Hello and welcome to the Netflix Q1 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. As a reminder, we will be making forward-looking statements, and actual results may vary. With that, Jessica, I'm gonna turn it over to you for your first question. Thank you. Let's start with Ted and Greg. You've worked together for over 15 years, but this is your first quarter as Co-CEOs. Are there any highlights you wanna share? Well, Jessica, as you pointed out, it's our first quarter together as co-CEOs, but 15 years working together. In those 15 years, you know, you build a lot of respect and trust in each other to help you get through some trying times. Not to let you down about the there's no drama, but this was pretty much a business as usual quarter for us, having done this, you know, together for so long. Greg and I enjoy the same kind of trust, respect, and shorthand that I enjoyed with Reed for so many years, and I know Greg did as well. It's not as eventful as folks might have thought, and it's really been incredibly and wonderfully professionally stimulating to have a co-CEO and to get to tackle big problems together. I think one of the things that we'll look back at Reed's incredible 25 years at Netflix, one of the great accomplishments is facilitating this very, very smooth transition and succession. Great. You've recently reduced prices in 116 countries. Is this a more local approach similar to what you did in India in 2021, or is the impetus to enable a successful introduction of password sharing and advertising tiers? I can take this one if you want. Jessica, this is really about, you know, we talked for the last few quarters about further refining our pricing strategy and monetization. If you think back to when we did our global launch in 2016, it was pretty much across the board, a bit of a skim approach and not particularly sophisticated in terms of our pricing. Think of this as kind of that next step in our evolution of a bit of a better market fit, product market fit, pricing fit, with the aim of growing our penetration in these markets and also better medium and a long-term revenue, so better for our members, better for our business. Just wanna emphasize this is not a material to our business anytime in the near term for sure. It's a lot of countries, but it represents less than 5% of our revenue. It's something that over the long term hopefully will benefit us. You know, we can point to, you know, an example and success is sorta like what we saw in India. Last year, back in December of 2021, we dropped prices in India between 20%-60%. We saw engagement over the past year grow by about 30%, high growth in paid net adds and also revenue, FX neutral revenue growth actually accelerated from 19% in the year prior to 24% last year. That's, you know, we're not saying every market's gonna play out like that, but that's what it would look like in success. Great. Let's move on to password sharing. What have you seen in your Q1 new market launches, churn as well as conversion? Can you give us any specific color on what you've seen in Canada, whether it's in terms of new subs versus add-ons? Yeah, I'll take that one. This is an important transition for us. We're working hard to make sure that we do it well and as thoughtfully as we can. This last set of country rollouts have gone well. Maybe most importantly, we're directionally consistent with what we saw in Latin America. Just to remind people what that looks like, very much like a price increase. We see an initial cancel reaction, and then we build out of that, both in terms of membership, and revenue as borrowers sign up for their own Netflix accounts and existing members purchase that extra member facility for folks that they wanna share with. First of all, it was a strong validation to see consistent results in these new countries because, you know, they're different market characteristics, different from each other and also different from the original Latin American rollout countries. To get to a positive outcome, you mentioned Canada, you know, we're in now in a positive member and positive revenue position relative to pre-rollout. That's a really strong confirmation that we've got an approach that we can apply in many different countries with different market characteristics, including our largest revenue countries. In fact, we could have launched that solution. We actually considered that option. We also learned from this last set of launches about some improvements we can do, especially in areas that matter a lot to our members. Things like having seamless access to Netflix as they've always been using it on the go or while traveling, as well as making sure that we've got good tools for them to manage access to their accounts and their devices. All in, you know, we felt based on those results, it was better to take a little bit of extra time, incorporate those learnings, and make this transition as smooth as possible as we can for members. And we think that approach also best serves the long-term business goals as well. We're gonna launch this new improved version broadly, including in the United States in Q2. As a follow-up, the cadence, you just said the U.S. in Q2. How about the rest of the world? Is there, you know, can you give us your thoughts on pricing and whether you have a preference for a current borrower to become a subscriber or an add-on? So that launch we're doing in