Bloomberg Audio Studios, podcasts, radio news. I want to start everyone acts like Netflix has won everything, right, I get a lot of people don't. People, even people a Netflix, don't like it when you say that Netflix has won the streaming wars. They think it's the wrong But I want to so I want to start with something. Let's let's go negative.
All right, well it is you're speaking to my personality here.
What is something that Netflix needs to do better?
We need to do everything better.
And I think you know the reason I hate, like, you know, when I hear we've won everything or whatever. I actually I think the worst position for a company to be in is to feel like they've actually won everything, because I think success has this, uh, you know, vulnerability where you start to breed, you know, complacency, error against
and things like that. And I think in the world that we live in entertainment, this has been the most competitive entertainment environment that's ever existed in the planet, you know, in the history of humankind. It's getting more and more competitive, and if you don't maintain the sense that you are constantly vulnerable, I think you will lose.
So I think the biggest thing that people point to as perhaps a side of vulnerability at least that I noticed is that your engagement, the amount of time people spend on the service has been pretty flat over the last couple of years. And then you look at the regular drops from Meelsen and you see that streaming share of TV time has gone up quite a bit, and your share that's gone up is a pretty small fraction of that. A lot of the growth has gone to these free services. So how do you address that?
Well, I think you just essentially explained it right, which is that we moved on demand very early on in the process, so we sort of got the benefit or basically built our business around that benefit. And then you know, everyone over a period of time caught up and essentially from our perspective, they're all now moving to that model and moving to that benefit from consumers. So you know, frankly, the fact that we were actually keeping pace in that
sort of you know, shifting tide if you will. I think, as you know, reasonably good thing. It's not great, you know.
I mean good thing, but from everything I've heard inside the company, like the goal is basically to replace television, right like have Netflix be the ones or if you can watch basically anything on television on Netflix except for news and until recently sports.
Well, I think, you know, expressing that as an ambition and also that is a way to organize how the company thinks about what we're trying to go do is great. I also think that that's not consistent with saying that we thought it was realistic that we were going to be the only thing that people were going to watch, right, because I also don't think that that's realistic at the end of the day. So I think there's always going to be like multiple sources of entertainment, even in the
categories that we serve. We want to be you know, we want to win as more much of that as we possibly can. So I'm not you know, the don't back to being complacent. I'm not happy with the fact, you know that we're not growing engagement. We should grow more engagement. I think we will. I expect you'll see engagement numbers will go up for us. But also I don't think that I don't think there's a world in which we be the only thing that people watch.
A big project I assumed to help grow engagement was the new you Use or interface UI that you rolled out over the last year plus.
Yep.
Can you point to some key ways in which that has already helped or you think it will help.
Well, I would say a lot of what we've been doing is essentially re architecting the entire stack. This is from sort of how algorithms get calculated. We used to calculate overnight everyone's recommendations. When they show up in the morning, we would have that baked. Now we do it dynamically on the fly, and now we've created a UI where essentially you can you know, connect those those algorithm pipes in and also launch new modules.
Can you use words that I'm not even going to insult the audience here that I will understand.
Yeah, so thank you.
Basically, what happens now is that when we think about.
What titles do you want to watch? Right?
We used to do that overnight and you'd show up and we'd give you those titles, right. But now the way that we do it essentially is as you're navigating the UI, we think about, oh, what are signals that you're giving.
I skipped over this thing really quick. I'm not interested in that, right.
Right, that's right. So I think that's something that's going to take us.
I think a while to really build the fullness of how that delivers, you know, benefit for our users. But the thing that I can point to right now that the new UI structure is just designed to go do and is doing for us, is serving new content needs as we expand beyond just film and series.
We spanned a live events and.
The UI has to do a different job, which is like, why do you want to show up at Thursday at seven pm? Because oh you're going to watch a you know, a boxing match that you know you would not otherwise get to see, Or why do you want to play a game or those kind of things. That's that's what it's That's what it's doing for us right now.
