is thinking through how we kind of grow through that growth.
2020, so there's probably still a little bit of that pull forward dynamic in the early parts of 2021, and then more broadly can on it.
It's just so difficult and this time I mean this is one of the more uniquely challenging times not just for life, but that's most important but also obviously in terms of trying to just forecast the growth trajectory of the business. There's just so much uncertainty right now so.
It's more uncertain than we've ever seen.
And we're trying to forecast for that.
But at the same time, one thing that's maybe counterbalancing that as that would COVID-19 has done for us.
Is it accelerated that big shift from linear to streaming entertainment. So the long term growth trajectory is at least as strong as ever there's just more short term noise and uncertainty right now, but still very strong underlying growth metrics and thats, what youre seeing in the Q1 guide.
Okay.
I guess, if you just look at the full year in terms of cadence.
'twenty, one obviously has tough comps versus 2020.
But I think one of the things you guys also indicated was potentially of $4 million to $5 million pull forward.
For 2020 from a growth perspective, and I think theres been a lot of debate about what you actually meant by that sort of $5 million. So if you could just contextualize the guidance for Q1 more in the context of 2021.
You typically do 28 to 30 million subs in a given year.
But more or less in fact or should we beat that four to 5 million comment of the pull forward into 'twenty.
Okay.
This one of other others can jump in as well. Unfortunately can on we're just we're not going to provide.
Our full year guide I mean, just as we talked about there's so much uncertainty in the business that we can provide a number but I'm not sure of the worst.
Bankable right I mean, it's hard enough to project. The next 90 days, let alone. The next 12 months, where we are.
I feel very good about as I said is that longer term growth trajectory, you've seen us as you pointed out historical growth trends.
Hopefully it would be plus or minus that but it's a bit impossible to predict but do you see is that viewing is up in every region of the world has kind of returned from those peak COVID-19 levels, but it's up year over year in all regions.
Retention is better than it was a year ago acquisition is strong so the underlying metrics are strong and the business, but I don't want to provide false precision on a 12 month target.
Okay.
And if you could touch on a couple of regions.
The one thing that stood out during the quarter of course as you can where most of growth part of the market was saturated but you guys keep act.
Accelerating growth despite price increases, which is even more impressive.
And then the other region, which take Q3 seems to be despite the benefit of Colbert seemed to have slower growth than 2019.
Despite the market non being saturated. So if you could just talk about the underlying trends in some of these markets and what you have seen which is driving some of these trends that might be useful.
You want me to go or someone else want to go.
Sure.
Okay I'll I'll go again.
Yeah.
The story is pretty similar throughout the world every country is a little bit different but what we're seeing in terms of our viewing trends are similar around the world of types of content that our members are viewing as part of kind of similar pre COVID-19 and post Covid, obviously, we have more and more variety of content and great experiences.
We're offering to our members.
But the story is pretty similar as you know there are certain countries around the world. We're just further along in our content market fit in our maturation, but we're seeing growth everywhere I mean, even sort of like the Pik Latin America. As an example, one of our more mature markets you look over the past few years and we've been steadily growing about five to 6 million paid net of.
Adds a year as you mentioned in the kind of U S. You can market were roughly 60% penetrated and we're still growing so we're still a very small share of even just pay TV penetration in most markets around the world and small share of viewing. So we think we've got a lot of headroom in all of these markets. We're just trying to get a little better every day.
Non if you take the U S being our most penetrated market.
Still under 10% of TV viewing time is Netflix.
So again, there we've got a lot of subscribers here in the U S. But we still have a lot more viewing time that we would like to or with an incredible service of incredible content.
Got it.
And maybe one last financial question that really gives us out of the way and get into the more interesting part of of discussion.
But I wouldn't think of FEMSA that last comment.
Yeah.
But.
The one thing, obviously, which is new.
In the letter this quarter is the cash flow guidance and your cash flow guidance is better than what you paid for mutually indicated and the buyback guidance. So maybe you could talk about capital allocation and.