Q2 is a very broad launch, includes the United States, includes many, many other countries. I mean, we reserve the right for some, you know, countries, where we think there's, you know, a different approach. I would say the bulk of our countries, and certainly when you think about from a revenue perspective, the vast majority, we'll be, you know, we'll be rolling out in Q2. You mentioned in terms of pricing, you know, we'll look at that on a market by market basis. Obviously we tested different pricing in these last rollouts than what we tested in Latin America, and that gives you a sense about how we're thinking about, you know, what is optimal pricing, especially in more affluent countries. I'll leave it at that. In terms of preference, what we're trying to do is create a structure that really supports choice. That gives an opportunity for folks to spin off to borrower accounts where they think that's the right solution for them, or for use cases which are legitimate use cases where somebody wants to, you know, basically, you know, buy Netflix for, you know, a family member or something like that. We want that extra member, you know, to be in place too. We don't really have, I'd say, a strong preference. We're not trying to steer in one perspective other than using pricing, you know, to both satisfy those, you know, customer choice goals, as well as thinking about long-term revenue optimization. One more on password sharing. Are there any incremental costs? I mean, it seems like content, distribution, marketing are already in your expenses. Is the incremental margin 100%, or are there plans to reinvest some of this revenue so it doesn't all flow through? Well, I'll leave it to... Go ahead, Spence. I'll take a pass. No, go for it, Greg. It's okay. No, you got it. I was gonna say, there's really not, other than just kind of just the general kind of allocation of resources, I wouldn't say there's real incremental cost to this. Of course, we always want to reinvest. As you kind of see with our kind of guidance and our objectives generally, Jessica, we're looking to re-accelerate our revenue growth. That's the path that we're on right now. As we do that, we wanna kind of balance, you know, gradually increasing margins. You see that in our guide, where we're looking to tick up margins a bit to the 18%-20% range full year relative to just under 18% last year. Balance that with that big prize ahead of us. Reinvesting to more and more great entertainment for our members and drive that flywheel of more entertainment, more value for members and ultimately more and more members over time, and then build a really, really big and profitable business. Let's move on to advertising. Netflix appears to have a huge advantage in, let's call it television advertising. I mean, you pretty much have nothing to lose from a legacy perspective and everything to gain on an AVOD platform. Given the limited ad load, premium video content, your humongous reach and engagement with some pretty hard-to-reach demographics, as well as the ongoing mass transition from linear to streaming, your position is enviable. Having said that, you seem to be very careful in your advertising rollout. Can you give us your key learnings to date and what the growing pains have been so far? Yeah. As you state, we're, you know, significantly optimistic about the long-term opportunity for the reasons that you mentioned. You know, we've always expected, and we continue to expect, frankly, this to be a gradual build. It follows, you know, a very similar process that we've used in so many other areas where, you know, we get in, we learn as we go, we iterate. We found that, you know, having that approach, you know, yields basically, you know, great long-term outcomes as we sort of grow and learn. I would say, you know, where we're at today, you know, we've got a lot of work to do to develop, continue to develop, features that support advertisers. We're rolling out things like measurement and verification. We've got, you know, a bigger long, longer roadmap that we have to go do there. We're improving our go-to-market and sales capabilities in partnership with Microsoft. There's a lot of, you know, good work that we have to go do, and some of this is hard work because it's very country by country. You've seen us add a programmatic private marketplace that gives advertisers more ways to buy as we grow inventory. Then we're also trying to improve things on the consumer-facing side. You know, we're adding, more features to the ad plan. We're making that experience better for members. You know, and through that sort of process, you know, we, you know, expect those iterations, which we're trying to go as fast as we can on them, while being judicious and thoughtful about the business to really, you know, add up over a period of time into a significant, you know, highly material and highly lucrative, high margin business. There's plenty to go do and, you know, and we're trying to maintain a fast pace, but also a thoughtful pace. There have been a lot of press reports, regarding your buildup of ad tech capabilities. Can you provide an overview of plans, timeframe, and cost? Yeah. I would say, you know, we have ambition, you know, to be innovative in this space, and a lot of that innovation is thinking about not a one-size-fits-all in terms of the member experience and thinking about, you know, what's the right