Netflix Inc at UBS Global Media & Communications Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: John Hodulik - UBS Securities LLC - Analyst : <_ALACRA_META_ABSTRACT>That was a great selection of content. So why don't we dig into the content side? Sitting here at the end of this year, you guys had a great year in '24. What are you excited about for '25?

Question: John Hodulik - UBS Securities LLC - Analyst : So obviously, a ton of different genres, tons of different content in different local markets. When you talk about the balance of your spending, are there verticals where you're increasing spending, areas where you're decreasing? And what about spending on English language versus international?

Question: John Hodulik - UBS Securities LLC - Analyst : And do you try to balance your spending for where you see the most opportunity for subscriber growth? Like if you're underpenetrated in Asia-Pac, do you think, okay, we've got to make sure we've got the four quadrants account?

Question: John Hodulik - UBS Securities LLC - Analyst : Yeah. I think we're all sort of US-centric here, and we see the Nielsen Gauge under 10%. That's the case everywhere in all of your major markets?

Question: John Hodulik - UBS Securities LLC - Analyst : So what would you lead you to move ahead more meaningfully in terms of content spend or pull back? I mean, what are the things that the dials that you're looking that guide that spend?

Question: John Hodulik - UBS Securities LLC - Analyst : So the network -- the Netflix effect is, I think, a relatively nice issue, but are there -- and there are a number of ways you're already doing it, but do we think we are in the early days of monetizing that of whether it's through events or like you said, consumer products? Or what are the ways that you see this evolving over time?

Question: John Hodulik - UBS Securities LLC - Analyst : Makes sense. Maybe let's turn to sports --

Question: John Hodulik - UBS Securities LLC - Analyst : Where are those?

Question: John Hodulik - UBS Securities LLC - Analyst : Okay. King of Prussia Mall, probably. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 9:30PM, NFLX.OQ - Netflix Inc at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Securities LLC - Analyst : So let's pivot to sports. First, give us your take on the Jake Paul, Mike Tyson fight. How did that go for you?

Question: John Hodulik - UBS Securities LLC - Analyst : Does it increase your interest in live events or maybe combat sports in particular? And then what I find fascinating about the whole thing is you guys created this event. It wasn't like, yeah, we'll get the NFL, but it wasn't like, okay, you release the NFL. But you guys, you sort of invented this, put it together, and it became the, like you said, the biggest live event in streaming.

Question: John Hodulik - UBS Securities LLC - Analyst : And can your number of live events sort of ramp from here? Like if we have a crystal ball, like we look out three to five years, can you -- do you see Netflix doing a lot more live events and not just ones that are based in the US but sort of take that globally and do ones that are important for different regions?

Question: John Hodulik - UBS Securities LLC - Analyst : Got it. So what does the NFL games and WWE starting in January -- what does it do to your ad business? Obviously, with sports, especially given the natural breaks in the game, it comes with advertising. So do you expect it to sort of kick your advertising business into a new gear? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 9:30PM, NFLX.OQ - Netflix Inc at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Securities LLC - Analyst : So just finishing up on sports, what type of additional sports properties would make sense for you? And I think in the past, you've talked about getting -- obviously, you have a global reach, so sports that resonate globally, but just any thoughts?

Question: John Hodulik - UBS Securities LLC - Analyst : It kind of feel that WWE fits that mold a bit, right? Global, younger, but also big events, right?

Question: John Hodulik - UBS Securities LLC - Analyst : Outside of sports --

Question: John Hodulik - UBS Securities LLC - Analyst : So maybe we'll talk about engagement. So outside the sports, what are the opportunities you think, the biggest pockets of engagement that you can tap into that maybe you haven't penetrated yet to drive engagement. What kind of content or what areas do you think that you need to invest more into driving engagement?

Question: John Hodulik - UBS Securities LLC - Analyst : Got you. Let's talk a little bit about subscriber growth. With the 2025 guide, you suggested about -- that more than half of the 11% to 13% revenue growth that you would see next year would come from subscriber growth, suggesting another very healthy year of subscriber. I think that was a major concern coming out of password sharing. People are thinking, okay, maybe it will slow down. You guys are going to divulge the subscriber growth every quarter. Where is the next layer of sort of subscriber growth coming from -- maybe from a regional or demographic?

Question: John Hodulik - UBS Securities LLC - Analyst : And I will get to that. From a pricing standpoint, with the paid sharing initiative fully rolled out, how should we think about the cadence of price increases going forward?

Question: John Hodulik - UBS Securities LLC - Analyst : These live events, are they -- are we going to see them -- I could probably do the math myself, but move the needle from an engagement standpoint like the fight and then the football games, you're going to get tens of millions of viewers. (multiple speakers)

Question: John Hodulik - UBS Securities LLC - Analyst : Maybe shifting to advertising, which has been a big topic of discussion, of course, for Netflix. You announced you have 70 million monthly active users on the app here. Is the adoption of the -- is the size of the audience at this point still the biggest barrier just to scaling the advertising business?

Question: John Hodulik - UBS Securities LLC - Analyst : And you're putting together the other pieces of the puzzle as well. So how will the new programmatic deals and adding tech in-house help to drive the business?