Right when it comes to to live that was something that you sort of famously said you weren't going to do sports for a while. And I know it's not just sports, you also do other live events, but the sports have been the biggest. Right Your NFL game was really big. Boxing match was huge, or both boxing matches, the logan or the the Jake Paul one will decide if it's really a boxing match.
Sure, very good offer you. Well, I'll refrain, how much more.
Are you going to invest in live events over the next few years and are there things that you know that you want to add to the service that you don't have right now.
So it's a start with you know live, we think of as an important additional form of entertainment that we can deliver members. It's sort of a different style of entertainment you know where. Actually it's interesting because in contrast to our on demand service, which has tremendous benefit because you control the entertainment when you want to watch it, the big benefit alive is that we're all experiencing the same thing at the same time, and that has tremendous
sort of social and conversational relevance. Right, So we want to do more of it. It represents a very small fraction of our total investment, It represents a small fraction of our total hours, but we think it also does a different job, so it sort of.
Comes does it have a different impact, Like do you see because from the third party data I've seen, you tend to see huge surges and sign ups around some of those bigger events.
Yeah, I think we expected it will do the same work ultimately that our other content does, which basically is a reason to sign up and a reason to stay.
That's you know, at the end of the day.
Now, I think we back to your point about like what do we know we want to get and stuff like that. We're still really learning in the space, so we're really trying to figure out, like, okay, what, how is this delivering value to members? How is this delivering value to the business. And there's definitely a different phenomena where these are punctuated.
Moments to your point, right, which you.
Know, people go like, Okay, if I'm maybe on the edge of signing up for Netflix, this might be the thing that pushes me over, you know, to actually do that. So I think we'll see different things for sure, but we really are learning.
As we go.
I want to throw one poll to the audience before we ask the next question, because they are related. If we get it up there, I will ask. So I just want to I promise Greg I would do this. Keep in mind how much these sports cost. Football is the most expensive, Tennis is the least expensive. Everything else sort of.
Fits in between there.
So even though Greg and I both like tennis, probably smallest audience but also least.
Expensive international audience, what.
Would you say the odds that you make a bid for one of the football packages when the NFL ops out of its current deal in twenty nine, or.
Doesn't it you know, it doesn't really fit with our strategy as we understand it right now. So again back to your point, we think about what we're doing as an event's strategy, and it turns out, as you said, sports are big events, right, and so we can plug those into that strategy. But we also want to make sure that we're being really really disciplined about you know, are we buying, are we investing in ways that are profitable for the business and some of the big league sports things.
We don't actually have a way to figure out that math.
So okay, all right, although it doesn't I mean, isn't the sort of the magic of football. I get that the NFL is maybe tricky for you, and that it's not global and how expensive it is. But the reason it's so successful it's the one sport where like every Sunday sort of is an event.
It's amazing regard, right, But I think to some degree that lack of substitutability is of course what gives the rights holders the leverage.
And it's done a pretty good job at Yeah, I know you have.
I can tell that you guys have this vision of where like you have more leverage than the sports leagues that are negotiation and that has basically never happened in media.
That's right, until it happens, I would say you should have some skepticism about that.
Okay.
One other thing that you guys have basically never done is large scale em a day. But the bigger you get, the more you tend to get tied to different companies, different deals. There's been some reports around you guys being interested in Warner Brothers Discovery. Is there any truth to that?
I would say this, you know, we come from a deep perriage of being builders rather than buyers. I also think that it's you know, one should have a reasonal amount of skepticism.
Around big media mergers.
They don't have an amazing track record over you know, the history of time, so you know, I would say it's our also, it's our responsibility to evaluate all our options and.
Try so you'll look, you'll have a conversation, but the odds of an offer are pretty low.
Yeah.
Our job is to figure out, like what's the best way to grow our business? Right, and we have to think you know, really carefully, like how do we invest our capital, our time, and our attention and if that's the best way to do it, great, and if it's not, then we should do something else.