time to flight an ad, things like that. I would also say that, you know, we're very much in the mode right now where we're doing a lot of work that is following a well-trodden path to build a, you know, a big business. Back to, you know, when you think about, you know, verification, measurement, et cetera, you know, what we're doing on programmatic, those are, you know, sort of, I'd say, relatively straightforward things. A lot of the work that we're doing is really heavily in that space. In terms of incremental costs, Spence, do you wanna chime in here? Sure. I'd say, just generally, Jessica, we try to, you know, in all of this, you know, firstly, we've always, we've talked about this crawl, walk, run, which Greg mentioned, just being very thoughtful and methodical how we're building the business. With that also how it impacts our overall financials, our revenue, and our incremental profit contribution, and we believe we can do that in a very healthy way. That's what we're building towards. Yes, there is some cost to this, both in terms of the cost to the Microsoft partnership and the cost to kind of some building out of our capabilities, people as well as tech capabilities, but all very manageable. We also talked about a little bit of content costs as we increased our level of content parity on the plan this past quarter, which is great. It's about 95% + of viewing parity, which is again, a great progress. We keep moving forward, but this is all at a level that we believe is not just better for our members with a lower priced option, but better for our business. We think we could do it with, and are doing it in a way that's, I would say without being overly specific, but think of it as like, you know, 50% or more incremental profit contribution to the business. When you come to the May advertising upfront, which is in a couple of weeks, it sounds like you're coming with the standards tier now. Do you have any plans to introduce it to your premium tier? How much scale, meaning, you know, how many subs do you expect on the platform when you roll out? When the upfront commitments come in the fall, how much scale will you have? On your first question, you know, we're always thinking about and working to improve that plan structure, the pricing. We've got two goals in mind when we do that. One is, you know, we want to give a wide range of consumers and ideally increasingly wide range of consumers access to our great stories at a range of prices with appropriate, you know, corresponding features. The second goal is thinking about optimizing long-term revenue. You know, a good example of this is, you know, based on the economics of our ads plan, based on the limited switching behavior that we've seen off of standard and premium, we've upgraded the ads plan features both in terms of video resolution or video quality and number of concurrent streams, because we think it supports both of those goals. That's a good example of that. I would say beyond that, we've got. You know, we'll continue to evaluate as we always do. You've seen us make moves in this space before, but we've got nothing more to add on that today. In terms of scale, obviously we're growing. Every day we grow, and we're seeking to continue to grow. But we're not going to sort of announce or a target or what we expect a forecast, let's say, for upfronts at this point. One more advertising question and then I'll move on. Can you provide ARPU specifics on what you've seen so far? Because you mentioned in the release that the revenue is actually higher than even standard. It seems like so far so good. Yeah. I can jump in. I mean, yes, overall, we're pleased with our kind of per member, ad plan economics. It's higher than our basic plan overall. As you say, in the U.S., it's actually even higher than our standard plan. We really like the path we're on, the trajectory we have. As I said, it's kind of a win-win 'cause it's a lower priced option for our members, and it's both kinda incremental revenue, incremental profit to for the business, so it makes the business stronger, which of course we can then reinvest into more and more great entertainment. We like the path. Again, it's early. We're only a couple quarters into this, Jessica, so we're gonna get better, as Greg said, better targeting and measurement, better kind of tools and buying options for advertisers. We think all of that will actually kinda build on this, so that will reinforce and strengthen that kind of premium CPM ad network that we're building. Maybe switching gears a little bit to the capital returns and free cash flow. You did raise your free cash flow guidance, but you kept your margins the same for this year. What are your longer term margin growth or expectations at this point? You know, pre-COVID you had indicated 300 basis points of improvement per year over a few year period. Can you provide any update to that? Well, we've never provided a long-term guide to our margins. I'd say look, we're already in a place where we feel great about the business that we have. It's a great business model. It's a business at scale with over $30 billion of revenue, you know, healthy profit margins, growing margins, growing free cash flow. That's sort of the starting point. As I mentioned before, we're trying to balance as we re-accelerate revenue, ticking up those margins with also reinvesting back into the business, back into that member