Using the cash for buybacks versus potentially other opportunities and also why yields an absolute growth that number instead of a leverage target to frame the buyback discussion. So it would be helpful to give that context, yes.
Yeah sure. So thanks Tom.
We're super proud of where we are from a free cash flow perspective, and we we've talked a bit.
Internally before the call is what was the bigger milestone for us the passing of 200 million member Mark or.
Kind of turning to this next chapter in terms of our free cash flow and the ability to.
Self fund our growth going forward and we think that's a pretty big milestone for us to the point of our capital allocation approach to philosophy remains unchanged, which is that where we're going to be disciplined stewards of capital and try to do things that we believer of value maximizing for our shareholders, but we have turned this corner where.
Now we can as we talked about with $8 billion of cash on the balance sheet projecting to be cash flow about breakeven in 2021, and then positive thereafter.
We want to you.
Return excess cash of the chair of our shareholders. So we won't build up a bunch of excess cash.
We will maintain as you say about.
We said in the letter you mentioned about $10 billion to $15 billion of gross debt on the balance sheet and that's really just to yes.
Maintain familiarity and access to the debt markets should we need it but there's really not a whole lot of science.
On that.
Then beyond that as I say, where we put a premium on balance sheet flexibility. So we're going to continue to invest.
Invest aggressively into the growth opportunities that we see.
That's always going to come first but beyond that if we have excess cash we will return it to shareholders through two of share buyback program.
Yeah.
And.
Reed and Ted if we could just pivot to.
A question on competition I mean, this question may feel a little bit unfair to be honest because in many ways you created the streaming streaming template for others to replicate but given Disney's recent success and other kind of numbers, we are putting up it almost feels like Netflix is under achieving versus its potential.
And has to work a lot harder to get the comparable scale for other any reasons why that.
Disney numbers or not.
Not a benchmark for Netflix and why.
The company kind of get there.
Under achieve kind of all of that.
Yeah.
In the bottom of our earnings.
The return of the annualized return of over 18 years being 40 per se so that the underperformance of wisdom more of that.
Okay Super impressed of what Disney is done.
Accretable execution for.
Income led to pivot and taking on in search of itch.
So that's great and it shows that members are interested and willing to pay more for more content because they are hungry for great stories and Disney does have some great stories and so it gets us fired up about increasing our membership increasing our content budget.
And it's going to be great for the world that Disney of Netflix for competing show by show of movie by movie.
We're very fired up about.
Catching women and family animation, maybe eventually pass of them, we will see a long way to go just to catch them and maintaining our lead in general Entertainment.
So stimulating like Richard Ted I don't think of your go to see on the Disney anytime soon.
Ted you want to follow up other.
No I think I think of when you talk about it in competitive terms you'd think about.
Christmas Day 2020.
Well you have enormous the anticipated some like one of eliminating four and so both debuting on competitive services in us launching what turns out to be one of our biggest launches ever and.
And I do think weighted Reed said as it is it does point to people have tremendously big appetite for great Entertainment in all different kinds of it and the fact that they are willing to pay more for more programming. I think is very encouraging now we've always said that people will we our goal of drawing that make everybody's favorite show everybody's favorite film other people are going to try to do.
That too and people will supplement their netflix subscription to get that content, and which I would think of as a super healthy dynamic and.
Can I ask about that.
Sorry go ahead sorry.
But if I could stat as well I think there is the membership lens and the number of subscribers, but it's also used for to look at it from a revenue lag which of course is the fuel that we have to basically create more of that content to get that virtuous cycle slowing anymore in the.
One other thing I would ask for that kind of not to get too in the weeds on the numbers and if you take anything away at all from what Disney is doing because it's been amazing and I'm, a happy customer of myself, but.
30% of their I think 87 million paid subscribers were Hasan of which I think we all sort of recognize there's a bit of of different service.
So that's sort of for 87 millions of closer to 60 million and all of who is roughly double or actually more than double.
So we added close to $40 million last year alone. So I think when you factor in those dynamics on the fact that we're coming from a higher level of penetration.
