Q1 2026 Netflix Inc Earnings Call

With me today are co Ceos, Ted surrenders, and Greg Peters and CFO Spence Neumann as a reminder, we will be making forward looking statements and actual results may vary we'll now take questions submitted by the analyst community and we will begin on the topic of our results and outlook.

Spencer Wang: -earnings interview. I'm Spencer Wang, VP of Finance and Capital Markets. Joining me today are Co-CEOs Ted Sarandos and Greg Peters, and CFO Spencer Neumann. As a reminder, we'll be making forward-looking statements, and actual results may vary. We'll now take questions submitted by the analyst community, and we'll begin on the topic of our results and outlook. The first question comes from Robert Fishman of MoffettNathanson. His question is, can you speak to your full-year margin guidance and how it compares to prior guidance with the Warner Bros. deal costs? Beyond content spending, where else are you accelerating investment in 2026?

The first question comes from Robert Fishman of Moffett Nathanson.

His question is can you speak to your full year margin guidance and how it compares to prior guidance with the Warner brothers deal costs and beyond content spending where else are you accelerating investment in 2026.

Speaker #1: Good afternoon, and welcome to the Netflix Q1 2026 earnings interview. I'm Spencer Wang, VP of Finance and Capital Markets. Joining me today are co-CEOs Ted Sarandos and Greg Peters, and CFO Spence Newman.

Perhaps I can kick this one off and just sort of step back and do a little bit of high level framing of course, it's early in the year Theres still plenty of time to go plenty of work left to go do but we've seen really good progress. So far in this first quarter that builds on the solid momentum and results from 2025, so given that we are maintain.

Greg Peters: Perhaps I can kick this one off and just sort of step back and do a little bit of high-level framing. Of course, it's early in the year. There's still plenty of time to go, plenty of work left to go do. We've seen really good progress so far in this Q1 that builds on the solid momentum and results from 2025. Given that, we are maintaining our guidance, our strong outlook for organic growth that we established for 2026. That's revenue growth of 12% to 14%, operating margin at 31.5%. That includes roughly doubling the advertising business to about $3 billion.

Speaker #1: As a reminder, we'll be making... The first question comes from Robert Fishman of MoffettNathanson. His question is, "Can you speak to your full-year margin guidance and how it compares to prior guidance with the Warner Brothers deal costs?"

Speaker #1: Forward-looking statements and actual results may vary. We'll now take questions submitted by the analyst community, and we'll begin on the topic of our results and outlook.

<unk> our guidance our strong outlook for organic growth that we established for 2026, that's revenue growth of 12% to 14% operating margin at 31, 5% that includes roughly doubling the advertising business to about.

Speaker #1: And beyond content spending, where else are you accelerating investment in 2026?

$3 billion U S dollars now we ended last year with more than 325 million paid members and as that number continues to grow we are entertaining an audience that is approaching a 1 billion people, which is an exciting milestone.

Speaker #2: Perhaps I can kick this one off and just sort of step back and do a little bit of high-level framing. Of course, it's early in the year.

Greg Peters: We ended last year with more than 325 million paid members, and as that number continues to grow, we are entertaining an audience that is approaching 1 billion people, which is an exciting milestone, that's to strive for, and it'll be an exciting milestone to achieve. Even given that number, we still have plenty of room to grow into our addressable market. If you look at it from a addressable household perspectives, you know, that have good data, that have a smart TV, all those things that we think are enabling, we're still under 45% penetrated in terms of that number. We think that number is roughly 800 million, and it grows every year, obviously. We've captured about 7% of addressable revenue. This is countries and categories that we currently directly participate in.

Speaker #2: There's still plenty of time to go, plenty of work left to do. But we've seen really good progress so far in this first quarter that builds on the solid momentum and results from 2025.

To strive for and it will be an exciting milestone to achieve but even given that number we still have plenty of room to grow into our addressable market.

Speaker #2: So given that, we are maintaining our guidance—our strong outlook for organic growth that we established for 2026. That's revenue growth of 12 to 14 percent, and an operating margin at 31.5 percent.

We look at it from a addressable household perspectives that have good data that have a smart TV all of those things that we think are enabling we're still under 45% penetrated in terms of that number we think that number is roughly $800 million and it grows every year. Obviously, we've captured about 7% of addressable revenue. This is countries in category.

Speaker #2: That includes roughly doubling the advertising business to about $3 billion US dollars. Now, we ended last year with more than 325 million paid members.

So we currently directly participate in we now estimate that $670 billion as of 2026 and that number grows of course year over year as well and we estimate that we account for only 5% of TV view share globally. So you can pretty much use any measure and say we've got tons of room for growth still ahead of us.

Speaker #2: And as that number continues to grow, we are entertaining an audience that is approaching a billion people, which is an exciting milestone. That's something to strive for, and it'll be an exciting milestone to achieve.

Greg Peters: We now estimate that's $670 billion as of 2026, and that number grows, of course, year over year as well. We estimate that we account for only 5% of TV view share globally. You can pretty much use any measure and say we've got tons of room for growth still ahead of us.

Speaker #2: But even given that number, we still have plenty of room to grow into our addressable market. So, if you look at it from an addressable household perspective—that have good data, that have a smart TV, all those things that we think are enabling—we're still under 45% penetrated in terms of that number.

Yeah, and I'd just add Greg looking ahead, we're focused on three big priorities number one to deliver even more entertainment value for our members and we do that by continuing to strengthen our core offering series and films original and licensed.

Ted Sarandos: Yeah. I'd just add, Greg, looking ahead, you know, we're focused on three big priorities. Number 1, to deliver even more entertainment value for our members, and we do that by continuing to strengthen our core offering, series and films, originals, and licensed. We also are pushing into new categories that are really exciting, like our further expansion to podcasts. We announced a few exciting new ones just today. We're adding more regional live sports events, like the incredible event we just did in Japan with World Baseball Classic. We're growing our games offering, including with a brand-new kids gaming app. Number 2, we're leveraging technology to improve the service, from how it's delivered to how to find great things to watch, and now even how content is created and produced.

Speaker #2: We think that number is roughly 800 million, and it grows every year, obviously. We've captured about 7 percent of addressable revenue. This is countries and categories that we currently directly participate in.

But we also are pushing into new categories that are really exciting in the Q or further expansion to podcast, we announced a few exciting new ones just today, we're adding more regional live sports events.

Speaker #2: We now estimate that's $670 billion U.S. dollars as of 2026, and that number grows, of course, year over year as well. And we estimate that we account for only 5 percent of TV view share globally.

The incredible event, we just did in Japan with World Baseball Classic and we're growing our games offering including with a brand new kids gaming App on number two we're leveraging technology to improve the service from.

Speaker #2: So, you can pretty much use any measure and say we've got tons of room for growth still ahead of us.

From how it's delivered to how to find great things to watch and now even how content is created and produced.

Speaker #1: Yeah. And I'll just add, Greg, looking ahead, we're focused on three big priorities. Number one, to deliver even more entertainment value for our members.

And we're and number three we're improving monetization and we're doing this through a combination of broad distribution, mostly organic but also supplemented with some great partners.

Speaker #1: And we do that by continuing to strengthen our core offering—series and films, originals and licensed. But we also are pushing into new categories that are really exciting, like our further expansion into podcasts.

Ted Sarandos: Number 3, we're improving monetization. We're doing this through a combination of broad distribution, mostly organic, but also supplemented with some great partners. We have increasingly sophisticated pricing and pricing plans, and we have a great and growing ad business, as Greg just said. These features help position us to deliver, you know, multi-year growth, we think beyond the 12% to 14% that we expect to deliver this year. You know, at Netflix, we embrace change. We thrive on competition. We stay focused on constant and consistent improvements, all the things that make us faster and better than the competition in whatever form the competition takes. We really feel great about the business, about the organic growth opportunity ahead, and we are just as energized as ever to achieve our mission to entertain the world.

We are increasingly sophisticated pricing and pricing plans and we have a great and growing AD business as Greg just said.

Speaker #1: We announced a few exciting new ones just today. We're adding more regional live sports events, like the incredible event we just did in Japan with the World Baseball Classic.

These features help position us to deliver multi year growth, we think beyond the 12 months to 14% that we expect to deliver this year.

At Netflix, we kind of we embrace change we thrive on competition, we stay focused on constant and consistent improvements all the things that make us faster and better than the competition in whatever form the competition takes.

Speaker #1: And we're growing our games offering, including a brand new kids' gaming app. Number two, we're leveraging technology to improve the service—from how it's delivered, to how to find great things to watch, and now even how content is created and produced.

So we really feel great about the business about the organic growth opportunity add.

Speaker #1: And number three, we're improving monetization. And we're doing this through a combination of broad distribution—mostly organic, but also supplemented with some great partners.

And we are just as energized as ever to achieve our mission to entertain the world.

Maybe you could talk a second about the WP deal costs in the guide.

Speaker #1: We have increasingly sophisticated pricing and pricing plans. And we have a great and growing ad business, as Greg just said. These features help position us to deliver multi-year growth.

Yeah sure. Thanks, Ted so with respect to the Warner brothers deal and those costs and how it impacts the guide so may recall back in January our initial forecast our guidance for the year was carrying $275 million.

Ted Sarandos: Spence, maybe you could talk a second about the WB deal cost and the guide.

Spencer Neumann: Yeah, sure. Thanks, Ted. With respect to the Warner Bros. deal and those costs and how it impacts the guide, you may recall back in January, our initial forecast or guidance for the year was carrying $275 million of kind of cost for M&A-related activity, but that wasn't just Warner Bros., actually. One thing that we were carrying in there was the Interpositive acquisition. It wasn't announced yet, but it was in our guidance, and that carries through, also through our OpEx, so that's kinda hitting our operating margin. For Warner Bros.

Speaker #1: We think beyond the 12 to 14 percent that we expect to deliver this year. At Netflix, we kind of embrace change. We thrive on competition.

Cost for M&A related activity, but that wasn't just Warner brothers actually so one thing that we were carrying in there was the positive acquisition it wasn't announced yet but it was in our guidance and that carries through.

Speaker #1: We stay focused on constant and consistent improvements—all the things that make us faster and better than the competition, in whatever form the competition takes.

Also through our Opex, so that's kind of hitting our operating margin and for Warner brothers, specifically, even though we obviously walked away from the deal.

Speaker #1: So, we really feel great about the business, about the organic growth opportunity ahead. And we are just as energized as ever to achieve our mission to entertain the world.

And some of our initially planned cost for the deal they won't fully materialize, but also some that we were planning to carry into 2007 were pulled forward into 2026. So when you kind of put all that together, we're still in the ballpark frankly of the total that we're projecting for M&A related expenses in the year. There is no material impact on our opera.

Spencer Wang: specifically, even though we obviously walked away from the deal, and some of our initially planned costs for the deal, they won't fully materialize, but also some that we were planning to carry into 2027 were pulled forward into 2026. When you kinda put all that together, we're still in the ballpark, frankly, of the total that we were projecting for M&A-related expenses in the year. There's no material impact on our operating margin outlook, as a result, that there's not a reflection of some increase or acceleration in other expenses in the year. Thanks, Spence. Thanks, Ted. Thanks, Greg. Well, following up on that question, we have from Sean Diffley of Morgan Stanley. His question is, what have been your biggest learnings from the Warner Bros.

Speaker #1: Spence, maybe you could talk a second about the WB deal costs and the guide.

Speaker #3: Oh, yeah, sure. Thanks, Ted. So with respect to the Warner Brothers deal and those costs and how it impacts the guide, you may recall back in January, our initial forecast—our guidance for the year—was carrying $275 million of, kind of, costs for M&A-related activity.

Margin outlook and as a result that there is not a reflection of some increase or acceleration in other expenses in the year.

Speaker #3: But that wasn't just Warner Brothers, actually. So one thing that we were carrying in there was the interpositive acquisition. It wasn't announced yet, but it was in our guidance, and that carries through also through our OPEX.

Thanks Spence thanks, Ted Thanks, Greg.

Following up on that question, we have from Sean <unk> of Morgan Stanley.

Speaker #3: So that's kind of hitting our operating margin. And for Warner Brothers specifically, even though we obviously walked away from the deal, some of our initially planned costs for the deal won't fully materialize, but also some that we were planning to carry into 2027 were pulled forward into 2026.

His question is what has been your biggest learnings from the Warner brothers experience and does it in any way change your appetite for M&A or capital structure going forward.

Spencer Wang: experience, and does it in any way change your appetite for M&A, or capital structure going forward?