base, back into that big prize where we feel like we're so small today. We've talked on recent earnings calls where we represent, we believe, roughly 5% of that direct consumer spend in the areas of entertainment that we're participating in today, primarily in film, TV, and games. When we think about even just the member population that's available, those 1 billion+ broadband households, and even today, you know, roughly 450 million-500 million of those being connected TV households, and we only have 230 million-ish paying members today, roughly, right. That's why we're so focused on addressing with paid sharing and then just making our business and our the value that we bring to the service better each day to bring in more members. That's really what we're working towards. Long term, we just, we don't see, like, ourselves approaching a near-term ceiling. There's lots of proxies out there. Entertainment services and networks at scale, traditionally have been well above our roughly 20% operating margin. We believe we have a long way to go, and we have some inherent advantages. We're a truly global entertainment network, perhaps the first, with really healthy leading engagement, and a really scalable content model. We believe we've got a long way to go, but not really putting more specific guidance out for now. Just, Spence, just if I could add a example of that, of the scale of the business being global, is that every one of our big content wins start as a local win. Then in success, they roll out and they get regional, then they reach the diaspora, then they get global, and it's huge success. There's no marginal cost to all that additional audience when we get it right. By creating those stories that drive growth of the business in local territories, it provides content into the pool that people can fall in love with, and it's just as likely that we can get a gigantic hit, from anywhere in the world. That's the really the scale of our operating business. To go back to what Spence said about the potential for to even grow margins beyond where we're at today is very, very high. Could you give us an update on your capital return plans? I mean, how are you thinking about? You know, you announced the $1.2 million buyback in Q1, but relative to your free cash flow, and incredible balance sheet, You have a lot of capacity. You know, can you give us any color on how you're thinking about capital returns over the longer term? Sure. Spencer, do you wanna take that one? Sure. Yeah, I can take that one. Thanks Jessica for the question, we are happy to be fully investment grade as of Q1. That's a nice milestone for the company. You're right. There's no change to our capital allocation philosophy, so we are still targeting to maintain minimum cash equivalent to roughly two months of revenue. Based on the Q1 numbers, that's about $5.4 billion of minimum cash. We ended the quarter with about $7.8 billion on the balance sheet, so we do have about $2.4 billion of excess cash. That is why we did indicate in the letter that our share repurchases will accelerate over the course of the year. One other minor thing I forgot to mention in my intro, that this video interview will include forward-looking statements and actual results may vary. Sure. I do wanna say that this video interview is actually not scripted, so back to you, Jessica. Thank you. Ted, how are you preparing for a potential writers strike? Well- ... it's not likely. Well, Jessica, let's first may I say we respect the writers, and we respect the WGA, and we couldn't be here without them. We don't want a strike. The last time there was a strike, it was devastating to creators. It was really hard on the industry. It was painful for local economies that support production, and it was very, very, very bad for fans. If there's a strike, and we wanna work really hard to make sure we can find a fair and equitable deal so we can avoid one. If there is one, we have a, you know, a large base of upcoming shows and films from around the world that we could probably serve our members better than most. We really don't want this to happen, but we have to make plans for the worst. We do have a, you know, a pretty robust slate of releases for, to take us into a long time. Just be clear, we're at the table, and we're gonna try to get to an equitable solution so there isn't a strike. Beyond the strike, just, you know, once you get that, we get past that, how do you expect content spending to change over the next few years? You've kind of been at this $17 billion cadence. You know, does it depend on revenue growth? Can you give us some color on how you're thinking about that? Well, yes, it depends on revenue growth. Also keep in mind that the way that revenue, or the way that content spend hits us, it's with starter productions and deliveries. We still work through or we came through or comping off of those post-COVID flood gates opening, that does, you know, makes the content spend a little lumpier. We expect to be back to about the $17 billion level in 2024. The rate of growth depends on the rate of revenue growth, for sure. Do you have any thoughts? If I can just to-. Yeah ... just to add to Ted's point, 'cause I totally agree with all of that. But again, it's a, you know, there's a big opportunity ahead, so I just wanna reinforce that. We're not gonna. We said we'd stay at roughly $17 billion on average over a few