Globally, I think we feel very good about the performance. So you took the bake can I was just trying to get us the chest on tomorrow.
[laughter].
Rocket turned out to be.
But I guess, a follow up Greg I guess.
You're going to have a lot of for you on this topic, but when you think about Disney coming in or even discovery of all of these new launches that are happening in some ways.
This expands the pie quite a bit with streaming in general because there are also new distribution models that have been attempted.
And telecom companies have started to see this as a new normal and my guess is to sort of eat all kinds of other commutations in the future.
So when you think about more streaming services coming out over the course of 'twenty one.
Does that in some way provide an opportunity to try new distribution avenues or accelerated growth.
Because of the growth in streaming in some ways.
Well I think Youre right I mean, we're seeing this big macro shift and certainly.
The global pandemic has accelerated that process.
And really I think the first bid is just even that big impetus to move is to some degree of tailwind for us because we have more and more consumers who are around the world who are aware of these services, we have more and more attention more activity out there.
We are seeking to be innovative.
And constantly pushing yet just around how we can accelerate our growth how we can improve our distribution footprint, how do we access member.
Members more and more and also what's really the key engine of our growth is just how do we satisfy those folks that have signed up for us because that really is the ultimate stimulus when they have a great experience and they talk wildly about how great. The services, how amazing that the titles that they're viewing their to their friends or family of their colleagues that's.
Really what motivates that next round of <unk>.
Scrubbers to sign up so well keep pushing the edges, we seek to be innovators in that way.
Come up with creative ideas, we can grow.
Alright.
And I guess extending on that topic you ran a couple of interesting experiments during the quarter I think Netflix was free in India for the weekend and in France, you have trade for linear format. So could you talk of a little bit about the learnings from these experiments in any successful enough to expand to other regions.
Yes, so the stream first in India.
Primary learning, which was very evident is that there's a lot of interest amongst consumers India to try Netflix we had millions of people that had access for a 48 hour period to the service and now we go through the the more difficult part of actually analyzing.
How that interest through this specific tactic tran.
Translates into sustained incremental growth and we're still working through the details of that and obviously based on what we see there will inform how we think about how we leverage that tactic again or how do we improve on it what other places we think it might be leverage of <unk> and then on to your other point.
I think Netflix members come to the service seeking to be entertained and a whole variety of ways, sometimes theyre looking for a movie or some type of a TV show or animation of scripted unscripted and sometimes they show up and they're not really sure what they want to watch and so we've had the opportunity to try and be innovative and.
Try new mechanism of sort of help our members in that particular state. So there is the linear feed isn't one example of that it's still unclear how that's going to work out. So we're still looking at that one but I think even better are example of that is a new feature of that we've been testing and we're going to now roll out globally, because it's really working for us.
Where our members can basically indicate to us that they just wanted to skip of browsing entirely click one button and we'll pick of title for them just to instantly play and that's a great mechanism that's worked quite well for our members in that situation.
And Greg are we going to call. It I'm feeling lucky or are you going to come up with something better, but we're going to come up with something better than that so standby for it.
God forbid youll see it when it rolls out.
That's great.
And so Greg just following up on Israel EBIT more.
You mentioned, the $4 billion to $5 billion in revenue.
That Netflix has been able to add over the last few years as EMEA becomes a bigger region and as your reliance on growth in that region increases is that part of $5 billion. The right way to think about revenue growth.
Also because of the artful of course in that region being much lower how should we think about that framework for revenue growth going forward.
Yes, I mean, we're proud of the sustained four to 5 billion annual revenue growth, which we think is unprecedented in the entertainment industry and certainly our aspiration started to do as well as we can and growing continue to grow that revenue.
But to your point, specifically, what we're seeing is.
We have to find ways to improve the accessibility of the Netflix service and oftentimes that means doing some trade offs between.
Scriber growth at different Asps, but really our framework for all of that and the way we assess that.
Of the moves that we make and how we expand those moves and when we test how we evaluate those tests is really around that sort of revenue optimization piece and so that's always the lens that we get to and we're going to use that to continue to try and basically fuel as much revenue growth as we can.