So at the risk of being a broken record I was wondering remind you that.

Speaker #3: So when you kind of put all that together, we're still in the ballpark, frankly, of the total that we were projecting for M&A-related expenses in the year.

Ted Sarandos: At the risk of being a broken record here, I just wanna remind you that we said this from the beginning, that the WB deal was a nice to have, not a need to have. We're very confident in the core business. We really looked at this going into it that our biggest risk was losing focus on our core business while we were working on the transaction. As you can see from our Q1 results, we did not lose focus. We're very encouraged by the team's ability to stay focused on our core business while, you know, exploring this opportunity as well. Historically, we've been builders and not buyers, there were certainly questions internally and externally about our ability to do a deal of this size.

You said this from the beginning that the DWP deal was a nice to have not a need to have we are very confident in the core business.

Speaker #3: There's no material impact on our operating margin outlook, and as a result, there's not a reflection of some increase or acceleration in other expenses in the year.

So we really looked at this going into it that our biggest risk was losing focus on our core business. While we were working on the transaction.

So as you can see from our Q1 results, we did not lose focus.

Speaker #1: Thanks, Spence. Thanks, Ted. Thanks, Greg. Well, following up on that question, we have one from Sean Diffley of Morgan Stanley. His question is: "What have been your biggest learnings from the Warner Brothers experience?"

We're very encouraged by the team's ability.

To stay focus on our core business, while exploring this opportunity as well.

Historically, we've been builders are not buyers. So there were certainly questions internally and externally about our ability to do a deal of this size.

Speaker #1: And does it, in any way, change your appetite for M&A or capital structure going forward?

Speaker #4: So, at the risk of being a broken record here, I just want to remind you that we’ve said this from the beginning: the WB deal was a nice-to-have, not a need-to-have.

But we did learn though is that our teams were more than up to the task.

We've learned so much about deal execution about early integration, we're really proud of the teams did all of that work.

Ted Sarandos: What we did learn, though, was that our teams were more than up to the task. We've learned so much about deal execution, about early integration. We're really proud of the teams that did all that work. We were proud to win the bid. We are confident in our ability to get to the finish line with regulators for the approvals that we needed. But mostly we really built our M&A muscle. The most important benefit of this entire exercise though was that we tested our investment discipline, and when the cost of this deal grew beyond the net value to our business and to our shareholders, we were willing to put emotion and ego aside and walk away.

Speaker #4: We were very confident in the core business. So we really looked at this going into it that our biggest risk was losing focus on our core business while we were working on the transaction.

Where we were proud to win the bid we are confident in our ability to get to the finish line with regulators for the approvals that we need it.

Speaker #4: So, as you can see from our Q1 results, we did not lose focus. We were very encouraged by the team's ability to stay focused on our core business while exploring this opportunity as well.

But mostly we really built our M&A muscle.

And the most important benefit of this entire exercise, though was that we tested our investment discipline and when the cost of this deal grew beyond the net value into our business and to our shareholders. We were willing to put emotion and ego aside and walk away.

Speaker #4: Historically, we've been builders and not buyers, so there were certainly questions, internally and externally, about our ability to do a deal of this size.

And doing it at this level I think sets up our teams to understand that that's the expectation of them day to day.

Speaker #4: What we did learn, though, was that our teams were more than up to the task. We've learned so much about deal execution, about early integration.

Ted Sarandos: In doing it at this level, I think sets up our teams to understand that that's the expectation of them day to day. I would like to add, though, that we met a bunch of great people in WBD during this process. If there's any emotion in all of this, it was the disappointment of not getting to work with those folks, and we were really looking forward to that. We do come through this with no change in our capital allocation philosophy. You know, we invest in the business both organically and opportunistically with M&A, like you just saw with InterPositive. We do that while maintaining strong liquidity, returning excess cash to shareholders through share repurchase. M&A for us remains a tool to help us achieve our goals.

I would like to add though that we met a bunch of great people in the <unk>.

During this process.

Speaker #4: We're really proud of the teams that did all that work. We were proud to win the bid. We were confident in our ability to get to the finish line with regulators for the approvals that we needed.

So if theres any emotion and all of this it was the disappointment I'm not getting to work with those folks and we're really looking forward to that.

We do but we do do come through this with no change in our capital allocation philosophy, we invest in the business both organically and Opportunistically with M&A like you just saw within are positive and we do that while maintaining strong liquidity and returning excess cash to shareholders through share repurchase so M&A for us remains a tool to help.

Speaker #4: But mostly, we really built our M&A muscle. And the most important benefit of this entire exercise, though, was that we tested our investment discipline.

Speaker #4: And when the cost of this deal grew beyond the net value to our business and to our shareholders, we were willing to put emotion and ego aside and walk away.

Speaker #4: And in doing it at this level, I think it sets up our teams to understand that that's the expectation of them day to day. I would like to add, though, that we met a bunch of great people in the WBD during this process.

Achieve our goals and as you can see with the W. B deal will remain very disciplined in how we approach it.

Ted Sarandos: As you can see with the WB deal, we'll remain very disciplined as how and how we approach it.

Thank you Ted.

I'll move along now to the next topic, which is on engagement and the question here comes from Vikram tests of our Butler of Baird. The.

Spencer Wang: Thank you, Ted. I'll move us along now to the next topic, which is on engagement, and the question here comes from Vikram Kesavabhotla of Baird. The question is, last quarter, you shared that your primary quality metric for engagement achieved an all-time high in 2025. How is this metric performing so far in 2026? What are some examples of the data points that inform your measurement of quality?

Speaker #4: So, if there's any emotion in all of this, it was the disappointment of not getting to work with those folks. And we were really looking forward to that.

The question is last quarter, you shared that your primary quality metric for engagement achieved an all time high in 2025, how is this metric performing so far in 2026.

Speaker #4: We do, but we do come through this with no change in our capital allocation philosophy. We invest in the business, both organically and opportunistically with M&A.

What are some examples of the data points that inform your measurement of quality.

Speaker #4: Like you just saw with Interpositive. And we do that while maintaining strong liquidity and returning excess cash to shareholders through share repurchase. So M&A for us remains a tool to help us achieve our goals.

Sure I'll take this one first just to note that volume of engagement is still relevant we still track. It we still seek to grow it and actually in Q1 view hours were up at a similar rate of growth to what we saw in the second half of 2025 and Thats actually despite.

Greg Peters: Sure, I'll take this one. First, just to note that volume of engagement is still relevant. We still track it. We still seek to grow it. Actually in Q1, view hours were up at a similar rate of growth to what we saw in the H2 of 2025. That's actually despite having the Winter Olympic Games, 17 days of robust streaming competition land in Q1 as well. As we said, as you alluded to here, you know, while view hours are important, it's actually just one of several metrics that we look at, and we're increasingly trying to make that a more sophisticated view. Member quality is an important part of that increasing sophistication in measuring our performance, and it's got several associated signals.

Speaker #4: And as you can see with the WB deal, we'll remain very disciplined in how we approach it.

Speaker #1: Thank you, Ted. I'll move us along now to the next topic, which is on engagement, and the question here comes from Vikram Kesavabotala of Baird.

Having the Winter Olympics 17 days of robust streaming competition land in Q1 as well.

Speaker #1: Last quarter, you shared that your primary quality metric for engagement achieved an all-time high in 2025. How is this metric performing so far in 2026?

But as we said and as you alluded to here while view hours are important.

Just one of several metrics that we look at and we're increasingly trying to make that a more sophisticated view member quality is an important part of that increasing sophistication and measuring our performance and it's got several associated signals and in Q1 that primary member quality merch.

Speaker #1: What are some examples of the data points that inform your measurement of quality?

Speaker #5: Sure. I'll take this one. First, just to note that volume of engagement is still relevant. We still track it. We still seek to grow it.

Speaker #5: And actually, in Q1, view hours were up at a similar rate of growth to what we saw in the second half of 2025. And that's actually despite having the Winter Olympics—17 days of robust streaming competition—land in Q1 as well.

Eric that you referenced it hit another all time high so we're making good progress there. We're excited about that I am not going to detail, how we compose our metrics because they often take quite a time and quite an effort to actually build them and to prove them out I'm sure our competitors would like to get that cheat sheet, but we're not going to give it.

Greg Peters: In Q1, that primary member quality metric that you referenced, it hit another all-time high, so we're making good progress there. We're excited about that. I am not going to detail how we compose our metrics because they often take quite a time and quite an effort to actually build them and to prove them out. I'm sure our competitors would like to get that cheat sheet, but we're not going to give it to them. I will say this, that we build confidence in our metrics, and specifically this member quality metric, as well as assess how we evolve and improve those metrics over time by evaluating their predictive and explanatory power to really important primary metrics like retention. That's why we are clear that improving that number improves the business.

Speaker #5: But as we said, and as you're alluding to here, while view hours are important, it's actually just one of several metrics that we look at.

I will say this that we build confidence in our metrics and specifically this member quality metrics as well as assess how we evolve and improve those metrics over time by evaluating their predictive and explanatory power two really important primary metrics like retention. So thats why we are clear.

Speaker #5: And we're increasingly trying to make that a more sophisticated view. Member quality is an important part of that increasing sophistication, and measuring our performance—and it's got several associated signals.

Speaker #5: And in Q1, that primary member quality metric that you referenced, it hit another all-time high. So we're making good progress there. We're excited about that.

Improving that number improves the business.

Expanding on this I would say as we invest into new forms of content. We also have to learn how the new programming provides different kinds of value I think live is a really great example of this it often drives really significant viewing value for our members, albeit with fewer view hours than perhaps a scripted series.

Speaker #5: I am not going to detail how we compose our metrics, because they often take quite a time and quite an effort to actually build them and to prove them out.

Greg Peters: You know, expanding on this, I would say as we invest into new forms of content, we also have to learn how the new programming provides different kinds of value. I think Live is a really great example of this. It often drives really significant viewing value for members, albeit with fewer view hours than perhaps a scripted series. It's also got different acquisition characteristics. These are all things that, you know, we have to continually understand better. We have to build models for how that programming matters to our members. We got to figure out how that supports the business. Of course, we can bid appropriately based on that.

Speaker #5: I'm sure our competitors would like to get that cheat sheet, but we're not going to give it to them. But I will say this, that we build confidence in our metrics, and specifically this member quality metric, as well as assess how we evolve and improve those metrics over time, by evaluating their predictive and explanatory power to really important primary metrics like retention.

Also got different acquisition characteristics. So these are all things that we have to continually understand better we have to build models for how that programming matters to our members. We got to figure out how that supports the business and that of course, we can bid appropriately based on that.

Thanks, Craig our next question on engagement comes from Rich Greenfield of light shed partners.

Speaker #5: So that's why we are clear that improving that number improves the business. And, expanding on this, I would say as we invest in new forms of content, we also have to learn how the new programming provides different kinds of value.

Spencer Wang: Thanks, Greg. Our next question on engagement comes from Rich Greenfield of LightShed Partners. Nielsen adjusted their methodology. The end result was lower streaming viewership and higher broadcast and cable viewership, albeit the trend lines were similar. Nielsen has delayed implementing these changes into its monthly gauge report until 2026. The base of Netflix viewership will be lower, but also have more room to take share. Curious how you think about the coming impact, especially on your advertising revenue.

Nielsen adjusted their methodology. The end result was lower stream viewership and higher broadcasting cable viewership.

The trend lines were similar Nielsen has delayed implementing these changes into its monthly gauge reporting till 2026.

Speaker #5: I think live is a really great example of this. It often drives really significant viewing value for members, albeit with fewer view hours than perhaps a scripted series.

Ace or Netflix viewership will be lower but also have more room to take share curious how you think about the coming impact, especially on your advertising revenue.

Speaker #5: It's also got different acquisition characteristics. So these are all things that we have to continually understand better. We have to build models for how that programming matters to our members.

So nielsen's methodology change in the gauge reporting is a change in how they calculate the national TV universe. So it's not a change in how people actually watch television.

Speaker #5: We got to figure out how that supports the business. And then, of course, we can bid appropriately based on that.

Greg Peters: Nielsen's methodology change in the gauge reporting is a change in how they calculate the national TV universe. It's not a change in how people actually watch TV. It changes Nielsen's numbers, and those are really a methodology change. They're not reflecting any actual viewing behaviors. It's just simply a change how they think about relative viewing methodologies. Specifically, the new approach, just getting the details, reduces the weight of streaming-only households. It increases the weight of linear households, which makes streaming look smaller and broadcast cable look larger on a relative basis as they measure and report. Now, of course, we have the actual data on how much members stream. We include that in our engagement report. I think that methodology is very straightforward. Other streamers have started to measure views in that same way. Just note that.