year period, over that 2022-2024 period, but there's a big entertainment market to go after beyond that. As we re-accelerate revenue, we see a lot of opportunity to grow into that viewing and engagement and business opportunity ahead. We expect to be there, and then we just have to build into it. Absolutely. Do you have any thoughts on revisiting your film strategy? You know, in terms of, like, theatrical output as well as distribution. You've had so much success at the Academy Awards, does that change anything for you? You also recently had a restructuring in this division. Is there anything to read from that? No, Jessica, you know, the film division is doing great. They really are building some great films. As you point out, the success at the Oscars was great, but the thing they, even better than that was, the movies that won so big, were also very, very popular with fans. This is, award-winning, critical acclaim, and enormously popular with fans. Even, like I said, with All Quiet on the Western Front was that. Pinocchio certainly was that. And we're really proud of the films that were in the mix because they were loved by fans. We're really happy with the investment in film. Of course we're trying to improve it, like we do with all of our films. Our release strategy, remember, there's a lot of ways to create and collect demand for a film. Driving folks to a theater is just not our business. We create that demand, and we collect that demand on our subscription service with our members. I think having big, new, desirable content, including feature films in the first window, drives value for our members and drives value to the business. No major changes in play except for trying to continue to improve the films for our members and make a big splash with films that are loved and watched. And, and it's- How would you- ... it's really leaning into an advantage we believe, an advantage we have of delivering that value to our members. Because of our reach and our scale to have over 230 million paying members at our average revenue per member, it affords the opportunity to invest in these big movies, bring them to our members. It's just one other piece or area of variety of content and must-watch content and entertainment for our members. It's really kinda leaning into that advantage. I think it's tempting to make the comparison between the services, but the other services don't have that scale, as you pointed out, Spencer. They don't have the revenue base or the viewer base to support with a single window the way we can support even big budget films with a single window on Netflix. How is your live strategy evolving? Chris Rock was a huge hit. Love Is Blind had some technical issues. Is live a big advertising driver? Do you need to invest more to beef up your technical capabilities? Greg, you wanna grab that? Yeah, I'll kick it off. I would start by saying, you know, we're really sorry to have disappointed so many people. We didn't meet the standard that we expect of ourselves to serve our members. Just to be clear from a technical perspective, you know, we've got the infrastructure. We had just a bug that we introduced, actually when we implemented some changes to try and improve live streaming performance after the last live broadcast, Chris Rock in March. We just didn't see this bug in internal testing 'cause it only became apparent once we put sort of multiple systems interacting with each other under the load of millions of people trying to watch Love Is Blind. We hate it when these things happen, we'll learn from it and we'll get better and, you know, we do have the fundamental infrastructure that we need. I would say the good news is that, you know, ultimately, you know, 6.5 million viewers watched and enjoyed the show. I'll turn it over to Ted to talk about more of the strategy side. Yeah, look, we've said we wanna use Live when it makes sense creatively, when it helps the content itself. A reunion show that's gonna generate news and buzz, it really does play better live when people can enjoy it together. Certainly the Chris Rock stand-up show played out so well because there was so much anticipation for what he was gonna say in that set. When we have the opportunities to do projects like that, you know, we like the fact that we have the option to do it. As Greg said, we're super disappointed to not be able to come across with the live product first fair enough for everyone who wanted it on Love Is Blind reunion. We're super thrilled that people love the show, and it does point to the kinda love for that brand and for the growing love for those unscripted brands on Netflix. Some of them will be live. I do think sometimes those results-oriented shows do a little play out a little bit better on live, and they do generate a lot of conversation. Keep in mind, like on Chris Rock, about 90% of the viewing happened after. It doesn't change the fact that it was a big event when it happened live. Is it a big driver of advertising? We are not. You know- Go, go, Greg. No, go ahead, Ted. You take it. I was gonna say we're not currently have advertising in the live broadcast. Right. I have one more question on password sharing. Just go back to that for a second. Of the 30 million you can, and 100 million+ global borrowers, that sounds like from your release, that's actually the number of households. What is the number of potential subs or add-ons? I mean, what