No I would just add to that not just in this past quarter of the APAC region was the second largest contributor to growth and you see that kind of revenue.
Acceleration frankly, that's happening in our business from about $4 billion increase over the total year two years ago to about $5 billion. This year.
Even just in our guidance for Q1, it's I think 24% year over year. So on an absolute basis net revenue is growing.
And when you think about the APAC region I mean, obviously, that's that region is very different in terms of price sensitive it would be in.
The kind of diversities of Aegean has languages influence of for so when you approach that particular region.
Is the present model more of a less a steady state of training of mobile only kind of our plan and then trying to update people from there are other other things you can do.
EBIT in terms of pricing our product.
Potentially accelerates that.
There are 100 things that we can and we needed to go do and we know that.
It's really not just about just one one trick or of one thing that will basically make us successful in the region, but it's just constantly looking at all of the ways at which the current product experience doesn't satisfy completely.
Members of our members to be in you mentioned language, it's a great one where even simple things like we're improving the ability for our members to tell us.
What languages they want it.
In terms of the content when they are browsing and theyre sort of these different scenarios. There's a scenario may be when you are by yourself and if youre multilingual that could result in sort of different choices. If youre in a multi generational household then all of a sudden that might shift how you think about like what titles do you want to present and what languages and so that's just one small example of places.
We know we can improve the product experience and be more effective and satisfy members, but it goes on and on from that to like the methods of payments that we what we know we need to expand and we're constantly working to add more of those and make those more effective for partnerships. We have to make the service more accessible and more immediate easier for for members to find out and sign up so there's two.
Tens of things that we're looking at.
Got it.
And.
Speaking of scenario over achievement instead of under achievement than 70 movies in a year [laughter].
So now you guys out of the industry in many ways I think the tough by studios potentially do about 19 movies a year your days of doing 70 of yours. So.
At what point is this too much how do you judge that balance.
How are you juggling.
Or how are you evaluating kind of guns on this investment, but it's likely more than 70. That's just what we were able to talk about in that less released in that exciting trailer.
Thinking about it as you think about how diverse people's tastes are you think about what the appetite to watch a movie is it isn't just one of weak I think theres, a plenty of room to grow that but when we're doing that but much larger scale today. So im thinking about moving stars like Gallagher Doe and Leonardo Dicaprio, Meryl Streep and filmmakers like Jane Campion and Adam of Kay.
Zack Snyder Antonio Fuqua two.
Fuqua, making films at enormous scale for Netflix.
So that when people have of appetite to watch a movie they could do it at home and they could do it on the big screen that they could do it on their phone and I just think that that evolution.
We will continue to grow and expand well beyond a movie of week.
Because that's the we're talking about serving a global audience with incredibly diverse taste. So that one of weak as you know many weeks, it's already two or three and some of them are hugely impactful in the region that they are created for and some of them become very very global like we saw with hashtag of live last year with from Korea.
It became a very big hit for us around the world.
And when you make these titles I mean, you integrated with respect to the kind of financial model on content creation with a cost plus kind of a structure relative to the necessary finance models in the past for content.
Tom.
When you do the kind of output that youre doing and the volume that youre doing.
Instead of risk that.
This leads to lower returns over time, because there is really no downside in some ways for studios the creators of content on a cost plus basis.
And does it make sense of this scale worst of anywhere essentially doing original for the startup.
I think it does I mean, we're seeing of scale up more than double every year and of continuing to scale. Both in the scope of the projects the ambition of the projects and the execution of the projects and I do think the financial return. If you think about it relative on a handful of titles that wind up doing the enormous return for the studio versus the hundreds of Titan.
Those that barely breakeven this is of great model for producers to produce it and the fact that we can support it a day.
And a day out of this kind of volume.
And make projects that are otherwise pretty difficult to make in some cases.
It's been really encouraging for filmmakers to embrace this model.
Got it.
And given the kind of <unk>.
Volume that Youre doing on Moody's now and also because of Covid, there's been a significant shift.