Speaker #1: Thanks, Greg. Our next question on engagement comes from Rich Greenfield of LightShed Partners. Nielsen adjusted their methodology; the end result was lower streaming viewership and higher broadcast and cable viewership, albeit the trend lines were similar.

It changes nielsen's numbers.

Those are really a methodology change, they're not reflecting any actual viewing behaviors. It's just simply a change how they think about relative viewing methodologies. So specifically the new approach is getting the details reduces the weight of streaming only households, it increases the weight of linear households.

Speaker #1: Nielsen has delayed implementing these changes into its monthly Gauge report until 2026. The base of Netflix viewership will be lower, but also have more room to take share.

Which makes streaming it look smaller than broadcast cable look larger on a relative basis as they measure and report now of course, we have the actual data on how much members stream. We include that in our engagement report I think that methodology is very straightforward other streamers, who started the measure views in that same way. So just note that.

Speaker #1: Curious how you think about the coming impact, especially on your advertising revenue.

Speaker #5: So Nielsen's methodology change in the Gauge reporting is a change in how they calculate the national TV universe, so it's not a change in how people actually watch TV.

Speaker #5: It changes Nielsen's numbers, and those are really a methodology change. They're not reflecting any actual viewing behaviors; it's just simply a change in how they think about relative viewing methodologies.

Turning to the question how does this impact our advertising the Nielsen gauge is not the currency for the video marketplace and given that there is no change in consumer behavior or amount of viewing related to this shift none of this changes our effectiveness or our aspirations in the AD space. We continue to expect to deliver that 3 billion and advertising revenue this year.

Greg Peters: Turning to the question, how does this impact our advertising? The Nielsen gauge is not the currency for the video marketplace, and given that there's no change in consumer behavior or amount of viewing related to this shift, none of this changes our effectiveness or our aspirations in the ad space. We continue to expect to deliver that $3 billion in advertising revenue this year. We haven't adjusted that target. On your point about growth potential, really independent of this shift, we still see tremendous upside in the business in being able to win more moments of truth, especially the most valuable moments. And with our current position being less than 5% of global TV time, or any other credible measurement out there really, which doesn't change that number that much, we've got just a ton of room to grow in this space.

Speaker #5: So specifically, the new approach is going to the details: it reduces the weight of streaming-only households. It increases the weight of linear households, which makes streaming look smaller and broadcast/cable look larger on a relative basis as they measure and report.

Haven't adjusted that target on your point about growth potential.

Really independent of this shift we still see tremendous upside in the business and being able to win more moments of truth, especially the most valuable moments.

Speaker #5: Now, of course, we have the actual data on how much members stream. We include that in our engagement report. I think that methodology is very straightforward.

And with our current position of being less than 5% of global TV time.

Speaker #5: Other streamers have started to measure views in that same way, so just note that. Turning to the question, how does this impact our advertising?

Or any other incredible measurement out there really which doesn't change that number that much. We've got just a ton of room to grow in this space.

Speaker #5: The Nielsen gauge is not the currency for the video marketplace. And given that there's no change in consumer behavior or amount of viewing related to this shift, none of this changes our effectiveness or our aspirations in the ad space.

Thanks, Greg we have several questions that have come in about our content and content strategy.

Spencer Wang: Thanks, Greg. We have several questions that have come in about our content and content strategy. The first I'll begin with John Hodlik of UBS. Any details you can share about the World Baseball Classic viewership? Are there other similar sports and live event opportunities out there that can appeal to a global audience in driving engagement?

But first I'll begin with John Hodulik of UBS any details you can share about the will be spoke classic viewership.

Speaker #5: We continue to expect to deliver that $3 billion in advertising revenue this year. We have not adjusted that target. On your point about growth potential, really independent of this shift, we still see tremendous upside in the business in being able to win more moments of truth, especially the most valuable moments.

Any are there other similar sports and live event opportunities out there that can appeal to a global audience and driving engagement.

Well, thanks for asking John about the World Baseball Classic because there was a hit it was amazing.

Speaker #5: And with our current position of being less than 5% of global TV time—or any other credible measurement out there, really, which doesn't change that number that much—we've got just a ton of room to grow in this space.

Ted Sarandos: Well, thanks for asking, John, about the World Baseball Classic 'cause it was a hit. It was amazing. In fact, it was the most watched program we've ever had in Japan. It is the biggest global baseball streaming event of all time. It was 31.4 million viewers. It was really exciting to see how this played out. Events like this are super important because they, as Greg was just saying, they really drive outsized business impact, and they're kind of a proof point that all engagement is not created equal. For those few days, that was really an incredible time for our members in Japan. The WBC drove the largest single sign-up day ever in Japan. It and Japan led our Q1 member growth around the world.

In fact, it was the most watched program we've ever had in Japan.

It is the biggest global baseball streaming event of all time was $31 4 million viewers.

It was a really exciting to see how this played out in <unk>.

Speaker #1: Thanks, Greg. We have several questions that have come in about our content and content strategy. The first, I'll begin with John Hoodlick of UBS.

Events like this is super important because as Greg was just saying they really drive our drive outsize business impact and there kind of a proof point that all engagement is not created equal for.

Speaker #1: Any details you can share about the World Baseball Classic viewership? Are there other similar sports and live event opportunities out there that can appeal to a global audience and drive engagement?

So those few days that it was really an incredible time for our members in Japan, but the WPC drove the largest single sign up day ever in Japan.

Uh huh.

And Japan led our Q1 member growth around the World and Japan had its highest quarter of paid net adds in our history.

Speaker #4: Thanks for asking, John, about the World Baseball Classic because it was a hit. It was amazing. In fact, it was the most-watched program we've ever had in Japan.

It's also the kind of it was the first big regional live event for us outside of the U S, which was great and we got to flex our new muscle here really which was you know streaming multiple games concurrently so a big expansion of our capabilities.

Ted Sarandos: Japan had its highest quarter of paid net adds in our history. It is also kind of the first big regional live event for us outside of the US, which was great. We got to flex a new muscle here really, which was, you know, streaming multiple games concurrently, a big expansion of our capabilities. It is very, very exciting. We were excited, the fans were thrilled, and the leagues were super excited. Yes, much more to come.

Speaker #4: It is the biggest global baseball streaming event of all time. It was 31.4 million viewers. It was really exciting to see how this played out.

Speaker #4: In events like this, it's super important because, as Greg was just saying, they really drive outsized business impact. And they're kind of a proof point that all engagement is not created equal.

Very very exciting. So we're we were excited the fans we're thrilled and we're super excited so yes, a much more to come.

I think also a great example of how we were firing on all cylinders cross functionally so whether our marketing teams our partnership teams working to make sure that we're bringing this to Japanese consumers in a friendly way. It was really impressive to see everyone organize around that and a great shot in the arm in our for our AD sales group in Japan totally one other thing on it not to dismiss.

Speaker #4: For those few days, it was really an incredible time for our members in Japan. But the WBC drove the largest single sign-up day ever in Japan.

Greg Peters: I think also a great example of how we were firing on all cylinders cross-functionally, whether our marketing teams, our partnership teams working to make sure that, you know, we're bringing this to Japanese consumers in a friendly way. It was really impressive to see everyone organize around that.

Speaker #4: And Japan led our Q1 member growth around the world. And Japan had its highest quarter of paid net adds in our history. It's also the case that it was the first big regional live event for us outside of the US.

Ted Sarandos: A great shot in the arm for our ad sales group in Japan.

UPC, but also just thinking about abuse at me.

Greg Peters: Totally.

Speaker #4: Which was great. And we got to flex our new muscle here, really, which was streaming multiple games concurrently. So a big expansion of our capabilities.

Spencer Neumann: One other thing on it, not to dismiss.

First grade as it was and it was great.

Ted Sarandos: Yeah, please.

Spencer Wang: WBC. Also to just think about it because it may for as great as it was, and it was great, you may notice that APAC was our strongest FX neutral revenue growth market for the quarter. It wasn't just because of this. Actually, we had really strong performance in a number of areas in APAC. We had a great quarter in India, a really strong quarter in Korea. Southeast Asia had showed strength.

You may notice that APAC was our strongest FX neutral revenue growth market for the quarter and it wasn't just because of this actually we had really strong performance in a number of areas in APAC, we had a great quarter in India, a really strong quarter in Korea Southeast Asia had had showed showed strength so.

Speaker #4: It's very, very exciting. So we were excited. The fans were thrilled. And the leagues were super excited. So yes, much more to come.

Speaker #5: I think also a great example of how we were firing on all cylinders cross-functionally. So whether our marketing teams, our partnership teams, working to make sure that we're bringing this to Japanese consumers in a friendly way.

Wanted to kind of make the point across the board in APAC, we executed it wasn't just one title one country and I'd say to that was exciting to see people pick up on recent original series. So that viewing went up you saw some of those shows pop back into the top 10. The success of one piece on the heels of WPZ too. So it was a really great time for the content.

Spencer Neumann: Yeah

Spencer Neumann: just wanna kind of make the point across the board in APAC, we executed. It wasn't just one title, one country.

Speaker #5: It was really impressive to see everyone organize around that.

Speaker #4: And a great shot in the arm for our ad sales group in Japan.

Ted Sarandos: I'd say, too, that it was exciting to see people pick up on recent original series, so that viewing went up. You saw some of those shows pop back into the top 10. The success of One Piece on the heels of WBC, too. It was a really great time, you know, for the content, and it all just came together with that gigantic halo of the WBC.

Speaker #5: Totally.

Speaker #1: One other thing on it—not to dismiss WBC—but also to just think about it, because it may, at first, great as it was—and it was great—you may notice that APAC was our strongest FX-neutral revenue growth market for the quarter.

It all just came together at that gigantic handler at WPZ.

Alright, I will take the next question from Robert Fishman of Moffett Nathanson.

Speaker #1: And it wasn't just because of this. Actually, we had really strong performance in a number of areas in APAC. We had a great quarter in India.

Spencer Wang: All right. I'll take the next question from Robert Fishman of MoffettNathanson. His question is, with the NFL in the market for new packages, do you judge ROI on live event content spending the same way as scripted content? Does adding NFL games give you the ability to drive higher CPMs and ad growth that one-off scripted shows wouldn't be able to deliver?

His question is with the NFL in the market for new packages do you judge ROI on live event content spending the same way as scripted content or does adding NFL games give you the ability to drive higher CPM and outgrowth that one off scripted shows wouldn't be able to deliver.

Speaker #1: Really strong quarter in Korea. Southeast Asia had showed strength, so I just want to kind of make the point that across the board in APAC, we executed.

Speaker #1: It wasn't just one title, one country.

Speaker #4: Yeah. And I'd say, too, it was exciting to see people pick up on recent original series. So that viewing went up. You saw some of those shows pop back into the top 10.

That's a great question, Robert I mean, I'll take a step up which is first of all our our sports strategy is pretty much unchanged. We're most interested in those big breakthrough events less so in the regular season packages.

Speaker #4: The success of One Piece on the heels of WBC, too. So it was a really great time for the content, and it all just came together with that gigantic halo of the WBC.

Ted Sarandos: That's a great question, Robert. I'll take it a step up. First of all, our sports strategy is pretty much unchanged. We're most interested in those big breakthrough events, less so in the regular season packages. Everything we pursue has to make economic sense in the ways that you just talked through. When we consider this, we have to consider all the benefits you derive, both from the viewing and from the ads business. The reminder, sports is an important piece of our live strategy, but that strategy also includes other big live events. We had Skyscraper Live, the Star Search reboot with live voting, which was really exciting, the BTS comeback concert.

Everything we pursue has to make economic sense in a way that you just talked through.

Speaker #1: All right. I'll take the next question from Robert Fishman of Moffett & Nathanson. His question is, with the NFL in the market for new packages, do you judge ROI on live event content spending the same way as scripted content, or does adding NFL games give you the ability to drive higher CPMs and ad growth that one-off scripted shows wouldn't be able to deliver?

And when we consider this we have to consider all of the benefits you derive but both of them the viewing and from the ads business. So as a reminder, sports is.

An important piece of our lives strategy, but that strategy also includes other big live events, we had a skyscraper live the star search reboot with live voting, which was really exciting the bts comeback concert.

But sports is an important component of that line of business and we've had a number of successes there, including our opening night MLB baseball game with the AG given the Giants are Christmas day NFL games.