is the potential conversion from these 100 million + households? Well, to some degree, I mean, the borrowers, this borrower set represent, you know, well-qualified people in the sense that they have all the technical needs they need, you know, to get to Netflix, you know, the smart TV, the broadband access. They know how the system works. They've clearly enjoyed content, you know, on the service before. You know, having said that, you know, we see a sort of, you know, a range of engagement amongst those borrowers. Some folks are, you know, are watching as much, you know, of our shows as a normal paying account, and those folks are very strong likelihood to convert, I would say. Then, you know, we see that tailor off, taper off rather, you know, through that range of folks. You know, if you're watching much less, it's much less likely that you'll ultimately convert. Even in that case, I'd say, you know, this represents a really important structural shift where we'll develop that one-to-one relationship without pricing distortion, without membership distortion, with a whole new range of members. We'll see a membership grow through that approach. We'll see revenue growth through it as well. We'll also see, you know, a situation where in high viewer penetration markets like the United States that you mentioned this, the stats there, you know, some of those folks won't convert, but they'll represent essentially a pool of people that we can then go after with, you know, improving our offering, you know, more amazing movies. You know, Ted talked about that, more amazing series, more amazing games, in the fullness of time that'll get those folks ultimately to convert over members as well. Just also going back to like advertising, what are the advertising features that you are most excited about? Well, again, we're sort of in this mode where there's what I'm, you know, super excited about, and then there's the work that we really need to do for the business, which I'm also excited with it because it's just about how we get to be bigger. There's sort of the, you know, the brass tacks pieces, which, you know, are a lot about measurement, verification, targeting, expanding the ways for advertisers to buy. I'm excited from a sort of, you know, immediacy of business returns for those pieces. When you think about like from a technology and product experience perspective, what am I excited about there? That's again where I think we have an opportunity to bring, the specific characteristics of a, you know, premium, fully addressable, fully targetable, fully deterministic ad, streaming system, you know, to this world. That means that we can do a whole range of things in terms of how we flight creatives, from brands associated with certain shows. It thinks about how we tailor the user experience to be specific to what the user needs in a moment, rather than having a one-size-fits-all set of rules in terms of how we flight ads. There's just a whole, amazing line of innovation that we can go after, and we'll be going after it for, frankly, for years. We don't even know what all those things are because mostly we'll be working with advertisers and members to try things and then let them tell us what's working and what's not. What do you consider the walk phase? I think we're sort of getting into the walk phase and that it's probably a combination of things. One is, you know, it's scale. Obviously, scale is relevant in the business. We have, you know, we're getting to a certain size of scale that shifts how advertisers think about us. Part of it is the technical features that advertisers, that face advertisers. That's, you know, very much along the lines of this measurement, verification, targeting, the programmatic buying capability. That's a component of it. Those I think really constitutes... I'd characterize it, we're really, you know, we're basically getting into that middle phase of growth, and we've got a lot of work, frankly, to do in that before we get to the run phase. Yeah, we talked about it's a multi-year build and a gradual build, and crawl, walk, run, and, you know, we're only a couple quarters into this, so I don't know, Greg, if you would agree, but I would hope we're in the walk phase by the end of the year and into next year. I think this is a year of getting from crawl to walk. Yeah. That sounds right. I just wanted to clarify something. Spence, I think you said that this is a 50% margin. I mean, typically advertising can be as high as 80% or 85% margins. Is that... Are you... Do you expect to build up to that or do you think it's really just a 50%+ business? Well, I put plus in there, so I said at least 50%. It was really just to highlight the fact that we're still in startup mode of this business, and so leaning a little conservative. Yes, our expectation over time is that it'd be meaningfully over 50%, but I don't wanna give a specific number yet. Moving on to gaming. Can you give us some data points on engagement and what you're seeing on retention? I'm not gonna give you those specific points, but let me just to review sort of where we're at more broadly. You know, we've got 55 games out to date. We've got 40 more in the queue for this year. There's very exciting games. If you wanna try a few out, I'd recommend Terra Nil. That's a reverse city builder, so a sort of twist on that genre. We've got Mighty Quest launching today. Our first new