In the release back on for movies, not just Netflix.
Netflix but across the industry.
Does this in some ways create essentially a new distribution channel for you if bnb for leases our charter of windows become more acceptable.
Does it become possible for you to essentially have the box office with wider leases on a very short window and does that become a new revenue stream at some point kind of potentially I mean, we've looked at this before but we've never had any issue with movies being in theaters. Our biggest issue has been that you had to commit to this very long window of exclusivity to get access to any theaters.
That's been the biggest challenge so of those windows aren't going to going to collapse and we'd have easier access to films to of short films in theaters I'd love to have consumers be able to make the choice between seeing it out we're seeing it at all which is becoming the norm of enduring Covid, certainly and we'll see how long how much that sticks, but I think that consumer behavior.
Your human behavior things changed a lot over time, but there is a very different experience associated with going out and go into the theatre with strangers and seeing a movie and its fantastic. It's just not core to our business right.
Great.
Hopefully with Warner brothers sort of Covid move what we'll see is post COVID-19 like the second half of the year is that people both doses of theatres in significant numbers of watch their films and their premier simultaneously.
<unk>.
And then that will really set a path for simultaneous was good for the film helps both online and on streaming and then also as of the theaters, but we have to wait to post COVID-19 to get of clean read of that so what youre seeing today, though is exactly what we've been trying to do for a couple of years since we've been making these films of this size.
I guess the other side of this coin is giving you of distribution scale of Mt.
If a studio wanted to release of movie on Netflix. This was one of the most efficient channels they can get to.
Why is that not an attractive model for Netflix EBIT in the form of a premium Vod channel or some other distribution model, but.
Why isn't that more of an attractive model for you.
I'm not we're not saying that it isn't what we're saying is this one has been the most attractive model. So in terms of for both for consumers and for our own business.
And then kind of I think you alluded maybe to a different model sort of of.
Transactional kind of approach and I would say that we really believe that from a consumer orientation that simplicity of our AD free no additional payments one subscription that's really really powerful and really really satisfying to consumers around the world and so we want to keep emphasizing that.
Got it.
And it's interesting when you challenge for people to figure out of one of the great things about the subscription models I think it opens up.
For consumers to be much more adventurous about what they watch I think you could throw out a lot of preconceived notions about what works and what doesn't cause those are mostly established by business trends not by consumer trends and so I think what happens is people say, hey, I don't I don't watch foreign language television, but I've heard of this show cardio Pan and I'm Super excited to see it and it is included in my subscription my push.
Play and 10 minutes later all of a sudden they like foreign language television.
It's a really incredible evolution.
June hosted it so beautifully at the Oscars.
Audiences have to get over the one inch wall to enjoy a whole another world of entertainment and we're seeing that incredible scale already.
Watching but by having great stories from anywhere in the world to everywhere in the world of Netflix and that one inch balls of subtitles or you can watch it with dogs or you can watch it the original language track.
Yeah.
And I guess when you have this kind of content volume and also the kind of movie slate that youre putting out.
It also gives you a lot more pricing power.
Because instead of.
Watching a movie for $10 of as a family for $30 you essentially paid for Netflix of your pricing power implicitly goes out in this environment because of the kind of product.
We're increasing value of increasing the value proposition for the consumer every time, we get another 10 minutes of watching Netflix youre, increasing the value of that subscription.
By credit <unk>.
Greasing. The options. We are also increasing the likelihood that you're going to push play in when you do push play you're going to love what you see.
And cannot realistically out of home entertainment.
Just most consumers think of that differently, just like we could cope cheaply, but people still go out for dinner.
And there's still go out and we see that as an experience that's just different.
So you don't think of that as the direct our members. So I would think of that as the director of.
They love is for low price they get to watch and a limited amount of be very experimental back to what type of state and their taste.
And just try Allison borderlands and to try to bonds. So all of these things are kind of interconnected.
To be able to create a really unique and incredible user experience.
Yeah.
So I guess when you think about these sectors I mean, there are two ways to think about pricing in this environment. One is when you have so much competition.