Speaker #4: That's a great question, Robert. I mean, I'll take a step up, which is, first of all, our sports strategy is pretty much unchanged. We're most interested in those big breakthrough events.

Ted Sarandos: Sports is an important component of that live business, and we've had a number of successes there, including our opening night MLB baseball game with the Yankees and the Giants, our Christmas Day NFL games, some big fights, the WBC we just talked about in Japan. The NFL is a great property, and it delivers value as part of our total offering, and we are in discussions right now because we think there's an opportunity to expand the relationship. Overall, it is within the same strategy, focused on creating big events for them. We've learned a lot about what works and how to value the NFL and live generally over the last couple of years.

Speaker #4: Less so in the regular season packages. Everything we pursue has to make economic sense in the ways that you just talked through. And when we consider this, we have to consider all the benefits that you derive, both from the viewing and from the ads business.

Fights the WPZ, we just talked about in Japan.

And then and the NFL is a great property and it delivers value as part of our total offering and we are in discussions right now because we think there's an opportunity to expand the relationship.

Speaker #4: So as a reminder, sports is an important piece of our live strategy. But that strategy also includes other big live events. We had Skyscraper Live, the Star Search reboot with live voting, which was really exciting.

But overall within the same strategy focused on creating big events for them.

We've learned a lot about.

Works and how to value the NFL and live generally over the last couple of years.

And this is going to inform how we have those discussions and help us be much even more disciplined about it.

Speaker #4: The BTS comeback concert. But sports is an important component of that live business. And we've had a number of successes there, including our opening night MLB baseball game with the Yankees and the Giants, our Christmas Day NFL games, some big fights, the WBC we just talked about in Japan.

Ted Sarandos: This is gonna inform how we have those discussions and help us be much even more disciplined about it. I'd point out, you know, the event strategy is working. We've announced Tuesday we have a multi-year deal with Concacaf for rights in Mexico. That's in addition to, like, Women's World Cup in US and Canada, our first big global M&A event with Ronda Rousey and Carano. This is we're ramping up our sports events globally and local for local, both in terms of volume and profile. We really do this because I think we bring a lot of value, we receive a lot of value, but most importantly, our members receive a lot of value.

Point out the event strategy is working and we've announced Tuesday, we have a multi year deal with conflict.

For rights in Mexico.

That's in addition to like Women's World Cup in U S and Canada, our first big Global M&A event, with Ronda Rousey and Corrado.

Speaker #4: And the NFL is a great property, and it delivers value as part of our total offering. And we are in discussions right now because we think there's an opportunity to expand the relationship.

So this is we're ramping up our sports events globally and local for local both in terms of volume and profile, but.

Speaker #4: But overall, within the same strategy, we’re focused on creating big events for them. We’ve learned a lot about what works and how to value the NFL and live generally.

But we really do this because I think we bring a lot of value we receive a lot of value, but most importantly, our members receive a lot of value.

Thanks, Ted our next question comes from Peter Zaffino of Wolfe Research.

Speaker #4: Over the last couple of years, and this is going to inform how we have those discussions and help us be even more disciplined about it.

Spencer Wang: Thanks, Ted. Our next question comes from Peter Supino of Wolfe Research. Help us better understand your business model in podcasting. I think he means by business strategy in podcasting.

Help us better understand your business model in podcasting.

Speaker #4: I'd point out the event strategy is working. We've announced Tuesday, we have a multi-year deal with Concacaf for rights in Mexico. And that's in addition to Women's World Cup in US and Canada.

It's probably a business strategy and podcasts, yeah look I think we talked a bit about it in the letter, but I think what's most exciting about it even though it's very early days. What we're seeing is some data that would indicate that we're gaining incremental engagement to the platform and how do we know it's incremental on two things really jump out one is the daytime viewing so pipe.

Ted Sarandos: Yeah, look, I think we talked a bit about it in the letter, but I think what's most exciting about it, even though it's very early days, what we're seeing is some data that would indicate that we're gaining incremental engagement to the platform. How do we know it's incremental? Well, two things really jump out. One is the daytime viewing. Podcast consumption indexes to daytime hours on Netflix, which allows us to capture a time where we historically have less engagement during the day. The other one is that it indexes much more mobile. Podcasting being more mobile than professional TV, and professional TV and film historically makes up a pretty small percentage of mobile viewing. It's great that we get to meet our members where they are, even when they're enjoying other forms of entertainment.

Speaker #4: Our first big global M&A event with Ronda Rousey and Carrano. So this is, we're ramping up our sports events globally and local for local, both in terms of volume and profile.

Gas consumption indexes to daytime hours on Netflix, which now allows us to capture a time, where we didn't we historically have less engagement during the day. The other one is that index is much more mobile so podcast thing being more mobile than professional television and professional television film historically makes up a pretty small percentage of mobile viewing.

Speaker #4: But we really do this because I think we bring a lot of value. We receive a lot of value. But most importantly, our members receive a lot of value.

Speaker #1: Thanks, Ted. Our next question comes from Peter Supino of Wolfe Research. Help us better understand your business model in podcasting. I think he probably means your business strategy in podcasting.

So it's great that we get to meet our members where they are even when they're enjoying other forms of entertainment. So that's really a thrilling early sign.

Speaker #4: Yeah. Look, I think we talked a bit about it in the letter. But I think what's most exciting about it, even though it's very early days, is that what we're seeing is some data that would indicate that we're gaining incremental engagement to the platform.

And we've been building out a great lineup of podcast, both licensed and owned.

Ted Sarandos: That's really a thrilling early sign. We've been building out a great lineup of podcasts, both licensed and owned, shows like the Bill Simmons podcast, The Breakfast Club, and Therapuss from Jake Shane, which I've been waiting to say all day. Pardon My Take, all of these are doing great. We have our own podcasts as well, like The White House with Michael Irvin and the Pete Davidson Show. Our companion podcasts have been great for super fans, like The Bridgerton Official Podcast and a few others. Just today, we announced new podcasts from Brian Williams, from Evan Ross Katz, from Steven Soo, Allison Barber, and David Kwong. The list keeps growing, and it's very promising.

Shows like the Bill Simmons podcast the breakfast <unk>.

Speaker #4: And how do we know it's incremental? Well, two things really jump out. One is the daytime viewing. So podcast consumption indexes to daytime hours on Netflix.

Therapist from Jack Shang, which I've been waiting to say all day pardon.

Pardon my take all of these are doing great and we have our own podcast as well like the White house with Michael urban in the P. Davidson show or.

Speaker #4: Which allows us to capture a time where we historically have less engagement during the day. The other one is that it indexes much more mobile.

Hallion podcasts have been great for Super fans like the Bridger 10 official podcast and a few others and then just today, we announced new pipe gas from Brian Williams from Evan Evan Ross Katz from Stephens, Sue Allison Barbara David Kuang, So the list keeps growing and it's a very promising.

Speaker #4: So podcasting, being more mobile than professional TV, and professional TV and film historically makes up a pretty small percentage of mobile viewing. So it's great that we get to meet our members where they are, even when they're enjoying other forms of entertainment.

Speaker #4: So that's really a thrilling early sign. And we've been building out a great lineup of podcasts, both licensed and owned. Shows like The Bill Simmons Podcast, The Breakfast Club, Therapuss from Jake Shane, which I've been waiting to say all day.

Great well.

We will now shift over to the topic of advertising and this question comes from Dan Salmon of New Street research.

Spencer Wang: Great. We'll now shift over to the topic of advertising. This question comes from Dan Salmon of New Street Research. Can you share more on the growth of your total advertiser base? What proportion of advertisers are being serviced directly by the Netflix sales team, and what proportion are buying on Netflix through third-party DSP partners? Are you still largely focused on the top 500 brands, or is a mid-market strategy beginning to emerge? About 5 questions in one there.

Can you share more on the growth of your total advertiser base, what proportion of advertisers are being serviced directly by the Netflix sales team and what proportion are buying on Netflix through third party DSP partners are you still largely focus on the top 500 brands or.

Speaker #4: Pardon my take. All these are doing great. And we have our own podcast as well, like The White House with Michael Urban and The Pete Davidson Show.

Speaker #4: Our companion podcasts have been great for super fans, like the Bridgerton Official Podcast and a few others. And then just today, we announced new podcasts from Brian Williams, from Evan Ross Katz, from Steven Soo, Ellison Barber, and David Kwong.

Is the mid market strategy beginning to emerge so about five questions in one there or we will do our best to handle them all so.

Speaker #4: So the list keeps growing. And it's very promising.

Maybe just start with as we've mentioned before the biggest benefit we got from moving to our own AD Tech stack is just making it easier for advertisers to buy on our service and then Additionally, we've added more and more DSP, which of course are more ways to buy.

Greg Peters: We'll do our best to handle them all. Maybe just start with, as we've mentioned before, the biggest benefit we got from moving to our own ad tech stack is just making it easier for advertisers to buy on our service. Additionally, we've added more and more DSPs, which of course are more ways to buy. We're seeing through that a pretty significant growth in programmatic, which is on its way to becoming more than 50% of our non-live ads business. Due to those moves, as well as things like improving go-to-market capabilities, more sales force, continuing to build out our ads products, more attractiveness in those products. Our advertiser base grew over 70% year-to-year in 2025 to be more than 4,000 advertisers.

Speaker #1: Great. We'll now shift over to the topic of advertising. And this question comes from Dan Salmon of New Street Research. Can you share more on the growth of your total advertiser base?

And we're seeing through that pretty significant growth in programmatic, which is on its way to becoming more than 50% of our non live ads business. So due to those moves as well as things like improving go to market capabilities more sales force.

Speaker #1: What proportion of advertisers are being serviced directly by the Netflix sales team? And what proportion are buying on Netflix through third-party DSP partners? Are you still largely focused on the top 500 brands?

You need to build out our ads products more attractiveness in those products. Our advertiser base grew over 70% year to year in 2025 to be more than 4000 advertisers. We've seen a pretty good expansion of that advertiser base, which of course is a key indicator of the health of that business.

Speaker #1: Or is a mid-market strategy beginning to emerge? So about five questions in one there.

Speaker #3: We'll do our best to handle them all. So maybe just to start with—as we've mentioned before—the biggest benefit we got from moving to our own ad tech stack is just making it easier for advertisers to buy on our service.

Greg Peters: We've seen a pretty good expansion of that advertiser base, which of course is a key indicator of the health of that business. Today, we're still currently concentrating in those top advertising accounts, the largest buyers, which are serviced primarily by the Netflix sales teams. That could be directly through our stack or basically a sales team driving buying behavior through DSPs. Either of those, you know, those are, you know, not separate, let's say. Over time, we expect continued growth in that number of advertisers. We're clearly pushing in that direction. We think we're gonna see percentage of advertisers who buy programmatically increase, and therefore the programmatic share of ad revenue will go up as well.

Today, we are still currently concentrating in those top advertising accounts, the largest buyers which are serviced primarily by the Netflix sales teams that can be directly through our stack or basically a sales team driving buying behavior through dsp's either of those those are those are not separate let's say.

Speaker #3: And then additionally, we've added more and more DSPs, which of course are more ways to buy. And we're seeing through that a pretty significant growth in programmatic, which is on its way to becoming more than 50% of our non-live ads business.

Speaker #3: So, due to those moves, as well as things like improving go-to-market capabilities, more Salesforce, continuing to build out our ads products, and more attractiveness in those products, our advertiser base grew over 70% year to year in 2025 to be more than 4,000 advertisers.

And over time, we expect continued growth in that number of advertisers. We're clearly pushing in that direction. We think we're going to see percentage of advertisers, who buy programmatically increase and therefore, the programmatic share of AD revenue will go up as well and as we scale programmatic and our advertiser base broadens further of course, we're going to be able to follow this pretty.

Speaker #3: So we've seen a pretty good expansion of that advertiser base, which, of course, is a key indicator of the health of that business. Today, we're still currently concentrating in those top advertising accounts, the largest buyers.

Greg Peters: As we scale programmatic, and our advertiser base broadens further, of course, we're gonna be able to follow this pretty, you know, fairly standard, modern time-tested model of expanding iteratively into larger and larger pools of advertisers.

A fairly standard moderate time-tested model of expanding iteratively into larger and larger pools of advertisers.

Speaker #3: Which are serviced primarily by the Netflix sales teams. That could be directly through our stack, or basically the sales team driving buying behavior through DSPs—either of those are not separate, let's say.

Thanks, Greg.

Let's see I'll move on to a question around plans and pricing and this one comes from Victor.