game from an internal studio, which is OXENFREE II, is coming later this year. You can sort of see us build into a combination of licensing and now layering in, you know, internally developed games into that. You know, and it's really, you know, it's following a trajectory that we've seen before, I would say, on these other new content categories that we've added. If you think about, you know, film and you know, you heard, you know, folks here talk about sort of that film progress or non-fiction or international, where we sort of build into this over, you know, a multi-year period. You know, to reinforce, you know, you mentioned those metrics. I mean, the fundamental goal here, obviously, is to give, yeah, our members a new entertainment modality and more, you know, ways to enjoy incredible, you know, universes and deepen their fandom. We do that with an effort to drive the primary metrics we have on the, on the consumer-facing side, which is, you know, engagement with the service, which leads to retention and incredible stories that people are talking about, games that are must-play games, that create buzz off the service and motivate people to sign up. Are there plans to directly monetize games, you know, with, for example, advertising or licensing IP to game developers? Not currently. We think that very consistent what we've done in other parts of the business, the best thing for us to do is really focus on, you know, the core initiative, which for us right now is how do we bring games, you know, and games based on our IP to our members, to fans of that IP directly. We believe that, you know, we wanna have a differentiated gaming experience and part of that is giving game creators the ability to think about, you know, building games sheerly from the perspective of player enjoyment, and not having to worry about other forms of monetization, whether it be ads or in-game payment. Maybe turning to India, which is one of the biggest global markets and one of the fastest-growing markets really in the world right now. Spence, you mentioned the pricing change in 2021. Ted, you recently said at a panel earlier in the year, I think you were in India. Yeah you know, that it is your fastest growing market and you've given the statistics, engagement up 30%, revenue up 24%. I think, Ted, you said that you're increasing your local originals from 28% last year. Can you just talk a little bit about this market? you know, like, what are your longer term plans? Is it actually profitable or is this something that we, where we can see a real change in contribution? Look, I think what we talked about earlier, when we get the pricing a little better, more suited to the market, you can see that we can grow revenue and therefore, and we grow engagement. We have to get the content that people just really flip out for. We've seen a steady improvement in that quarter-over-quarter, both in our films and our series. Rana Naidu now is this great show that we just, you know, that people are loving all over the country. It causes a great deal of excitement for the service. Now, we have, again, we have to get the pricing and the payment methods right. India's a big prize because it's an enormous population of entertainment-loving people, and you just have got to have the product that they love, and it's and a product that they and that you can do business with them together. We've got, we're doing the creative part and we're getting the pricing better, and there's always lots of promise to continue to grow in India. It is a very specific market in terms of they like local content, but also you're seeing their local content is traveling more than ever. This was an incredible year. I think it was what you may be referring to, Jessica, that I was talking about movies like RRR, which did business all over the world, and Gangubai was this really fantastic film that was in the hunt for the, for Best International Feature Film. You look at all these things and say that as the content opportunity continues to scale and our ability to access the market and thrill those audiences continues to grow, we could do quite well in India. We're a long ways from that. We're still, you know, still investing against it, and I think that we'll ultimately do great in India. Jessica, we have time for two last questions, please. Okay. Moving on to like ancillary revenue and products, can you give us an outlook or an update on you know, just what you're seeing, what your expectations are for consumer products? I mean, you announced the Lacoste collaboration for clothing on your eight most iconic shows, but you also have other collaborations. You know, I know it just seems like an area that now that you're building up your own content seems to provide a huge incremental opportunity. Yeah, we continue to grow it. Well, the primary driver for our consumer products business is to build and deepen fandom. It does drive some revenue, but in general, what we're really looking for is those opportunities to Fans connect with their favorite shows, their favorite films, their favorite talent, by wearing the shirt or carrying the notebook, and other ways that people really like to express their fandom. Also through these very successful live experiences. The Bridgerton experience or the Stranger Things experiences that travel around the world. We're super excited about all of them, and you see us stepping into even