What area you're investing a lot of capital right now? Or you might quibble with a lot, but it is gaming small fraction of our total investment. But yeah, I appreciate you saying that you've been offering video games for four years? What would you what grade would little over three? Little over three? Sorry? What grade would you give your gaming efforts so far?
I'll give us a B minus? How's that?
Okay?
Yeah?
I would say, look, you want maybe just to start where we're at right one. You know, it's a big market you one hundred and forty billion dollars X China X Russia. That doesn't that's just consumer spend that has include ads. So we think it's a real opportunity for us to try and earn a percentage of that over a period of time. A lot of what we've been doing is really just building the foundation, right We've been doing a lot of like you know, real hard plumbing work.
But now we're getting to a really interesting place where you know, we're going to deliver more of what our vision of what we.
Should be doing in the space is.
And we call it games because that's a you know, a rubric or you know, a name that we all can relate to. But really I would look at this as how do we add more interactive capability? So that means even things like taking our live program back to the live program and how to add interactivity with live. So we've got voting right now that we're in testing
on with David Chang and his live clicking show. You'll see that interact those interactive features come up with star Search, we do a lot another live event and non sports live event of star Search.
So that's an exciting place to be. And then it gets also.
Yeah, so you can see this is sort of how the Dave Chang experience is working. And you know, again this is you know, the tip of the iceberg, and we'll get deeper into this as we go. We're also I think more clear around what are the gaming areas back to the true you know, the more or traditional gaming areas that we are operating in. You know, it's a lot of interactive games around our IP. So you think about what you did with skid squid game. I
don't know if you saw Throng. Let's based on the Black Mirror universe, but it's worth checking out because if you're a Black Mirror fan, it's so in universe, it's and the fans of Black Mirror just loved it because it was like they were having a meta experience there too. But even like Happy Gilmore, we did a golf game with Happy at Gilmore that got a remarkable amount of consumption.
So do most of the people who use Netflix know you offer games?
I would say, And that's part of frankly, what's been hard about this, And I think it's it's hard for any brand that has a deep, you know, consumer sense of what are you doing for me?
Right? And then you're like, well, I'm going to do this as well, and you have.
It takes a while to really build up that sense of what's happening. But it's not it's not that dissimilar to let's say we launched, you know, in a new country, like you know, you went to Japan, right, So when we started in Japan, two percent of the Japanese population it ever heard of Netflix, So nobody knew what nobody would nobody eve knew our name much.
Let's be able to tell you what we were doing. And we're doing pay TV.
Service in a country that doesn't really have a great PayTV you know operation we're doing over the internet in a way, it was totally new, and so you've got to every day build a little bit of like what are we doing, who we are, what are we you know, how are we here to serve you? So that ten year journey, let's say, you know, just did the tenth universary in Japan. You know, tremendous progress over ten years,
but it took us a long time. And I think you know, the gaming situation is not dissimilar to that.
How much is it an impediment that for the most part now you can only play it on your on your phone.
Well, I would say, you know, the phone is what's great about it is it's a well developed gaming ecosystem, right so you know, folks notifying games there. But it's also a highly competitive gaming ecosystem, so it's developed. This gives you both that upside and the downside. But what's exciting is that now we are moving beyond the phone to the TV. So I mentioned like one of the
gaming areas we're going after. One of the big gaming areas we're going after now is you know, social gaming experiences.
It will show up on your TV.
So we are now announcing we're announced here actually that we're going to have these social party games, a pack of social party games that you can play on your TV with your phone as the controller. And it's things like you know, recognizable games like Boggle. You got Pictionary, We've got a Lego party game, We've got Tetris, We've
got like a Mafia style Who've done it? This is This is me and our CTO Elizabeth playing Boggle here, which is it's we're two very competitive people, so it got it got pretty ugly.
Who I'm not going to say that means he lost.
Oh does it when she watched a video my friend, you triggered my competitors. But this is again, this is you know, so it's your phone, which is an incredible device, and there's all sorts of things you're going to be able to do on your phone that you.
Can't do on a normal controller, like touch screen.