Spencer Wang: Thanks, Greg. Let's see. I'll move onto a question around plans and pricing. This one comes from Vikram Kesavabhotla, Baird. What informed your decision to raise subscription prices in the US recently? What are your early observations regarding the impact on customer acquisition and churn in the region?

Vikram.

It's a a boatload Baird what informed your decision to re subscription prices in the U S. Recently, what are your early observations regarding the impact on customer acquisition and churn in the region.

Speaker #3: And over time, we expect continued growth in that number of advertisers. We're clearly pushing in that direction. We think we're going to see the percentage of advertisers who buy programmatically increase.

Speaker #3: And therefore, the programmatic share of ad revenue will go up as well. And as we scale programmatic and our advertiser base broadens further, of course, we're going to be able to follow this pretty fairly standard, modern, time-tested model of expanding iteratively into larger and larger pools of advertisers.

This change was part of our plan for some time, we are continually monitoring signals from our members things like quality weighted engagement plan selection plan moves retention, which is industry, leading so we see improvements in value delivered to our members well in advance of making a price adjustment and.

Greg Peters: This change was part of our plan for some time. We are continually monitoring signals from our members, things like quality weighted engagement, plan selection, plan moves, retention, which is industry-leading. We see improvements in value delivered to our members well in advance of making a price adjustment. Those same signals inform this and frankly, all of our price changes. As a reminder, our initial full year guidance factors in the pricing adjustments that we expect to make throughout the year. Those are almost always all of the pricing changes. It's very rare that we have an unexpected or quote-unquote "surprise," pricing change. That guidance factors in everything that we're planning on doing. As for the most recent changes, the early signals we're seeing are in line with our expectations.

Speaker #1: Thanks, Greg. Let's see. I'll move on to a question around plans and pricing. And this one comes from Vikram Kesavabola at Baird. What informed your decision to raise subscription prices in the US recently?

Those same signals in form this and frankly all of our price changes.

As a reminder, our initial full year guidance factors in the pricing adjustments that we expect to make throughout the year and those are almost always all of the pricing changes is very rare that we have an unexpected are quite caught surprised.

Speaker #1: What are your early observations regarding the impact on customer acquisition and churn in the region?

Pricing change so that guidance factors in everything that we're planning on doing as for the most recent changes the early signals that we're seeing are in line with our expectations are similar to the performance that we've observed.

Speaker #3: This change was part of our plan for some time. We are continually monitoring signals from our members—things like quality-weighted engagement, plan selection, plan moves, and retention, which is industry-leading—so we see improvements in value delivered to our members.

Historically with price changes in the United States.

Greg Peters: They're similar to the performance that we've observed historically with price changes in the United States. So this is, you know, based on early data, the rollout's still ongoing, so I caveat that, but I would say all the indications that we see are consistent with what we've seen before. Worth noting that also consistent is our pricing philosophy. We haven't changed that in quite some time. We look to provide more and more value to our members, invest the revenue that we've got successfully and well. Occasionally, when we've added more value, we ask our members to contribute more so that we can invest that into delivering them even more entertainment value. We think we are delivering one of the best entertainment values that has ever existed.

So this is based on early data the rollout still ongoing so a caveat that but I would say all of the indications that we see are consistent with what we've seen before and worth noting that also consistent is our pricing philosophy, we havent changed that in quite some time, we look to provide more and more value to our members and best.

Speaker #3: Well in advance of making a price adjustment. And those same signals inform this—and, frankly, all of our price changes. So, as a reminder, our initial full-year guidance factors in the pricing adjustments that we expect to make throughout the year.

Speaker #3: And those are almost always all of the pricing changes. It's very rare that we have an unexpected, or call it surprise, pricing change. So that guidance factors in everything that we're planning on doing.

The revenue that we've got successfully and well.

Occasionally when we've added more value asking our members to contribute more so that we can invest that and delivering them even more entertainment value and we think we are delivering one of the best entertainment values that has ever existed as a comparison point to support that statement in the U S. Right now Netflix subscribers are paying the least.

Speaker #3: As for the most recent changes, the early signals we're seeing are in line with our expectations. They're similar to the performance that we've observed historically with price changes in the United States.

Speaker #3: So this is based on early data—the rollout's still ongoing, so a caveat to that. But I would say all the indications that we see are consistent with what we've seen before.

Greg Peters: As a comparison point to support that statement, in the US right now, Netflix subscribers are paying the least per hour of viewing compared to other SVOD offerings. In some case, you'd have to pay 2 times per hour to get a competitive service. Our ads plan at $8.99 in the United States, we think is a great entry point, highly accessible, and an incredible value. You know, we're excited about keeping all of those intact.

Per hour of viewing compared to other asphalt offerings. So in some case you would have to pay two times per hour to get a competitive service and our ads plan at $8 99 in the United States. We think is a great entry point highly accessible at an incredible value. So we're excited about keeping all of those intact.

Speaker #3: And worth noting, that also consistent is our pricing philosophy. We haven't changed that in quite some time. We look to provide more and more value to our members and best the revenue that we've got, successfully and well.

And maybe just Greg just to add to that kind of value, we're delivering and kind of how we see it in the metrics.

Speaker #3: Occasionally, when we've added more value, we ask our members to contribute more so that we can invest that into delivering them even more entertainment value.

Spencer Neumann: Maybe just, Greg, just to add to that value we're delivering and kinda how we see it in the metrics. Just think of the retention that we're seeing in the business, that kind of the churn factor, the opposite of strong retention. We saw it across the board this quarter. Every region was better year over year. That's really encouraging in terms of the value provided, which also speaks to a little bit earlier when you talked about our kind of primary engagement value metric, where we had kind of a record in Q4 of last year, a record again in Q1 of this year, which is playing out in the numbers.

Retention that we're seeing in the business that kind of.

Speaker #3: And we think we are delivering one of the best entertainment values that has ever existed. And as a comparison point to support that statement, in the US right now, Netflix subscribers are paying the least per hour of viewing compared to other SVOD offerings.

The churn factor the opposite strong retention, we saw it across the board this quarter every region was better year over year.

So that's really encouraging in terms of the value provided which also speaks to a little bit earlier, when you talked about our kind of primary engagement value metric, where we had kind of a record in Q4 of last year a record again in Q1 of this year, which is playing out in the numbers.

Speaker #3: So, in some cases, you'd have to pay two times per hour to get a competitive service. And our ads plan at $8.99 in the United States, we think, is a great entry point—highly accessible and an incredible value.

Thanks Vince.

Couple of questions on gaming the first of which comes from Eric Sheridan of Goldman Sachs.

Spencer Wang: Thanks, Spence. Couple questions on gaming, the first of which comes from Eric Sheridan of Goldman Sachs. You are in your fifth year of the gaming strategy. What have been the key learnings over that period? How do platform games change user consumption habits? What do you see as the most interesting areas to invest behind gaming in the coming years?

Speaker #3: So we're excited about keeping all of those intact.

You are in your fifth year of the gaming strategy would have been the key learnings over that period, how do you.

Speaker #1: Yeah. Maybe just, Greg, just to add to kind of that value we're delivering and kind of how we see it in the metrics, just think of the retention that we're seeing in the business, that kind of the churn factor, the opposite of strong retention.

Formed games change user consumption habits.

You see as the most interesting areas to invest behind gaming in the coming years.

Speaker #1: We saw it across the board this quarter. Every region was better year over year. So that's really encouraging in terms of the value provided, which also speaks to a little bit earlier when you talked about our kind of primary engagement value metric where we had kind of a record in Q4 of last year, a record again in Q1 of this year, which is playing out in the numbers.

Yes, I think platform games, just means games on our platform, but let me let me just start by zooming out and saying why are we doing this at the highest level, we really see this as a significant market opportunity. It's about 150 billion in consumer spend ex China ex Russia that doesn't even include AD revenues just in the current model in the ways that we're that we're on.

Greg Peters: Yeah. I think platform games just means games on our platform. Let me just start by zooming out and saying why are we doing this. At the highest level, we really see this as a significant market opportunity. It's about $150 billion in consumer spend, ex China, ex Russia. That doesn't even include ad revenues, so just in the current model and the ways that we're operating. That number is getting bigger as well. Large expansion potential, and where we see a significant part of that market is facing issues like new player acquisition or low-friction game discovery and play that we believe we are well-positioned to improve. We've been building foundations.

Speaker #4: Thanks, Ben. A couple of questions on gaming. The first of which comes from Eric Sheridan of Goldman Sachs. You are in your fifth year of the gaming strategy.

Operating that number is getting bigger.

As well, so large expansion potential and where we see a significant part of that market is facing issues like new player acquisition or low friction game discovery in play that we believe we are well positioned to improve so we've been building foundations. This as you know the ability just to develop games to bring games onto our <unk>.

Speaker #4: What have been the key learnings over that period? How do platform games change user consumption habits? What do you see as the most interesting areas to invest behind gaming in the coming years?

Speaker #3: Yeah, I think 'platform games' just means games on our platform. But let me just start by zooming out and saying, why are we doing this?

Service connect those games to players give players high quality experience.

Greg Peters: This is, you know, the ability just to develop games, to bring games onto our service, connect those games with players, give players high-quality experience. Just as we've seen with film and series, and just as we hypothesized, and I think you might say it's, you know, sort of obvious, but we have learned that gameplay can have a positive impact on member retention as well as driving acquisition. The observed effect of that acquisition has really been small to date, which I think is consistent with sort of our maturity or expectation amongst consumers as a gaming platform still. Now, a key user dynamic that we have observed repeatedly is that delivering a fan of a film or a series an interactive experience from that same universe, it not only extends the audience's engagement, but it also creates this synergy that reinforces both mediums.

And just as we've seen with films and series and just as we hypothesized and I think you might say is sort of obvious but we have learned that gameplay can have a positive impact on member retention as well as driving acquisition. Although the observed effect of that acquisition has really been small to date, which I think is consistent with sort of our.

Speaker #3: At the highest level, we really see this as a significant market opportunity. It's about $150 billion in consumer spend, ex-China, ex-Russia. That doesn't even include ad revenue.

Speaker #3: So just in the current model and the ways that we're operating, that number is getting bigger as well. So, large expansion potential. And where we see a significant part of that market is facing issues like new player acquisition or low-friction game discovery and play.

Maturity or expectation amongst consumers as a gaming platform still now a key user dynamic that we have observed repeatedly is that delivering a fan of a film or series and interactive experience and that same universe. It not only extends the audience's engagement, but it also creates this synergy.

Speaker #3: That we believe we are well positioned to improve. So we've been building foundations. This is the ability just to develop games, to bring games onto our service, connect those games with players, give players a high-quality experience.

Speaker #3: And just as we've seen with film and series, and just as we hypothesized—and I think you might say is sort of obvious—but we have learned that gameplay can have a positive impact on member retention.

That reinforces both medium so the interactive and the non interactive side, both do better it further drives engagement and it delivers more value.

Greg Peters: The interactive and the non-interactive side both do better, it further drives engagement, and it delivers more value. You asked about interesting areas that we're investing in. A few of those, games that reflect our other beloved IP or events and giving fans interactive experience that extend those universes, that's a key focus. Games on TV. This is a new canvas for players and for game developers. It's exciting to be able to expand the market opportunity in that way. As well as kids and providing a dedicated experience for them. Given all that, though, I think, you know, it's worth noting that while, you know, we've been a couple years in building this, we're still really just scratching the surface today in terms of what we can ultimately do in this space.

You asked about interesting areas that we're investing in a few of those gains that reflect our other <unk>.

Speaker #3: As well as driving acquisition. Although the observed effect of that acquisition has really been small to date, which I think is consistent with sort of our maturity or expectation amongst consumers as a gaming platform still.

<unk> IP or events and giving fans interactive experience that extend those universities. That's a key focus games on television. This is a new canvas for players and for game developers, it's exciting to be able to expand the market opportunity in that way as.

Speaker #3: Now, a key user dynamic that we have observed repeatedly is that delivering a fan of a film or series an interactive experience in that same universe not only extends the audience's engagement, but it also creates the synergy that reinforces both mediums.

As well as kids and providing a dedicated experience for them. So given all that though I think it's worth noting that while it's been a couple of years in building. This we are still really just scratching the surface today in terms of what we can ultimately do in this space.

Speaker #3: So the interactive and the non-interactive side both do better. It further drives engagement, and it delivers more value. You asked about interesting areas that we're investing in.

Been building a bunch of infrastructure a bunch of core capabilities.

But now we are increasingly able to deliver more and more the kinds of experiences.

