Good afternoon, and welcome to the Netflix Q3 2023 Earnings Interview. I'm Spencer Wang, VP of Finance, IR and Corporate Development. Joining me today are Co-CEOs, Ted Sarandos; and Greg Peters; and CFO, Spence Neumann. Our interviewer this quarter is Jessica Reif Ehrlich from Bank of America. As a reminder, we will be making forward-looking statements and actual results may vary. Jessica, let me turn it over to you now for your first question.

Thank you. So let's start with you, Ted. Now that one strike is over, the Writers Guild, what are the implications for your business?

Thanks, Jessica. Let me first say, we want nothing more than to resolve this and get everyone back to work. That's true for Netflix and true for every member of the industry. It's why our member CEOs have prioritized these negotiations above everything else we are doing. We spent hours with SAG-AFTRA over the last few weeks, and we were actually very optimistic that we were making progress. But then at the very end of our last session together, the Guild presented this new demand that kind of on top of everything for a per subscriber levy unrelated to viewing or success, and this really broke our momentum, unfortunately. But you should know, we are incredibly and totally committed to ending this strike. The industry, our communities and the economy are all hurting. So we need to get a deal done that respects all sides as soon as we possibly can. In terms of the impact, these are the times that I'm glad we have such a rich, deep, and broad programming selection. Programming costs themselves rise nearly every year, primarily driven by competition. Competition for talent, competition for shows and films. And you can see we've managed successfully through that year on year. The same is true during COVID when we were able to manage the slate through prolonged and unpredictable production interruptions. But I really think we are not really that focused right there on it and how this impacts much, except for our biggest opportunity, which is to continue improving the quality of the slate. We focused on that day in, day out, year in, year out. And I'm incredibly pleased with Bela and the team and the progress that they are making. So if you'll indulge me for just a second, I would just draw your attention to the Q4 slate as an example of that, headlined by the return of The Crown for its final season. This is one of the most ambitious television shows in the history of television. We have a new season of Big Mouth, a new season of Elite, the launch of Berlin, which is a spin-off from our Money Heist franchise, and new limited series like All the Light We Cannot See from Shawn Levy, and Bodies from the UK. And that's just on the TV side. On the film side, one of our strongest quarters ever. We have this enormous Sci-Fi Spectacular from Zack Snyder, Rebel Moon, a new film from David Fincher, The Killer, and these films that just lit up the fall film festivals recently, like May, December from Todd Haynes and Bradley Cooper's Maestro, The Doc Feature, American Symphony. That's all coming in Q4. And for family viewing too, we've got a new animated feature from Adam Sandler, Leo, that's hysterical, Chicken Run 2, which is a sequel to the most successful stop-motion animation film ever, and a new series from the CoComelon World called CoComelon Lane, Family Switch from Director McG, with Jennifer Garner and Ed Helms. So it's an incredible slate, something new and exciting for all tastes, all moods, all ages, and we're just super proud of the team that they've been able to manage through this and still deliver so much joy for our members.

One more on strike-related, like just the aftermath. You discussed at a recent conference giving talent more transparency. Could you talk about what that looks like? What are the new metrics talent will be paid on? And is it even standardized across the industry?

Yes. Look, what I talked about there was heading towards a world where streaming data will be much more readily available. Remember, streaming itself is not that exotic anymore. We've been doing it for 15 years. At the beginning, we thought there was a hard kind of apples and oranges comparison to ratings and streaming. I think we've gotten to a place where it's mostly about engagement, and that does capture the value of watching, and that things will become much more transparent the way TV has always had ratings, and music has always had Billboard, and theatrical has always had box office. So it will be much more common for the data to be fully transparent. What I didn't mention, though, is that part of the reason for not publishing early was part of our promise with creators. At the time we started creating original program, our creators felt like they were pretty trapped in this overnight ratings world and weekend box office world defining their success and failures. As we know, a show might have enormous success down the road, and it wasn't captured in that opening box office. So part of this was the relationship with talent, not just the business aspects of it. Over time, people are much more interested in this. We're on the continuum today of how much data do we publish. I think we've been leading the charge, starting everyone down the path of a top 10, publishing our top 10 list and our annual wrap-up list and everything that give a lot of transparency to the viewing. I expect it will be more and more transparent.