And this is USA basically picking our words on that, and it's you know, it's dead simple to use, it's intuitive. And then this is you know, us on the earliest days of how we actually can use that and if we you know, basically are going to like unleash this with a bunch of creators and they're going to go figure out stuff that we didn't even imagine that they can do with that interactivity.
Got so you made to comment earlier about how it's never been more competitive in media. How worried are you about competition from the second richest person in the world.
Well, I guess I'm not sure that that's exactly who's competing with us, And that's maybe a good question. Well, look, I mean start with like, it's fun to have some new vigor in the competitive ecosystem and the dynamic there.
I think it's exciting.
It sort of you know, keeps everybody on their toes and we're trying to figure out everyone like sort of figure ouare what.
Does that mean and what does it do?
I also think you have to go back to like doesn't change the business fundamentals, right, you know, you still have a bunch of problems to go solve and a business to grow, and so we'll.
See what happens.
So you bid against them for UFC, they come way over the top, that doesn't worry, that doesn't send the signal that maybe they'll be able to spend somewhat irrationally for.
Loucause we are constantly dealing with situation where our competitors outbid us. And what I try and remember our team is we should bid up to the point where we think it's going to deliver value back to business. And if somebody outbids us, I say you should applaud and say go with God and try and monetize the heck out of that.
Is it fair to say that YouTube is the stiffest competition or at least for attention.
Sorry saying YouTube? Oh, YouTube, Yeah, for sure, they're a competitor, of course.
Yeah, would you say that the toughest for you?
I mean, they're a formidable competitor, for sure.
I mean, and I think because of some degree they compete in a different access you know. I think it's you know, our thought on competition is always the hardest competition to deal with because they you know, it's hard to measure how you're doing things. They have angles against you that you might not you know, be familiar with. And so I think we're developing an understand ending of like what's our place in the ecosystem relative to them
that we basically shore that up. We want to be the place where we invest ahead with.
What is that like. Do you look at that and say we need to do UGC? Do you look at that and say we should skim off their biggest talent.
I think the dumbest move would be to try and match them in every way, because I think you have to really know what lane you're operating in and then you try and be excellent at that and then defend that lane.
And so you know what do we do? We invest ahead with creators.
So that they can tell their stories in really really compelling ways, in a way that the YouTube model doesn't really allow them to go do. So we want to work with the best creators in the planet. Some of those folks are going to come from YouTube, they're going to come from TikTok, They're going to come from traditional places all over the place. We want to be the place that they want to go when they're ready to
tell that story at that level. And then our job is to find the biggest global audience for them and make that really you know, a strong reinforced loop.
Yeah, I was talking with your old friend Robert earlier, and he made a parallel of sorts that I think other people have done between two of the dawn of UGC and where we're at with AI entertainment right now. A lot of people over the last week in Hollywood very alarmed about Sora, new product from Open Ai Netflix. It seems like has been slightly less reactionary than some of its peers, if I'm being fair. You guys have talked openly about using AI at least one project, So
why disclose that? And how are you using AI in terms of the creative process, not tech product, any of that.
So I think a better parallel, in my mind is actually the Internet rather than u GC. Sure, So that's how I think about it generally. Maybe just to start with, we've been in the AI business for people that haven't tracked for two decades, and so we think of that heritage our tech DNA, large sets of data, scaled consumer products, scaled business processes, including on the content production side, as being the reason that we actually have an advantage to
lean into how we use these technologies. We want to do so in a disciplined way, though, because I think you can you can throw a lot of stuff around that's not really going to matter, and we want to figure out where the places that that deliver value to the business. Consumer experience is one, Advertising is another big one. You mentioned content production. We feel like our job is to give our creators a suite of tools that we've vetted in our work together orchestraight together. Well, they can
use other tools to them. That's up to them to figure out what they want to go do. But you know, we see a lot happening in previews and shot planning, you know, and scheduling and perform a budgeting.
And all that stuff.