Greg Peters: You know, we've been building a bunch of infrastructure, a bunch of core capabilities, but now we're increasingly able to deliver more and more the kinds of experiences that, you know, we were originally thinking about that move us toward our vision and our aspirations. There's tons more work to do, for sure, but it's fun to get to this stage. And we're excited about the potential we see, and I believe you'll see increasingly interesting releases from us in the year to come. Having said all that, we're gonna continue to ramp our investment, which is still currently small relative to our overall spend on content based on demonstrated performance and growing returns to the business.

Speaker #3: A few of those: games that reflect our other beloved IP or events, and giving fans interactive experiences that extend those universes. That's a key focus.

We were originally thinking about the move us toward our vision and our aspiration. So there's tons more work to do for sure, but it's fun to get to the stage and we're excited about the potential we see and I believe youll see some some interesting increasingly interesting releases from us in the year to come but having said all that we're going to continue to ramp our investment which is.

Speaker #3: Games on TV. This is a new canvas for players and for game developers. It's exciting to be able to expand the market opportunity in that way.

Speaker #3: As well as kids and providing a dedicated experience for them. So, given all that, though, I think it's worth noting that while we've been a couple of years in building this, we're still really just scratching the surface today in terms of what we can ultimately do in this space.

<unk> currently small relative to our overall spend on content based on demonstrate performance and growing returns to the business.

Great and Greg a follow up question on games from Brian Pitz of BMO capital. The recent announcement of Netflix playground is seemingly one of your biggest moves into the video game space to date would you help us understand how you will measure success of playground and the incremental value you expect it will drive for your broader.

Speaker #3: We've been building a bunch of infrastructure, a bunch of core capabilities. But now we're increasingly able to deliver more and more of the kinds of experiences that we were originally thinking about, that move us toward our vision and our aspirations.

Spencer Wang: Great. Greg, a follow-up question, on games from Bryan Pitts of BMO Capital. The recent announcement of Netflix Playground is seemingly one of your biggest moves into the video game space to date. Would you help us understand how you will measure success with Playground and the incremental value you expect it will drive for your broader subscriber base? Maybe start with, just explaining for folks what Netflix Playground is.

Speaker #3: So there's tons more work to do, for sure. But it's fun to get to this stage, and we're excited about the potential we see.

Scrubber base, maybe start with just explaining for folks what Netflix playground is yeah, Greg is going to go there as well thanks, but playground is essentially a separate app for games for kids and kids really represents one of our four key focus areas for games. We've got kids, we have narrowed it as well and then we've got party slash puzzle games.

Speaker #3: And I believe you'll see some interesting, increasingly interesting releases from us in the year to come. But having said all that, we're going to continue to ramp our investment, which is still currently small relative to our overall spend on content, based on demonstrated performance and growing returns to the business.

Greg Peters: Yeah. Greg, I was gonna go there as well, thanks. Playground is essentially a separate app for games for kids. Kids really represents one of our four key focus areas for games. We've got kids, we have narrative as well, we've got party/puzzle games, mainstream games. Our goal here is to become a destination where kids' favorite worlds come to life through games and through interactive experience. Now, this represents the sort of extension of a long history we've had. We've always viewed kids as a special audience. They deserve special care. We provide kids with a dedicated experience. We provide parents with tools that ensure they have control and can determine what's appropriate for their kids. These include tools like ratings, parental controls, pin controls, et cetera.

And then mainstream games and our goal here is to become a destination, where kids favorite worlds come to life through games and through interactive experience now.

Speaker #1: Great. And Greg, a follow-up question on games from Brian Pitz of BMO Capital. The recent announcement of Netflix Playground is seemingly one of your biggest moves into the space. Can you help us understand how you will measure success with Playground, and the incremental value you expect it will drive for your broader subscriber base?

Represents the sort of extension of our long history. We've had we've always viewed kids is a special audience.

Deserve special care, we provide kids with a dedicated experience we provide parents with tools and ensure they have control and can determine what's appropriate for their kids. These include tools like ratings like parental controls pin controls et cetera. So playground, the separate app extends that core philosophy into games. It includes things like a growing collection.

Speaker #1: Maybe start with just explaining for folks what Netflix Playground is.

Speaker #3: Yeah, Greg, I was going to go there as well. Thanks. But Playground is essentially a separate app for games for kids. And kids really represents one of our four key focus areas for games.

Greg Peters: Playground, the separate app, extends that core philosophy into games. It includes things like a growing collection of kids' games in one app, so they can navigate between those. It's fully curated, age-appropriate titles based on beloved shows and movies. You know, think Peppa Pig, Dr. Seuss, Bad Dinosaurs. No ads, no in-app purchases. It fits also with kids' natural viewing habits, a significant portion of kids' viewing already happens on mobile and tablet, so this, you know, happens in the same place. This is all as added value included in your membership already. Now, we're seeing some encouraging signals with kids' games. As we've added more kids' games, we've seen strong growth and engagement through both new titles, as well as improved discovery on titles that we had before. That's exciting to see.

Speaker #3: We've got kids. We have narrative as well. And then we've got party/puzzle games. And then mainstream games. Our goal here is to become a destination where kids' favorite worlds come to life through games and through interactive experience.

The kids games in one app. So they can navigate between those it's fully curated age appropriate titles based on beloved shows and movies I think pepper Peppa pig, Dr. Seuss bad dinosaurs, no ads, knowing that purchases. It fits also with kids natural viewing habits. So a significant portion of the kids viewing.

Speaker #3: Now, this represents the sort of extension of a long history we've had. We've always viewed kids as a special audience. They deserve special care.

Already happened on mobile and tablets of this happened in the same place.

Speaker #3: We provide kids with a dedicated experience. We provide parents with tools that ensure they have control and can determine what's appropriate for their kids.

And this is all as added value included in your membership.

Already now we are seeing some encouraging signals with kids games.

Speaker #3: These include tools like ratings, parental controls, PIN controls, etc. So, Playground, this separate app, extends that core philosophy into games. It includes things like a growing collection of kids' games in one app so they can navigate between those.

We've added more kids games, we have seen strong growth and engagement through both new titles as well as improved discovery on titles that we had before so that's exciting to see and then ultimately we see an important long term opportunity to deliver more entertainment.

Speaker #3: It's fully curated, age-appropriate titles based on beloved shows and movies—think Peppa Pig, Dr. Seuss, Bad Dinosaurs. No ads, no in-app purchases. It also fits with kids’ natural viewing habits.

Greg Peters: Ultimately, you know, we see an important long-term opportunity to deliver more entertainment to kids in ways that parents feel good about, not just across games, but across TV and film as well.

Two kids in ways that parents feel good about not just across games, but across TV and film as well.

Thanks, Greg.

The next question from Eric Sheridan of Goldman Sachs.

Speaker #3: So, a significant portion of kids' viewing already happens on mobile and tablets. So this happens in the same place. And this is all as added value included in your membership.

Spencer Wang: Thanks, Greg. let's see. Next question from Eric Sheridan of Goldman Sachs. Entering 2026, how would you characterize the current competitive landscape for content? Are you seeing any differences in competitive intensity by geography, language, and/or format?

Entering 2026, how would you characterize the current competitive landscape of content are you seeing any differences in competitive intensity by geography language indoor format.

Speaker #3: Already, we're seeing some encouraging signals with kids' games. As we've added more kids' games, we've seen strong growth in engagement through both new titles, as well as improved discovery on titles that we had before.

Well first of all you know competition is not new for Netflix consumers have always had an incredible amount of choices when it comes to entertainment and.

Ted Sarandos: Well, first of all, you know, competition is not new for Netflix. Consumers have always had an incredible amount of choices when it comes to entertainment. We've continued to grow, as kind of what Greg said earlier, by offering enormous value to our members. We grow against other services who are launching against us all over the world. Now great projects are immensely competitive, and they remain so, and those are the projects we want. We've been pleased that Bela and the content team have been able to land some of the most competitive projects recently, like Strangers with Gwyneth Paltrow attached to star, which is this great, incredible The New York Times best-selling book that everyone was after for the adaptation.

Speaker #3: So that's exciting to see. And then, ultimately, we see an important long-term opportunity to deliver more entertainment to kids in ways that parents feel good about.

And we've continued to grow.

Kind of what Greg said earlier by offering enormous value to our members.

And we go against other services, we're launching against US all over the world.

Speaker #3: Not just across games, but across TV and film as well.

Great projects are immensely competitive and they remain so and those are the projects. We want so we've been pleased that the bell on the content team had been able to land some of the most competitive projects recently like <unk>.

Speaker #1: Thanks, Greg. Let's see. Next question from Eric Sheridan of Goldman Sachs: Entering 2026, how would you characterize the current competitive landscape for content? Are you seeing any differences in competitive intensity by geography, language, and/or format?

Strangers with Gwyneth Paltrow attached to Star, which is it's great Incredible New York Times bestselling book that everyone was after for the adaptation Rabbit Rabbit, It's Adam driver, which is going to be directed by Philip Barentine you directed adolescence for us incredibly competitive project that we were able to land.

Speaker #4: Well, first of all, competition is not new for Netflix. Consumers have always had an incredible amount of choices when it comes to entertainment. And we've continued to grow, as kind of what Greg said earlier, by offering enormous value to our members.

Ted Sarandos: Rabbit Rabbit with Adam Driver, which is gonna be directed by Philip Barantini, who directed Adolescence for us. Incredibly competitive project that we were able to land. I'd say I'm really proud of the team, but also it's not just about paying the most, because relationships really matter, particularly when there's a lot of competitive choices. Providing a great experience for creators, delivering a big audience for them. This is hard work, they want people to see it. Delivering a ton of buzz, which is what we do constantly, in the work that we do. We're seeing a lot of repeat business, which is an ultimate sign that we're doing our job well here.

So I'd say I'm really proud of the team, but also it's not just about paying the most.

Speaker #4: And we grow against other services who are launching against us all over the world. Now, great projects are immensely competitive, and they remain so.

Does relationships really matter, particularly when there is a lot of competitive choices.

Providing a great experience for creators delivering a big audience for them. This is hard work so they want people to see it.

Speaker #4: And those are the projects we want. So we've been pleased that Bella on the content team has been able to land some of the most competitive projects recently, like Strangers with Gwyneth Paltrow attached to star, which is this great, incredible New York Times bestselling book that everyone was after for the adaptation.

Delivering a ton of buzz, which is what we do constantly.

And the work that we do and we're seeing a lot of repeat business, which is an ultimate sign that we're doing our job well here.

So this week, we're today actually beef season, two starts and if you look at that project the show's creator Sunny Lee.

Speaker #4: Rabbit Rabbit with Adam Driver, which is going to be directed by Philip Barantini, who directed Adolescence for us. Incredibly competitive project that we were able to land.

Ted Sarandos: This week today actually, Beef season 2 starts. If you look at that project, the show's creator, Lee Sung Jin, he did the first season. It was the most honored limited series of the year when it came out 2 years ago. 45 individual awards, it was a massive hit for us all over the world. We just did an overall deal with Lee Sung Jin, he's gonna be creating for Netflix for years. That cast, Oscar Isaac, he just starred in Frankenstein. He was Golden Globe nominated for that performance. He's got another film coming out this year, another project that we just greenlit with Oscar. We're thrilled about that. Carey Mulligan, who's done multiple projects for Netflix, including her Oscar-nominated performance in Maestro. She's in Narnia coming up later this year.

He did the first season. It was the most honored limited series of the year. When it came out two years ago 45 individual awards and it was a massive hit for us all over the world, but we just did an overall deal with Sun is there's going to be creating for Netflix for years and that cast Oscar Isaac just start in Frankenstein her Golden Globe nominated for that performance He's got.

Speaker #4: And I'd say what I'm really proud of is the team, but also it's not just about paying the most. Because relationships really matter, particularly when there's a lot of competitive choices.

Speaker #4: So providing a great experience for creators. Delivering a big audience for them. This is hard work. So they want people to see it. Delivering a ton of buzz, which is what we do constantly in the work that we do.

Another film coming out this year and another project that we just greenlit with Oscar So we're thrilled about that Carey Mulligan, who has done multiple projects for Netflix, including our Oscar nominated performance in Maestro. She is in Narnia coming up later this year as he was in my balance sheet and dig we love working with carriers, He's a genius Charles Melton, who.

Speaker #4: And we're seeing a lot of repeat business, which is the ultimate sign that we're doing our job well here. So this week—we're, today, actually—Beef season two starts.

Speaker #4: And if you look at that project, the show's creator, Sonny Lee, he did the first season. It was the most honored limited series of the year when it came out two years ago.