Great. Let's move on to page sharing. Have you identified most of the borrowers and can you provide any help in how much more is left to go and the challenge in completing the crackdown?

Sure. I'll take that one. And I'll start by saying we're just incredibly pleased with how it's been going. You can see the progress from our membership growth in Q2. Now in Q3, you can see it embedded in the revenue outlook for Q4. I think paid sharing represents a difficult challenge where we needed to balance both important relevant consumer considerations with the importance of ensuring that our business gets reasonably paid when we deliver entertainment. It's an example where we leveraged core executional capabilities we've been building for over a decade, sort of how you develop good product experiences, how to solve hard problems through them, and how to have an iterative model where you listen to consumers to tell us what's working and what's not? So we've been excited about that. But because it's such a challenging problem, we're shifting essentially consumers' expectations and what they expect from us. We've always thought that making this change should be done in a steady, considered way. So our plan has been to stage out this rollout. We've been delivering our product experience to different borrower cohorts according to that plan. As a result, I think there are a number of borrower cohorts that, as of today, have not received part of that experience. Just to explain that a bit: part of the motivation to stage it out is based on technical considerations. This is our ability to build features and improve model accuracy over time in a way that allows us to ensure that we're accurately developing and applying our interventions effectively and positively for consumers. Part of that has been to stage things out based on borrower behavior. We want to present the right product experience at the right moment. That's more likely to convert a borrower over rather than have them spin off. So we're thinking about that in terms of maximizing long-term revenue. We'll continue the rollout for the next couple of quarters. I think folks are trying to figure out how much juice is left there. I would say we anticipate having incremental acquisition and incremental adds for the next several quarters. We've seen that in the last couple of quarters. It’s also worth noting that this was on top of very healthy organic growth, meaning not driven by paid sharing. We anticipate seeing that for the next several quarters to come. Just stepping back, there's a set of borrowers that we're not going to convert or haven't converted yet. We're not going to convert over the next couple of quarters, but that really represents how we think about paid sharing going forward, which is it has now become part of just our standard way of operating. We have many hundreds of millions of qualified households out there. There are Smart TV households that we want to win over the next several years. Those borrowers represent the same group we must go after just like we go after people who have never signed up for Netflix, with an incredible content offering and incredible value to get them so excited that they just have to sign up.

Right. Moving on to the recent advertising restructuring. Can you talk about why you made the management change and what you would like to accomplish?