We see a lot happen in the you know, sort of post side of things, the VFX, and you know.
You mentioned examples that we've used before.
That's a pretty good example where we've been able to do shots that we wouldn't able to do in other ways. And so we see that, you know, continue to proliferate, and you know, we'll let the creators lead the way in that process, but I think our job is to is to assist them in that rather than you know, hold back.
So do you I'm curious because some of your peers in Hollywood have sued some of the AI companies. Do you feel confident that an open AI I, a Google, a Meta or some of the smaller ones like the Journey have violated copyrights to you guys own Well.
I mean, I think we're in this process where you're going to see a lot of you know, people trying stuff. But I would say we have a very strong position that you know, IP should be protected.
You know, we believe in supporting creators.
They should tell amazing stories with us, with other people, and they're that output should be protected. And so we believe strongly that tool creators, some of the folks that you mentioned, and also consumers. We have sort of a legal standard around this, whether it's coming from an AI model or from another human creator, like if you copy you know without AI. You know, we've got a legal standard around that, and we shouldn't force those standards and be strong about that.
Another area where some of your peers have gotten into conflict that you have thus far avoided, although it flared up a bit recently, is in politics at a moment where you have a president who kind of has gone after a lot of elite institutions, probably has treated nasty things about your company at one point or another. How do you think about you do you have to do anything to proactively defend yourself.
I think we try to stay focused on serving members and serving the business as being our overarching organizing principle, and it comes to, you know, some of the things that trip you know, we've been pretty clear about our position that we are in the business of entertaining the world. That is our mission.
But in entertaining the world, you are invariably going to program certain things that a lot of people don't that people don't like.
Right, that we are doing our job well, and so just to be clear, like we're trying to now program for a number of human beings on the planet that's approaching a billion people, those people all do not think the same. They have different views of what their entertainment should be delivering to them. So if we are doing our job right, we're working with a wide diversity of creators and we're supporting their ability to tell you their
story and their own way. And that again, if we're doing it right, there's something on the service where every one of us as employees, where every one of our members probably thinks is not great or they don't like or maybe they think it's harmful and frankly, if we don't have that, we're actually not doing our job correctly, right, And so we've been pretty clear that that's the business we're in and we're going to keep doing that.
But you do every so often take stuff down when governments still like it. We just haven't had it happen here.
Would well to be very clear, we do not respond to government pressure. When the government has legal claim that there's we have to be you're legally obliged to respond to, then we react to that, but we then actually post
that so that there's transparents around that. And again that's like happened five times in the last year, right, So it's not I mean, it's if you think about the kind of content that we carry in the number of places that we carry, we've generally been successful at having a wide range of content up in every place that we operate.
Okay, we're going to run through a few things quickly because I really have a minute plus left. Would you have made more money from kpe up Demon Hunters if you'd released it in theaters?
I don't think so.
At the end of the day, I mean, it's worked incredibly well for us. I mean, if you cherry pick it and I don't, I don't know. Maybe I don't know, it doesn't really matter, but that doesn't that would not be a reason to go.
Change the strategy. So that's probably the more fundament question.
You've got a bunch of merchant Halloween costumes and stuff.
One more K pop question.
Has anyone approached you about a theme park attraction tied to.
Not that I'm aware of.
I bet you it's happened, though, you know, and I mean, and you know we were doing these in a.
Very delicate way of saying it's happened, But I'm gonna because I'm far enough removed from it, I'm not going to touch.
That I don't actually know, So I'm legitim me telling you I don't actually know, but I wouldn't be surprised of it asn't happened. But we've got these Netflix houses that we're building now, which would be the kind of places where we want to put those kind of experiences in.
Will Netflix syndicate its programming to third parties within the next three to five years.
I doubt it.
I don't just I don't think there's a lot of value in it, and I'm not sure why we would do it.
Okay, last one, who's a better tennis player? You or Bill Gates?
You're really pretty fine. I think I'm a pretty good test player.
That is not an answer to the question, Greg, Thank you very much, Thank you, m HM.