And consumer walnuts essentially have to be spread more widely.
One way to read the environment is to see that pricing power is limited, but then on the other side of it.
<unk> share of total engagement could continue to go up and that by itself could increase and you have more product, which consumers basically back all of it is coming out of somewhere else instead of television which.
Which of these do die.
Dynamics should we expect to see in other words should pricing power accelerated our RP.
<unk> growth accelerate in the coming years of Houston in the western markets.
Yes, I would say our competition set we think of as extremely broad whether you think about it as share of wallet of our share of time and attention share of entertainment share of delight.
We feel like we have so much more room to growth and to grow and really it's exciting to now see these sort of new dimensions of value creation for our users like bringing foreign language show Dupont causative of Perl shows that are now becoming global hits from countries and languages, but that's never happened.
So that's super exciting to see that kind of value creation, and that's really just where we stay focused so we're not trying to predict the.
The future in that way, but just stay tightly tightly disciplined on trying to think about what's that next incremental step where we can create more value for our members engage them delight them more great content more great product experiences and if we think we do that well then we think our business will grow and turn.
And to non where we've been pretty cautious and will continue to be pretty cautious.
So maybe Spencer Wang Kenny.
Other than what's the last three years, what's happened with average revenue per member what sort of moved upfront. Yeah. So it's moved up from less than $10 is around sort of $9 90.
Per per month per membership two <unk> last quarter slightly north of $11 and just bare among non I think you know this but we had significant FX headwinds over that of course of time too. So so we've seen that and of course that Italy.
So I think of helpful framework for you.
Okay, So maybe because of.
Yeah, that's about 10% over three years.
So pretty cautious.
It's working well for us to provide incredible value, yes, and maybe just another way of stating that the cautious is just thinking about it. We do think we're an incredible entertainment value and we want to remain an incredible entertainment value.
I draw you back to that Christmas day.
Releases, where we of that where refrigerated, but a couple of days before that we had midnight sky in a couple of days after that we had Cobra Kai and a couple of days after that we of Dupont and a couple of days after that.
It's a of a woman I mean, it's a phenomenal and you've used in the numbers are.
In front of your day.
The way that people have enjoyed these series and films.
Unprecedented and I think the rhythm and the pace of that has been really keeping up but I think that is the the definition of consumer value.
In India for the recent data points cannot and we referenced in the letter, but we had price increases in the U S. In the fourth quarter, we announced in the U K in December end, and we've grown nicely through that because I think to this point, we're continuing to increase the variety and value of what we're delivering for our members.
And I guess sort of pricing front I mean.
And a certain level of the lesson Sam there's some academic academic research on this but essentially elasticity seems to be a function of the price of time, which means as you go higher than higher when you start taking price up potentially maybe the elasticity of demand changes but.
Is that something that you guys have seen yet or are we still very far away from that point at which.
These factors kick in for you.
So if you could just talk about what you've seen so far as you've taken price up across different regions.
In terms of potentially churn our cohort behavior that might be a use of framework for us yes.
Yeah, and I think rather than sort of that academic perspective, we look at it perhaps more practically and more operationally and really it's almost reversing it which is that we are looking for signals and signs from our members.
That are telling us essentially that we have added more value. So you think about engagement with the service and retention and churn characteristics acquisition those of the things that we're really looking for that are our key to basically saying, okay. We've added more value into service now.
The right time to go back to those members and ask them to pay a little bit more so that we can reinvest that and keep adding it so it's really that sort of.
Iterative feel our way forward kind of orientation that we have.
Got it.
Pivoting to a slightly different topic you guys added.
Most of you.
Hold on pronouncing that right of the board in Africa as none of these.
Region, we've discussed in the past.
Disney instead of creating a lot of content in the region and obviously the board appointed for this is pretty interesting.
Is this the next focus how should we think about this.
As an opportunity.
Well.
Strive as a global board member.
Not coming onboard to be of marketing consultant for Africa, although he doesn't know it extremely well.