Yes. First, I'd say Jeremy has done a great job getting us essentially from zero to where we are today. She laid the foundation for the ads business. She's hired and built a burgeoning team of leaders who, in turn, are hiring the teams and people who are going to take the business forward. It's an important time and I think a great time for Amy to come in and extend that great work to build on that foundation and drive our ads business to the next level. Why am I specifically excited about Amy in the role? First, she has a high Netflix tenure; she’s been with the company for over seven years. She has demonstrated a positive impact and great results in several different roles, and most recently as part of the studio leading a big global team that is scaling very, very quickly, which sounds familiar when you think about where we want to take our ads business. Second, she has broad entertainment experience, ranging from content licensing and distribution to business development and finance strategy at Netflix and in prior roles. When you think about that assemblage of skills, and you think about the existing ads leadership team that has a rich history in ads and connected TV, especially someone like Peter Naylor, who started selling connected TV at Hulu, that’s a strong team to take our ads business to the next level. And maybe I'll just restate what we think the promise, the opportunity, and sort of where we are at with the ads business. First, just starting off with this is a $180 billion opportunity when you think about linear TV, connected TV, not including YouTube, China, and Russia. We believe we are in a great position to win some of those dollars. We have great content that brands want to be next to. We're a safe place for brands to exist. We have great engagement from our members. That's a strong foundation to work with. We know we have a lot of work to fulfill that potential. Among that work, we've said it many times; I’ll probably say it many times going forward, but scale is the number one priority. We're making good progress there. This quarter, we grew our ad plan membership 70% sequentially quarter-to-quarter. That's on top of last quarter where we grew at 100% quarter-to-quarter. We now have 30% of our new sign-ups choosing our ad plan in our ad countries. We have done this by making the ads offering more competitive. We've gotten to over 95% of content parity with our non-ad plans. We’ve improved features like the number of streams and video resolution. We're going to keep doing that, including adding downloads. So we'll keep that good trajectory going, focusing on it. The second big priority for us is delivering features and products that advertisers want. We've heard again and again from advertisers; top of that list is measurement. We launched our measurement partnership with Nielsen in the United States this month in October, and we're excited about that. We have a long list of other partners across other countries that we need to deliver that same capability. We’re also excited about new products. We've rolled out our top 10 media buy and we're going to roll out our Binge ad product later this year. We’re launching more ways to buy programmatically through Microsoft, giving more buyers more ways to access our inventory. There is a lot of work to do here on all those fronts, but we've always said this is a multi-year build with multi-year progress. We've got a lot going on and we're excited about the future.

So now that you've phased out basic for new subs and you're getting extra members or paid more per sub from password sharing crackdown, and you've introduced advertising in 12 countries. Could you talk about the outlook for ARM in 2024 and beyond?

You guys want me to take that one?

Go ahead, Spencer.

All right, you wind it up for me. Thanks, Jessica. I would say just generally, when we think about 2024 and beyond, think about it in terms of our revenue growth profile. We expect a more balanced mix of membership and ARM growth in 2024 and beyond. Looking at 2024 specifically, as Ted talked about, we expect to have a great slate to drive the business forward. We expect to continue to add extra members, grow our advertising revenue as Greg discussed, and in addition to have some pricing adjustments— you saw that in our letter. All those things will drive ARM. 2023 was a pretty unusual year where essentially all of our growth came from member growth. Going forward, more broadly, not just in 2024 and beyond, we'll grow our business by continuing to improve our service, increasing engagement, and satisfying current and future members. Now that as Greg discussed, we have an account sharing solution and a clearer path to more deeply penetrate that big addressable market of a half a billion connected TV households and growing. With our continued plan evolution, pricing sophistication, and all that hard work on our ads business, we'll keep getting better at monetizing that big and growing reach and engagement. We believe we have a long runway for growth in both membership and higher ARM over time in a more balanced way than what you saw this year, which was again a pretty unusual year.

And then you touched on, Greg touched on scale and advertising. How do you get to scale? Is it all through pricing changes? And what would you consider scale?

Yes. It's important to note that scale isn't a binary condition, right? It's not like you suddenly add one more member and become a must-buy situation. We become increasingly competitive with increasing reach. It's also worth noting that it's different in different countries and largely based on what's the competitive channels and competitive dynamics. Having said that, we carry several relevancy targets on a per country basis, thinking about this as essentially a percentage of market penetration that drives the rate of growth we desire. We've got more work to do to get those. We're not satisfied with the scale we are at in any country. We want to and know we can be bigger. I think there are a variety of techniques to employ to do that: pricing, optimizing ads versus non-ads, is part of what we're doing with plan evolution. Part of it is what I mentioned before, the feature set. These are the things that consumers want to sign up for. Some of it is also educating consumers. In some of our countries, consumers think about an ads experience mostly anchored in linear and their expectations around ad load and frequency rates. Some of our streaming competitors haven't done a great job of building an ad experience either, which informs that expectation. Part of it is just educating consumers about what the actual Netflix ads experience is, so they can consider their choices: a lower price with ads for what we think is a great ads experience for consumers or paying more to skip ads. It's all those things coming together that will ultimately drive us to several multiples of scale that we are aiming for.