Ted Sarandos: She was in Mudbound. She's in Dig. We love working with Carey. She's a genius. Charles Melton, who was a Golden Globe nominee for May December, incredible in the new season of Beef. Even and Cailee Spaeny, who was just in Wake Up Dead Man. Like, the whole cast is like Netflix family. I think that's a really good sign that we're doing something right. Running Point comes out next week. It's another new hit series with Mindy Kaling, who we've worked with steadily, who we love the relationship, and we hope she does too. It's not just happening in the US, by the way. Álex Pina, who created La Casa de Papel, has done a bunch of multiple projects since that show, including one he's working on right now.

The Golden Globe nominated for May December.

Credible and the new season of beef.

Speaker #4: 45 individual awards. And it was a massive hit for us all over the world. We just did an overall deal with Sonny's. He's going to be creating for Netflix for years.

Colleagues, Bonnie who was just didn't wake up dead man. So like the whole cast is like Netflix family. So I think that's a really good sign that we're doing something right.

Speaker #4: And that cast—Oscar Isaac just starred in Frankenstein. He was Golden Globe-nominated for that performance. He’s got another film coming out this year.

Running point comes out next week.

Another new hit series with Mindy Kaling, who we've worked with steadily who we love the relationship and we hope she does too.

Speaker #4: And another project that we just greenlit with Oscar, so we're thrilled about that. Carey Mulligan, who's done multiple projects for Netflix, including our Oscar-nominated performance in Maestro.

And it's not just happening in the U S by the way, Alex Danielle Greater La Casa de pop out there's been a bunch of multiple projects since that show and including one who is working on right now.

Speaker #4: She's in Narnia coming up later this year. She was in Mudbound. She's in Dig. We love working with Carrie. She's a genius. Charles Melton, who is a Golden Globe nominee for May December, is incredible in the new season of Beef.

So.

If repeat business as a sign of success I'm really excited about what we're doing.

Ted Sarandos: If repeat business is a sign of success, I'm really excited about what we're doing. You know what, I also think about competition in the terms of the folks, not just who we're competing for projects with or competing with our members with, but we're also a customer to most of these folks. You know, Running Point is produced by Warner Bros. for us. We license shows like Watson and Mayor of Kingstown from Paramount. We have a pay one deal with Sony. We have it with NBCUniversal that includes DreamWorks Animation and Illumination. Our investment in those films and in co-productions and in licensing actually feeds the entire movie ecosystem around the world.

But I also think about competition in the terms of the folks.

Not just who were competing for projects with or competing with her members with but we're also a customer to most of these folks so.

Speaker #4: Even in Cali Spani, who was just in Wake Up Deadman. So the whole cast is like a Netflix family. So I think that's a really good sign that we're doing something right.

Running point is produced by Warner Brothers for US we licensed shows like Watson and mayor Kingstown for Paramount.

Speaker #4: Running Point comes out next week. It's another new hit series with Mindy Kaling, who we've worked with steadily, who we love the relationship with—and we hope she does too.

We have a pay one deal with Sony we have met with NBC Universal that includes Dreamworks animation and illumination.

Speaker #4: And it's not just happening in the US, by the way. Álex Pina, who created La Casa de Papel, has done a bunch of multiple projects since that show, including one he's working on right now.

Our investment in those films and in co productions and in licensing actually exceeds the entire movie ecosystem around the world. So while it's a little unusual to have to be a customer and a competitor it's not that unusual in the entertainment business and we manage those relationships pretty well.

Speaker #4: So if repeat business is a sign of success, I'm really excited about what we're doing. But I also think about competition in terms of the folks not just who we're competing for projects with or competing with our members with, but we're also a customer to most of these folks.

Ted Sarandos: While it's a little unusual to have, you know, to be the customer and the competitor, it's not that unusual in the entertainment business, and we manage those relationships pretty well.

Thanks, Ed.

Eric Sheridan from Goldman also has another question. This time on AI, how does the company's approach to the.

Spencer Wang: Thanks, Ted. Eric Sheridan from Goldman also has another question, this time on AI. How does the company's approach to the role AI can play in the creative process continue to evolve? With the announced acquisition of InterPositive, can you discuss the decision around that deal, measured against your broader strategy?

Speaker #4: So, Running Point is produced by Warner Brothers for us. We license shows like Watson and Mayor Kingstown from Paramount. We have a pay-one deal with Sony.

How does the company's approach to the role AI can play in the creative process.

To evolve with the announced acquisition of intra positive can you discuss the decision around that deal.

Speaker #4: We have it with NBCUniversal, which includes DreamWorks Animation and Illumination. Our investment in those films, in co-productions, and in licensing actually feeds the entire movie ecosystem around the world.

Measured against your broader strategy.

Well in general we expect Gen AI to help make content better and better better tools better processes and I think Netflix is going to remain at the forefront in the exploration and innovation.

Ted Sarandos: Well, in general, we expect gen AI to help make content better and better. Better tools, better processes, and I think Netflix is gonna remain at the forefront in the exploration and the innovation of AI in the creative process. You know, given our technology DNA, we have a significant and unique data assets here. We have tremendous scale. We see that as all, you know, great opportunities to leverage new technical capabilities across every aspect of the business. I think, you know, AI's gonna deliver benefits for our members, for creators, and for our employees. On the content side, specifically to your question, you know, it takes a great artist to make great art, and AI won't change that.

Speaker #4: So while it's a little unusual to have to be the customer and the competitor, it's not that unusual in the entertainment business. And we manage those relationships pretty well.

And in the creative process, given our technology DNA.

Speaker #1: Thanks, Ted. Eric Sheridan from Goldman also has another question. This time on AI. How does the companies approach to the how does the companies approach to the role AI can play in the creative process continue to evolve with the announced acquisition of Interpositive?

A significant and unique data data assets here, we have tremendous scale. So we see that as all great opportunities to leverage new technical capabilities across every aspect of the business. So I think that is going to deliver benefits for our members for creators and for our employees. So on the content side specifically to your question.

Speaker #1: Can you discuss the decision around that deal measured against your broader strategy?

It takes a great artist to make great art, and AI won't change that but AI will give those artist better tools to bring those visions to life in ways that were just scratching the surface on so today, our talent and Leverages. These tools for things like set references pre visualization visual effects sequence prop shop.

Speaker #4: Well, in general, we expect Gen AI to help make content better and better. Better tools, better processes.

Ted Sarandos: AI will give those artists better tools to bring those visions to life in ways that we're just scratching the surface on. You know, today our talent leverages these tools for things like set references, pre-visualization, visual effects, sequence prep, and shot planning. All of these things, by the way, also improve on-set safety, which is something that's not talked about enough. This is all just the beginning. You know, with our acquisition of InterPositive, we think it accelerates our gen AI capabilities because it's a proprietary technology that was created specifically for filmmakers and specifically for filmmaking and thus, you know, different than other gen AI video applications.

Planning all of these things by the way also improve onset safety, which is something that is not talked about enough and this is all just the beginning.

With our acquisition or positive we think it accelerates our gen AI capabilities.

Because it's a proprietary technology that was created specifically for filmmakers and specifically for filmmaking and that's different than than other gen. II video applications. So while.

Our ownership of and a positive is very new we.

Have generated a bunch of interests with our creators who spent time with the tools and we're seeing momentum build around adoption.

Ted Sarandos: While our ownership of InterPositive is very new, we have generated a bunch of interest with our creators who've spent time with the tools, and we're seeing real momentum build around adoption.

Maybe just to pick it up.

From there I would say Ted mentioned these were the factors that inform where we think we should be developing technology, where we have a differential our unique capability to invest in generative AI deliver returns of the business and data the uniqueness and scale of data is a critical one the other one is wherever they are.

Greg Peters: Maybe just to pick it up-

Ted Sarandos: Yeah, please.

Greg Peters: From there, I would say, Ted mentioned these, what are the factors that inform where we think we should be developing technology, where we have a differential or unique capability to invest in Generative AI to deliver returns to the business? Data, the uniqueness and scale of data is a critical one. The other one is, where are there products or business processes that are also at scale that we can essentially attach this technology to and get good leverage off it? Content production, which Ted went through, is a big one. Member experience is another big one. Now, we've been in personalization and recommendation for 2 decades, but we still see tremendous room and opportunity to make it even better by leveraging some of these newer technologies.

Products or business processes that are also at scale that we can essentially attached this technology to and get good leverage off it. So content production, which said went through is a big one member experience is another big one now we've been in personalization and recommendation for two decades, but we still see tremendous room and opportunity to make it even better by leveraging some of these.

And thus, you know, different than—uh, than other GenAI video applications. So while the—we—our ownership of Inner Positive is very new, uh, we have generated a bunch of interest with our creators, who spent time with the tools, and we're seeing real momentum build around adoption.

Your technologies, we see that recommendation systems based on these new model architectures, not only improve the current personalization, but it also allows us to iterate and improve more quickly to improve that velocity things like adding support for different content types going forward and thats much more much more tour quick much more efficient and as we noted in the letter.

Greg Peters: We see that recommendation systems based on these new model architectures not only improve the current personalization, but it also allows us to iterate and improve more quickly, to improve that velocity. Things like adding support for different content types going forward, that's much more quick, much more efficient. As we noted in the letter, we already saw in this last quarter these new capabilities driving increased engagement with the service. That's super exciting to see. The better we execute here, the more our product experience acts as a force multiplier to the large content investments we make. There's sort of a multiplier effect.

We already saw in this last quarter. These new capabilities driving increased engagement with the service that's super exciting to see and the.

Maybe just to pick it up from there. I would say, you know, Ted mentioned these—you know, what are the factors that inform where we think we should be developing technology, where we have a differential or a unique capability to invest in generative AI, delivery, returns to the business—and, you know, data, the uniqueness and scale of data as a critical one. The other one is, you know, where are there...

Better we execute here the more our product experience acts as a force multiplier to the large content investments we make so there's sort of a multiplier effect and the last area. I'll mentioned is advertising, which again, we're we're growing scale in and we really see an opportunity to leverage AI within our Netflix add suite make it easier to design new creative form.

Greg Peters: The last area I'll mention is advertising, which again, we're, you know, we're growing scale in, and we really see an opportunity to leverage AI within our Netflix ad suite, make it easier to design new creative formats, custom ads, that improve contextual relevance. The technology stack just allows us to roll them out more quickly, more effectively, and allow partners to leverage those things in an easier manner.

Mats custom ads improved that improved contextual relevance in the technology stack just allows us to roll them out more quickly more effectively and allow partners to leverage those things and an easier manner.

Greg We have time for one last question, which comes from rich Greenfield of light shed partners, he's asking about reed's decision to not seen for reelection at our upcoming.

Spencer Wang: Great. We have time for one last question, which comes from Rich Greenfield of LightShed Partners. He's asking about Reed's decision to not stand for re-election at our upcoming annual meeting. The question is: You've talked publicly that Reed Hastings preferred to build versus buy. Was Netflix's decision to pursue Warner Bros. a key factor in his timing of leaving the Netflix board this year?

Annual meeting the question is you've talked publicly that Reed Hastings prefer to build versus buy was Netflix is decision to pursue Warner brothers, a key factor and as timing, leaving the Netflix board this year.

Products or business processes that are also at scale that we can essentially attach this technology to and get good leverage off of it. So, content production, which you said went through, is a big one. Member experience is another big one. Now, we've been in personalization and recommendation for, you know, two decades, but we still see tremendous room and opportunity to make it even better by leveraging some of these newer technologies. We see that recommendation systems based on these new model architectures not only improve the current personalization, but also allow us to iterate and improve more quickly—to improve that velocity. Things like adding support for different content types going forward, that's much more, much more quick, much more efficient. And as we noted in the letter, we already saw in this last quarter, these new capabilities driving increased engagement with the service. That's super exciting to see. And the better we execute here, the more our product experience...

Experience acts as a force multiplier to the large content investments we make, so there's sort of a multiplier to that.

So sorry, if anyone who is looking for some palace intrigue here.

So.

Ted Sarandos: Sorry if anyone who was looking for some palace intrigue here. Not so. Reed was a big champion for that deal. He championed it with the board. The board unanimously supported the deal. We had perfect alignment with management and the board on the Warner Bros. deal. That was absolutely had nothing to do with it.

<unk> was a big champion for that deal he championed it with the board the board unanimously supported the deal. So we have perfect alignment with the with management and the board on the Warner Brothers deal. So that was absolutely I know they're doing it.