But ease of voice about how to build large subscription businesses, which he's done is enormously sophisticated of dealing with governments, which as we grow as an increasingly important with scale for us to have so think of him as a great global advocate for US. He also knows Europe very.
Well of the rest of the world reasonably well so I think it's.
We've been broadening our global.
Board membership and is a continuation of that.
Again Africa has a ton of potential we're doing more content there we're growing our membership.
But again, that's a lot of.
That's drives role specific.
<unk>.
And just looking at the rest of the World I mean, there's a lot of.
A small transaction then spent of this one this one might be for you and I'm sure others will chime in as well but.
There've been a couple of streaming services in Southeast Asia, which essentially was acquired by some of the Chinese Internet majors.
Sony of course of the acquisition of crunchy role so they've been interesting assets, which could have helped you scale potentially faster, but obviously this fast on it or did not really show any interest in these assets. So could you help us think through.
What kind of assets you guys would care about is it more like a lot of world assets or why are these assets not interesting sure cancer of the first question with respect to other streaming services. Our view is many people will subscribe to multiple different services. So of acquiring another one just for their members doesn't.
It doesn't really help us and we wanted to stay focused on capturing an earning earning that subscription from each person of organically rather than just doing some sort of M&A deal. So that's sort of 0.1 point of view in terms of your other question around what are we interested in it is largely around things that can help us bolster.
Our core business.
As you know entertainment and specifically content of assets inclusive of.
Things like intellectual property that we can hopefully turn into great television shows and great movies.
I would just add that historically.
We've been builders not buyers.
And years ago, I used to try to get the team to wrap their head around the potential scale of the business by saying things like someday will be so big will have a VP of enemy.
And then that some day is now we're one of the largest producers of anybody in the world.
So you think about those kinds of things now and it's like what would you when you look at those assets.
Theyre, primarily distribution assets not really IP assets. So that's where we've been taken the approach with our unscripted programming with our anime with our animated features with a big budget original film.
We're building a building over net over a couple of years versus acquiring.
We have time for one more question. Please you better.
So Spencer, maybe it's sort of.
Our last Q of this final question more with respect to the longer term outlook for the business and Ted obviously feel free to chime in as well on this one.
Is there any regrets you guys have had in terms of things that you guys could have done but did not do in one instance that comes to mind is something like Roku.
It was part of the company instead of being spun out.
And also when you look at the competitive landscape.
What do you perceive as a real competition is it streaming services or it doesn't come from outside from things like Fort Mac that you've mentioned in the past as an engagement driver.
For consumers.
Yeah.
Reed.
As of June.
So that's good.
You can see how each of them that's what it was that.
I could take a stab at it I mean, and then I'll pass it over of the reader or and or Ted.
As Greg mentioned earlier, we think the competitive set is incredibly large and wide and so look I think we have.
A lot of work to do to continue to grow that small share of screen time that we have today, hopefully become more and more valuable to our members I think the other part of your question was is there anything that we sort of regret I've only been here five and a half years compared to you know Greg.
Having been here much much longer so I'm talking about window of regret is probably smaller.
I don't I don't think that there's anything that comes out to mind right now, especially for Grad is not joining three years earlier.
When you sort of got it.
Right.
No listen all of them.
Materially I mean.
It is fantastic that we've executed if we had kept for roku inside.
Unlikely they would have been the success that they have what adds.
Any of his team have done.
Taken enormous energy and focus on their side and it was an enormous task for us just to be type of a leader in both streaming and then original programming of the global.
So.
We're happy for their success.
No regrets.
On that front.
Got it.
With the the hours and hours of Joy, we're bringing into of hundreds of millions of people around the world and with the return to our shareholders. It's hard to look back with much regret.
Eric Lundberg.
We regret not behind US global license to house of cards in the first deal.
We have to go back and PCL of that extraordinary expense.
That's a good note to end on I guess.
Okay.
<unk>.
Thank you.
Thank you to all of our shareholders and look forward to talking to you in another quarter.
Thanks for all for them, Thanks, guys happy new year.