One last one maybe on advertising before we move on to margins. But you mentioned many innovative offerings that you plan on and some are sponsors. It's very unique. When do we get to a point or when will you have a point where it's targeted, addressable, so it's really relevant for consumers so they would want to see the ads?

Yes. We're working with Microsoft right now on targeting, so you'll see that roll out in the near future. I think that is the first step in how we think about increasing targeting relevance through a combination of product sets. These are the types of ad products that brands can buy that yield increasing relevance as well as improving our sophistication on what we might call targeting from a digital perspective, which is matching consumers who are most interested in a particular brand's message.

So Spence, I guess this one's for you on margins. But could you elaborate on areas like ad tech and content spend? Well, you did talk about content spend in your letter, but any other meaningful investment areas, something we might not be thinking about?

Sure. Let me step back a bit with some quick context. First, Jessica, we set margin targets; they're our best judgment of how to grow the long-term value of Netflix, balancing investment for future growth with near-term profits. For instance, after investing heavily to launch global Netflix in 2016, we wanted to approach profitability as we grew revenue because we felt it was a good way to build that profit muscle across the company, and investors had been patient with us, so we wanted to demonstrate the scalability and health of the business model. That took us from a 4% operating income margin business in 2016 to our current roughly 20% margin. We see this as a good indicator that ad-scale streaming can be a profitable business. There’s no change in our financial objectives and no change in our long-term margin expectations, including the fact that we see a long runway of margin growth. We expect roughly a 22% to 23% operating margin in 2024, assuming no material swings in FX. That's up from our current expectation of 20% this year, which is at the high end of the range we targeted at the beginning of the year. Just like we did in the past, going forward, we'll take a disciplined approach to balancing margin improvement with investments into our growth. We put a chart at the end of the letter that shows how we managed that balance historically, growing content investment, profit margins, and cash flow. You should expect the same discipline going forward as we invest and grow into that big opportunity ahead.

How does licensing content from third parties play into your overall content strategy? It seems like you've had incredible success with third-party content in the last year, like Suits or Band of Brothers, and you mentioned it in the letter. Can you just talk about the third-party licenses?

Yes. Licensing third-party content has always been part of our strategy, and we've been really good at matching that audience. I think Suits is a great example of the impact of the Netflix effect we can have because of our distribution footprint and recommendation system; we were able to take Suits, which played on cable and on other streaming services and pop it right into the center of the culture in a huge way, not just in the U.S. but all over the world. According to the Nielsen charts, Suits was the number one watched streaming series for 13 straight weeks— that is a record for Nielsen. This continues to be important for us to add breadth of storytelling to our consumers of a wide range of tastes. We can't make everything, but we can help you find just about anything. This is really our strength. Looking at Band of Brothers, and in that HBO deal, we also had Insecure, and Ballers, that came out and they were very successful on Netflix and popped into the top 10 on their originating network for the first time; that was money well spent. I think we have more to come with Six Feet Under and True Blood. Not just on the TV side, but we're also proud to bring movies like Super Mario Bros and Spider-Man: Across the Spider-Verse from our other suppliers. In one way or another, we're in business with nearly every supplier, including our direct competitors. We think we bring a ton of value to them. Think about what happens when that show runs in and becomes a huge success on Netflix— its lasting value; look at the value we've created that continues today for shows like Friends, The Office, Fuller House, Gilmore Girls, and all these other shows that really found an audience on Netflix even after they have more or less played out through traditional models.

Spence, one more on margins for you, but you said in September that long-term margins will be similar to other networks, which historically have been in the 40% to 50% range. Could you help us think through the ramp in margins over time?