Question: John Hodulik - UBS Securities LLC - Analyst : That's where we're running.

Question: John Hodulik - UBS Securities LLC - Analyst : And I think you guys said that the business won't scale '25 but maybe '26, '27. Is that the sort of timeframe when we can maybe move from the cross stage to the walk stage. I don't know if you've laid it out yet, but we do we get to the (multiple speakers)

Question: John Hodulik - UBS Securities LLC - Analyst : Got you. And how large of a business over time do you expect the ad-supported business maybe over, say, a five-year period.

Question: John Hodulik - UBS Securities LLC - Analyst : A couple more on advertising. You expect the products -- obviously, you have great demographics, mix of live events, highest-quality content in the industry. Do you expect that over time that you'll command -- and you may be now -- the highest CPMs in the industry, maybe within CTV but also as we look at sort of broadcast and cable, how do you expect CPMs to evolve over?

Question: John Hodulik - UBS Securities LLC - Analyst : And you announced -- you talked about the launch of the ad server in Canada. Any early reads there or any sort of new data points you could share? Or is it ready for prime time to roll out to (multiple speakers)

Question: John Hodulik - UBS Securities LLC - Analyst : Great. One question that we get in terms of the ad business is the amount of investment required. So not just on a technology standpoint, but you have to hire a sales force to sell ads. Obviously, you guys, your programmatic partners. But is that a sort of meaningful number as we look into '25 and ' 26. I know you've got the guidance out there for sort of 100 basis points in margin. But does the sort of spend on building ad business change that equation (multiple speakers)

Question: John Hodulik - UBS Securities LLC - Analyst : So a lot of people that think that you guys gave guidance for '24 and you sort of massively be it the same dynamic could play again at '25. And I think some of the drivers were like FX and other issues, but I guess you're not going to change the 100 basis points. Okay. Maybe turning to competition, how do competitive landscape evolving now that streaming has sort of begun to mature? I guess this is a question that will lead us to sort of the whole -- the industry itself. But what do you think the next steps are in the streaming line (multiple speakers)?

Question: John Hodulik - UBS Securities LLC - Analyst : And a lot of people now -- a big theme of the -- the last couple of days has been just the changes from the new administration, and there's a lot of belief both on the telecom side, but on the media side, it could usher in another sort of wave of consolidation in the media space? And how do you think of that? Would that be good or bad for Netflix sort of at a high level? And then also, is there an opportunity for Netflix to -- I mean, obviously, most of the growth has been organic. I mean --

Question: John Hodulik - UBS Securities LLC - Analyst : And then another sort of way --

Question: John Hodulik - UBS Securities LLC - Analyst : All right. Got it. Another way that some of the D2C, which is a very fragmented market, and you see the Nielsen Gauge data have looked to compete in the absence of sort of structural consolidation is bundling, D2C bundling. And it seems like that was a theme of the conference here the last couple of days. How does that change the competitive landscape? Does Warner Bros., Disney+ bundle or others that are being discussed. does that make it more or less competitive for you guys?

Question: John Hodulik - UBS Securities LLC - Analyst : Right. Makes sense. Getting back to the margin issues, again, I'm not going to ask for a change in guidance. But you have had a nice cadence outside in '24, more improvement on another 100 bps expected in '25. How should we expect sort of cadence? And you guys pulled back on the guidance for sort of the steady state improvement. But what should we think of sort of the margins of the -- because I think a lot of the value creation you've seen is just that massive increase in margins over the last 10 years. Just how do you think of long-term sort of margin (multiple speakers) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 9:30PM, NFLX.OQ - Netflix Inc at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Securities LLC - Analyst : Right. You're not going to give us a target number here? Okay. All right. Just a couple of other topics. We had Doug Shapiro in the year last session talking about AI. How do you guys think of AI in terms of how it affects your business, how it defects just the business of Hollywood in general?

Question: John Hodulik - UBS Securities LLC - Analyst : About discovery in the UI.

Question: John Hodulik - UBS Securities LLC - Analyst : Has that been rolled out or is that in the --

Question: John Hodulik - UBS Securities LLC - Analyst : It seems like the UI is really hard? I mean, all the -- whether it's Disney or Warner Bros., it seems like all the digital companies that we talk to are spending a lot of money to try to get where you are. And you're investing to sort of get to the next level.

Question: John Hodulik - UBS Securities LLC - Analyst : So just two more questions for me. Video games, where are you in that process of the initiative you started up a couple of years ago. How has that played out? And is it where you want to be? And is it having an impact on engagement and churn that you hope to be?

Question: John Hodulik - UBS Securities LLC - Analyst : Should we expect a Wednesday video game and maybe a Bridgerton -- I mean (multiple speakers)

Question: John Hodulik - UBS Securities LLC - Analyst : All right. Last question. We talked a lot about content. We saw the video. What is the one piece of content that you are most excited for in 2025? What do you think has the biggest potential to blow up next year?

Question: John Hodulik - UBS Securities LLC - Analyst : It's going to be an exciting year.

Question: John Hodulik - UBS Securities LLC - Analyst : Thanks for being here. Appreciate it.