And the last area I'll mention is advertising. Which, again, we're—you know—we're growing scale in, and we really see an opportunity to leverage AI within our Netflix ad suite. Make it easier to design new creative formats, custom ads, improved—improved contextual relevance, and the technology stack just allows us to roll them out more quickly, more effectively, and allow partners to leverage those things, um, in an easier manner.

And.

Ted do you want to close this out then with some words on the decision absolutely.

Spencer Wang: Ted, do you wanna close this out then, with some words on the decision?

Reed Hastings, our founder and Board Chair, let us know that he has decided not to run for reelection for our board at the next shareholders meeting.

Ted Sarandos: Absolutely. Look, Reed Hastings, our founder and our board chair, let us know that he's decided not to run for re-election for our board at the next shareholder meeting. It's very unusual for a founder to step away from the board of the company after succession. Reed is no ordinary founder. The first time I met Reed in 1999, he said that he was building a company that would be around long after him, and that requires succession. Imagine talking about succession while you're just starting to build. When Reed took the first steps in all of this, more than a decade ago, he said he would hang around for about another 10 years, and it's only been 6. This is Reed's style: make decisions and move fast.

It's very unusual for a boundary to step away from the board of the company after succession, but rate is no ordinary founder.

Great. Uh, we have time for, uh, one last question, uh, which comes from Rich Greenfield of LightShed Partners. Uh, he's asking about, uh, Reed's decision to not stand for re-election at our upcoming, uh, annual meeting. Uh, the question is: You have talked publicly that Reed Hastings prefers to build versus buy—was Netflix's decision to pursue Warner Brothers a key factor in his timing of leaving the Netflix board this year?

The first time at Reed in 1999, he said that he was building a company that would be around long after him and that requires succession now imagine talking about succession, while you're just starting to build.

When we took the first steps in all of this more than a decade ago. He said he would hang around for about another 10 years and it's only been six but this is reid style.

Uh, so sorry if anyone who is looking for some Palace Intrigue here and not, not not. So, uh, Reed was a big Champion for that deal. He championed it with the board, the board unanimously, supported the deal. So we had purpose alignment with the with management and the board on the Warner Brothers deal, so that was absolutely had nothing to do with it.

Decisions and move fast we have a long history of going from brainstorm to scale at breakneck speed in almost everything we do.

Ted Sarandos: We have a long history of going from brainstorm to scale at breakneck speed in almost everything we do. Reed will remain the chairman and the member of our board through his current term. The board and the Nominating and Governance committee are gonna take the next steps in reshaping the board in the months to come. I wanna say on a personal note, I've been very fortunate in my life to have great bosses, people who've inspired me, who've coached me, who gave me opportunities. Reed did these things at levels unimaginable. You know, Reed is an economist and an engineer in his head, but he's a teacher in his heart.

Reid will remain the chairman and member of our board through his current term the board and the nom and Gov Committee Youre going to take the next steps in reshaping the board in the months to come but I wanted to say on a personal note.

I've been very fortunate in my life to have a great bosses.

People who've inspired me have coached me who gave me opportunities.

We did these things at levels unimaginable.

Right as an economist in engineered and his head, but he is a teacher in his heart.

And, uh, Ted, um, do you want to close us out, then, um, with, uh, some words on, uh, the decision? Absolutely. Uh, look, um, Reed Hastings, our founder and our board chair, let us know that he's decided not to run for re-election for our board, uh, at the next shareholders' meeting. Um, it's very unusual for a founder to step away from the board of the company, uh, after succession, but Reed is no ordinary founder. Um, the first time I met Reed in 1999, he said that he was building a company that would be around long after him, and that requires succession. Now, imagine talking about succession while you're just starting to build.

And read not only shared the spotlight a real rarity in Hollywood by the way he pushed me into the spotlight and celebrated the wins and coach through the misses an insured made me the executive that am today I'm forever grateful.

Ted Sarandos: Reed not only shared the spotlight, a real rarity in Hollywood, by the way, he pushed me into the spotlight and celebrated the wins and coached through the misses, and in short, made me the executive that I am today. I am forever grateful. He built a company of risk-takers and a culture where character matters and nobody rests in the pursuit of excellence. I have loved working with and for Reed through amazing twists and turns in our business, and he has modeled what it is to be a leader and a friend. You know, in reflecting on Reed's leadership here at Netflix, I was reminded of a quote from Max De Pree, who said, The first responsibility of a leader is to define reality, and the last is to say thank you.

He built a company a risk takers and a culture, where character matters and nobody rests in the pursuit of excellence.

I have loved working with and for read through amazing twists and turns in our business.

When Reed took the first steps in all of this more than a decade ago, he said he would hang around for about another ten years. And it's only been six, but this is Reed's style—make decisions and move fast. We have a long history of going from brainstorm to scale at breakneck speed in almost everything we do. Uh, Reed will remain the chairman and a member of our board through his current term. The board and the naming committee are going to take the next steps in reshaping the board in the months to come. But I want to say, on a personal note,

And he has modeled when it has to be a leader and a friend.

And reflecting on reeds leadership here at Netflix.

I've been very fortunate in my life to have great bosses—people who've inspired me, have coached me, who gave me opportunities.

I was reminded of a quote from Max Dupree.

Redid these things at levels unimaginable.

You said the.

The first responsibility of a leader just to define reality.

You know, Reed is an economist and an engineer in his head, but he's a teacher in his heart.

And the last is to say thank you and then between the two the leader must become a servant and a debtor.

Ted Sarandos: In between the two, the leader must become a servant and a debtor. That sums up the progress of an artful leader. Reed Hastings is the ultimate artful leader, and he leaves me and Greg enormous shoes to fill. In the spirit of an artful leader work in progress, I say to Reed, thank you.

That sums up the progress of an artful leader.

Reed Hastings is the ultimate Artful leader.

And Reed not only shared the spotlight—a real rarity in Hollywood, by the way—he pushed me into the spotlight and celebrated the wins and coached through the misses and, in short, made me the executive that I am today. I'm forever grateful.

He leaves me and Greg enormous shoes to fill.

In the spirit of an artful leader a work in progress I would say to read thank you.

He built a company of risk-takers and a culture where character matters, and nobody rests in the pursuit of excellence.

So I'll just I'll join you.

I would just say that from the very beginning Reed essentially established the standard for what leadership for our culture. It looks like at Netflix his vision his willingness to take risks to embrace change to motivate change really.

Greg Peters: Ted, I'll just join you. I would just say that from the very beginning, Reed essentially established the standard for what leadership, for what culture looks like at Netflix. His vision, his willingness to take risks, to embrace change, to motivate change really, to be transparent even when it's hard to be, his total commitment to our values, to always putting our members and the company first, have shaped every part of what Netflix is today. The innovations that Reed championed didn't just build Netflix. They helped move a whole industry forward. They expanded what is possible for storytellers around the world, for audiences. We now bring stories from around the world to audiences in ways that weren't possible, weren't even imaginable before.

The first responsibility of a leader is to define reality.

To be transparent, even when it's hard to be.

Total commitment to our values to always putting our members and the company first have shaped every part of what Netflix has today and the innovations that re champion.

And the last is to say, thank you. And in between the two, the leader must become a servant and a debtor.

That sums up the progress of an artful leader.

Reed Hastings is the ultimate artful leader, and he leaves me and Greg enormous shoes to fill.

Just build Netflix they helped move a whole industry forward. They expanded what is possible for storytellers around the world for audiences. We now bring stories from around the world to audiences in ways that weren't possible, even imaginable for and we got to this point because reed has a way of pushing you to think bigger to be.

Now, in the spirit of an artful leader work in progress, I say to read. Thank you.

Greg Peters: We got to this point because Reed has a way of pushing you to think bigger, to be more honest, not only with others, but with yourself, to own your decisions, but always in a way that made you feel supported, trusted. He would debate his perspective with tremendous passion to try and get us to the best, most informed answer, but then would support you in your decision with equal passion, even when he personally disagreed. Then even better, he would celebrate you with even greater passion if you ended up being right. I think actually those are some of his most favorite moments. That style of interaction has quite literally shaped who I and many others across Netflix are today.

The more honest not only with others, but with yourself to own your decisions, but always in a way that made you feel supported trusted he would bet his perspective with tremendous passion to try and get us to the best most inform answer but then would support you in your.

<unk> with equal passion, even when he personally disagreed.

And then even better he would celebrate you with even greater passion. If you ended up being right I think actually those are some of his nose favor.

Favorite moments.

And that style of interaction has quite literally shaped who I and many others across Netflix are today and a lesson among many that I learned from reading and perhaps the most meaningful and certainly I think the most apropos to this moment is a realization that while many of us can spend most of our lives tremendous effort into building some.

Greg Peters: A lesson among many that I learned from Reed, and perhaps the most meaningful, and certainly I think the most apropos to this moment, is a realization that while many of us can spend most of our lives, tremendous effort into building something we believe in, something we're proud of, how we hand that work off to someone else is of equal importance to all that time building. We should put in equal effort, thoughtfulness, and planning into that transition as we did into all that came before it. When my time to transition comes, I aspire to be as selfless, disciplined, and graceful as Reed has been. Reed, thank you for the trust you placed in us, the example you set. We're gonna carry those principles with us every day.

Said, I'll just I'll join you. Uh, I would just say that from the very beginning Reed essentially, established the standard for what leadership for what culture looks like at Netflix his vision. His willingness to take risks to uh, Embrace change to motivate change, really, uh, to be transparent. Even when it's hard, to be his total commitment to our values, to always putting our members and the company. First have shaped every part of what Netflix is today and the innovations that read Champion didn't just build Netflix, they helped move a whole industry forward. They expanded what is possible for storytellers around the world for audiences. We now bring stories from around the world to audience in ways that weren't possible, or even imaginable before, and we got to this point because Reed has a way of pushing you to think bigger to be more honest, not only with others, but with yourself to own your

We believe in something we're proud of.

How we hand that work off to someone else is of equal importance to all of that time building and we should put an equal effort thoughtfulness planning into that transition as we did into all of that came before it. So when my time to transition comes I aspire to be a selfless discipline and graceful as read has been so REIT.

For the trust you place in US. The example, you said, we're going to carry those principles with US every day.

Yeah.

Thank you Reed I echo that as well.

Same thing I couldn't you couldn't say it better where it's just even as I could chills thinking about oddly. There's so many memories, but one thing stands out for me right now, which is real time is that a big singular read any of the Netflix logo because it seems to have appropriate read your you're literally an N of one forever DNA as this plays out.

Spencer Wang: Thank you, Reed. I echo that, as well.

Ted Sarandos: Same, same. I couldn't, you couldn't say it better. It's weird. It's just, it's like I get chills thinking about it. Oddly, they've sparked so many memories, but one thing standing out for me right now, which is just real time, is that big singular red N of the Netflix logo because it seems so appropriate. Reed, you're literally an N of one forever, DNA of this place. Thanks for everything.

Your decisions, but always in a way that made you feel supported, trusted. He would debate his perspective with tremendous passion to try and get us to the best, most informed answer. But then, he would support you and your decision with equal passion, even when he personally disagreed—and then even better, he would celebrate you with even greater passion if you ended up being right. I think actually, those are some of his most favorite moments. And that style of interaction has quite literally shaped who I and many others across Netflix are today, and a lesson among many that I learned from Reed—and perhaps the most meaningful. And certainly, I think the most awkward part to this moment is a realization that while many of us can spend most of our lives putting tremendous effort into building something we believe in, something we're proud of,

So thanks for everything.

Great and with that we'll conclude the call on that note I just wanted to thank everybody for joining us again, and we will see you next quarter.

Spencer Wang: Great. With that, we'll conclude the call on that note. I just wanna thank everybody for joining us again, and we will see you next quarter.

How we hand that work off to someone else is of equal importance to all that time building, and we should put an equal effort, thoughtfulness, and planning into that transition as we did into all that came before it. So when my time to transition comes, I aspire to be as selfless, disciplined, and graceful as Reed has been. So Reed, thank you for the trust you placed in us, the example you set. We're going to carry those principles with us every day.

Thank you, Reed. I echo that as well.

Same, same. I don't, you couldn't say it better, it's weird. It's just uh, even it's it's got like I get chills thinking about oddly the Sparks coming memories, but 1 Thing standing up for me right now, which is just real time is that that big singular red end of the Netflix logo, because seems so appropriate, read. You're, you're literally an N of 1 forever, uh, DNA of this place. So, thanks for everything.

Great, and with that, we'll conclude the call on that note. So I just want to thank everybody for joining us again, and we will see you next quarter.