Jessica, I’ll probably disappoint you as I have in the past on this. We won't put a long-term number out there. As I said, we don't see any ceiling—any near-term ceiling to our long-term margin potential. We've talked about feeling our way through to those long-term steady-state margins. We believe we have many things working in our favor. We have a very scalable business model; you see that over the last handful of years and it'll continue to do so as we produce content for big local impact, with the ability for those stories— through great subs, dubs, and discovery—to reach and be enjoyed around the world. It's a very scalable content model. It’s a global network at scale that has, in many ways, not been seen with legacy entertainment networks. We think we've got a long way to go. As I just talked about, we want to balance increasing profits in the near term with investing in that long-term opportunity. There is still a lot of runway. That's a set of benchmarks you can look at. There are others as well. Suffice to say, we believe we've got a long and healthy runway in terms of growing margins.

Only thing I would add to that, Jessica, is that I agree with what Spence said. There is a lot of opportunity to grow margins, but profit dollars also matter too. As we expand into big new addressable markets, like advertising that Greg alluded to or gaming too, those open up significant areas for us to expand into. We intend to grow margins, but we also want profit dollars as well. We’re not narrowly optimizing just for percentage margin.

Right. Of course. You announced some price changes today in premium and basic in several countries and more to come. Can you provide a current view of price increase or timeframe for the standards here?

Yes. Our focus on planned evolution over the last 18 months has largely been about paid sharing. Now that we've rolled that out, we see the benefits broadly, as I outlined in the letter. That's become a normal part of our business, which allows us to return to our core approach to pricing. That philosophy has not changed. We look to invest wisely the money members pay us, delivering back to them more amazing stories and entertainment value. When we think we’re doing that, we occasionally ask them to pay a bit more to keep that virtuous circle spinning. Hence, the changes noted in the letter. It's also worth noting that we seek to have a wide and even wider range of price points with corresponding features that allow entertainment fans from around the world to access great storytelling at a price point that works for them. Part of that widespread is the low entry price point. That’s why we’re keeping that static, so we think that this $6.99 in the U.S., £4.99 in the UK, EUR 5.99 in France, represents an incredible entertainment value. If you think about the breadth and variety of storytelling we’re offering compared to our streaming competitors and traditional pay TV, it’s just an amazing offer. Our goal and plan is to continue being a great entertainment value. Beyond that, we won't comment on other price changes or changes on tiers. We’ll find our way based on that philosophy and see when the right time to ask customers to pay a little more would be.

One more question on the pricing, though. Given the price increase for just premium and basic, not standard, do you expect any movement between the tiers as a result of these price increases?

I think pricing always results in a bit of movement between the tiers. More of that movement influences how people are signing up. We see that as more what it influences. However, our plans tend to be relatively sticky overall, so I would imagine that momentum will continue.

So your letter today says that you will spend $17 billion in 2024 on content spend, up from $13 billion in 2023. Obviously, that was somewhat strike impacted. How should we—how can you help us think through how content spend will grow beyond 2024? What is normalized growth?

Well, you see that we've done is want to grow the content spend just about half a step ahead of revenue to create the value proposition for our members. The more we put into it, the more we create hits out of that pool. I would say one thing, if I could, if you don't know, this past quarter, we had a remarkable story about something we could do, but Spence talked a little about the scale of content spend. This show, One Piece, is something very unique, created 26 years ago by Eiichiro Oda, over 1,000 episodes of the animated series based on the Japanese Manga. It’s nearly sacred IP. With our Japanese creative teams and American teams working with our partners at Tomorrow Studios and the showrunner, Steven Maeda, we were able to adapt this into a show that the world fell in love with. This show is number one in 84 countries around the world, something that Stranger Things and Wednesday did not achieve. It’s rare for an English show to be that popular in Japan, Korea, Brazil, and the U.S. at the same time. The other fun part of this is Iñaki Godoy, who stars in the show, was one of the most difficult casting challenges in the history of original programming—who would play Monkey Luffy? He was right under our nose; we discovered him a couple of years ago and had him in our Mexican series, Who Killed Sara. Now he’s a global superstar. This is the kind of thing we can do—something that’s hard to copy. It gives us competitive running room, allowing us to make more and more content that resonates with our core audiences. We spend the money well, have an impact, and grow it as we grow revenue.

Sorry, Jessica. I was just going to build a little bit on Ted's point about the trajectory of content spend. We talked about this in the past. We mentioned that in 2024, we hope to get cash content spend back up to or near that $17 billion level. The biggest swing factor is when the SAG-AFTRA strike resolves, getting us to a cash-to-P&L ratio closer to 1:1.1x. We aren’t putting a specific number out there for free cash flow in 2024—what that gets us to, when you think about our revenue growth outlook, margin guidance and target cash content spend, we will deliver substantial free cash flow in 2024. Beyond that, we expect to tick up our content investment over time as we also prove sustainable healthy revenue growth. Assuming no big expansions, we would expect our cash-to-P&L ratio of content spend cash to content amortization in the P&L to be roughly 1.1x. That's one way for folks to think about how to model our growth in content spend. As we grow our revenue, as we improve profitability, we should see both increasing content spend but also free cash flow growing nicely over time.

And just one last follow-up for Ted. There's so much going on in content right now. Can you maybe talk about investment priorities? How do you think about whether it’s local language film, TV? You've made a lot of deals with third-party film companies and television companies. Can you give us some color on how you think about content spend?

Yes. We always have a lot of plates spinning because our members have such different tastes and desires. We’re trying to please them all and find that person who fell in love with us for prestige TV and then discovered Love is Blind—that's a pretty common household. We need to be good at many different things. Our partnerships, like Skydance, help us maintain that scale as we grow. We’re thrilled with our success in animated features. It's a long cycle of development and production; sometimes it can take a decade to deliver a remarkable animated feature film. We've been moving pretty quickly. Those single companies successfully launched more than two animated features in a single year. That deal helps us complement the work we're doing, like you saw this year with Leo and Chicken Run coming out, and Nimona that has already come out. There’s a ton of appetite—if you look at the top 10 animated features that Nielsen has been tracking, seven of them are animated features. There’s a lot of appetite for animated features, so we’re committed to that part of the business. We do that through a combination of licensing partnerships and original creation all over the world. We should find that right balance; we can create products to fit. Consumers can say, ‘Hey, what I pay for Netflix, I’ll pay a little more because I get so much value there.’ For the last 37 of the last 38 weeks this year, Netflix has had the number one streaming series in all of streaming, and for 31 of those 38 weeks, we've had the number one movie too. In any given week, we might have had the number one, two, and three. We’ve got a lot going on, and we need to continue improving the value proposition for consumers, which drives the numbers we’ve been talking about on this call.

You announced a very significant increase in your buyback today. Should we think of the $2.5 billion buyback in the third quarter as sort of a run rate moving forward? I wouldn't read into that, Jessica. We had slowed down as we were looking to re-accelerate the business and roll out paid sharing. Now much of that is behind us, as we've said, and we have a better view going forward. We ramped up our repurchase because we had been building cash on the balance sheet, as well. Our target cash minimum is roughly two months of revenue. Plus or minus $6 billion, we look to hold on our balance sheet. We’ve gotten ahead of that and we’re still a little ahead of that. We’re managing to drive the business forward, grow it, and expand cash flow and then return excess cash to shareholders. We target roughly two months of revenue as cash on the balance sheet. That's how I think you should think about pacing over time.

Moving on to gaming. It feels like almost the way you describe advertising, like a walk, crawl, run approach. What is the near and midterm strategy in gaming?

Let's start with the big prize, which is games is a huge entertainment opportunity— $140 billion worth of consumer spends on games outside of China and Russia. From a strategic perspective, we believe we can build games into a strong content category, leveraging our current core film and series by connecting members—especially fans of specific IPs—with games they will love. If we make those connections, we sidestep the biggest issue that the mobile games market has today, which is cost-effective player acquisition. That’s the real proposition. If we deliver that, we give members great games, increasing engagement, retention, and delivered value— all driving our core business metrics. This is a very natural extension of the range of content we’re offering. We’re also seeing performance metrics that support the fundamental strategic hypothesis. Games engagement right now on our service drives core business metrics incrementally to movies and series. But the main challenge ahead of us to get to your mid-term is our current scale and investment level; both are very, very small relative to overall content spend and engagement. Our job is to scale incrementally, so games have a substantial impact on the business. We’ve got ambitious plans; we want to grow engagement by many multiples over the next few years. We can see how to do this. At the title level, some titles are really working for our members and our business. If we can do more of those, we know we can scale this proposition. We've got to do that through improved title selection, maximizing connection with the audience, and raising consumer awareness— as we've seen when we launched other content categories. Think about how unscripted or film started out; we build that familiarity, and we see overall engagement lift as consumers learn that we’re a place to find games. I'm excited about our Q4 plans; we’re launching some big high-profile titles to keep that drumbeat going. We have Dead Cells, Football Manager 2024, and Money Heist. Also, think about connections with IP coming in Q4 as well. Like Casa De Papel for those who saw in that language. We also have Virgin River coming in Q1. As we've pointed out, this trajectory isn't very different from our past launches in new regions like Latin America or countries like Japan, where Western companies struggle. We're going to continue to crawl, walk, and run while building, seeing a tremendous opportunity to provide long-term entertainment value.

That's a great experience for the super fan to immerse themselves in the universe between seasons of a show. It’s really exciting. Jessica, we have time for about two last questions, please.

Great. Okay, two. First— you're creating the Netflix Cup tournament to be held next month. Is this a change in your sports strategy at all? How should we think about that?

Yes. Given we are in the sports business in a way, we're in the part of sports that brings the most value to the drama of sport. Look at the success we've had with Drive to Survive, Tour de France, Quarterback, Full Swing, and most recently, Beckham. David Beckham is one of the biggest stars in the world; his documentary on Netflix brought him nearly 0.5 million new social media followers in a week. We are having a big impact on sports through the things we are great at, which is the drama of sport. The Netflix Cup will be a live event that brings together the cast of Drive to Survive and Full Swing, putting them into a golf tournament. We will stream it live on Netflix on November 14. It's a great way to extend those drama of sport brands we’ve created; but no core change in our live sport strategy.

There was some news today, but regarding your question about the ancillary businesses, including the Netflix House, can you share what that looks like in the long term? Will it be a significant investment area, and more importantly, will it contribute to our growth?

This initiative is inside our Consumer Products and Experiences Group. Today, they run successful businesses that travel live experiences all over the world, and fans engage in ways that would shock you. People love these things so much. They show up—dozens of people have proposed marriage at the Bridgerton Ball. It’s really important to deepen fandom, a way to express fandom. You see it on a large scale with theme parks. These build-outs won’t be like theme parks; they won’t have gigantic CapEx. We expect fans to go multiple times a year, not just once every couple of years. It is a way to take a business that’s really good at building and strengthening brands, aiding a little technology to create phenomenal experiences—whether it’s the Money Heist Escape Room, the Stranger Things experience, or the Squid Game challenge—all of which people can do live together and have fun. They can also visit Netflix Bites to have a culinary experience with all the Netflix food brands. It strengthens the brand and amplifies excitement around what people watch on Netflix and fall in love with, giving them a place to express it. It’s not a material investment relative to the core business we’re in, but a great way of building up our consumer products business.

Great. Well, Jessica, thank you very much for your questions, and we appreciate everybody tuning into our earnings call. We're looking forward to chatting with you all next quarter, if not sooner. Thank you.