a newer one with the Stranger Things stage show, and there's all kinds of amazing stuff coming in that world. Keep in mind that it's mostly to build fandom, in a way that can drive revenue, but mostly it strengthens the core of the business. Great. I guess one last one. It just we'll follow up on password sharing. In the markets where you've rolled out password sharing, have you seen any movement between the tiers? Like for example, as a household that has a premium subscription, are they going to two standard or, you know, anything like that? We see some of those effects and, right, and we know that in especially price-sensitive markets, you know, consumers essentially got to a practical or informal pricing structure by, you know, subscribing to premium and then sharing this out, and then oftentimes, you know, actually having people, you know, pay for a fraction of that, you know, from, as they're sharing it. Associated with that, you know, we see some of that being shifted off of those plans and having those people sign up for individual plans, you know, as we rationalize that structure, implement the changes that prevent password sharing and also have them be able to use things like extra member or in countries where it's relevant, the ads plan as a new entry-level price. I think you're gonna see some of that sorting. Again, we think this really, you know, it's better for the business ultimately. It sets us up structurally to have more members, to have a one-to-one relationship with those members, to have all the systems that we have work more correctly, to have more you know, transparent, sort of pricing connections with those different members on the different plans. We're excited about, you know, getting through that point. Again, I would characterize this as a very country-specific kind of approach where some countries respond that way and other countries, you know, it really wasn't about that, it was much more about casual sharing. Just if I could just add really quick, the way that we win over those sharers and the way that we grow the ad plan is to have the content that people cannot live without. Let me just tell you real quick before we get to the close here, how we're doing on that front. 'Cause this quarter alone, this past in Q1, Night Agent became our sixth biggest original season of television in our history. Incredible success. We saw returning seasons of You, for season 4, a third season of Outer Banks, a second season of Ginny & Georgia, all shows that have grown from their original first seasons. Also shows that have created incredible new stars like Chase Stokes and Antonia Gentry and Madelyn Cline and Penn Badgley, who now have huge fan bases around the world. We saw The Glory, which is from Korea and our fourth biggest non-English launch ever. We had incredible big films with big stars like You People, Your Place or Mine, Murder Mystery 2. Did really well in the multi-cam comedy space with That '90s Show and in unscripted with Full Swing. This past quarter, we are super thrilled with the results of the content, and we have to keep that up in order to win over those sharing accounts and also to grow that ad-supported tier. You missed Beef. You didn't say that. That was just incredible. Oh, I missed a bunch. You know, Jessica- Right -the reason why when we talk about our content, it sometimes sounds like a laundry list, it's a long list that really illustrates, how hard this is to do, which is to hit on, the quality and the breadth of the entertainment that people really want. Everyone has such remarkably varied taste that you have to have very different things for different fans, and that's what we're good at doing at scale. Amazing. Plus one to Beef as being an amazing title that guys love. Well, Two. By the way, that's new this quarter, and it has kicked off in. It's off to a tremendous start. It's again, another example of critical acclaim, likely to do well award season, we hope, but loved by fans. Great. Thank you. With that, Ted, did you want to take us home? Yeah, I just wanna tell you real quick, we're really pleased with the quarter. 2023's off to a good start. Netflix is the leading streaming service in terms of engagement, revenue, and profits. Streaming is the future of entertainment at home. On engagement, just yesterday, Nielsen released data that in Q1 of 2023, Netflix was the most watched of any broadcaster or streamer in the U.S. by a pretty nice margin. We have plenty of room to grow. Even with that tremendous amount of watching, we're about 10% of total TV time in our most established markets like the U.S. and the U.K. On revenue and profit, we're growing. Not as fast as we believe we can, not as fast as we'd want to. We are growing and we are profitable. We have a clear path to re-accelerate growth in both revenue and profit, and we're executing on it. You'll see a broader rollout of paid sharing in Q2, and we're gonna continue to grow that ad business. We also are aiming to continue to grow free cash flow. As we said this year, we're gonna generate about $3.5 billion in free cash and on increased margins. Remember that this account sharing initiative helps us have a larger base of potential paying members that we can continue to serve and grow Netflix long term. That's why we've been so focused on execution. The variety and quality of our must-watch movies, our must-watch TV shows, our must-play games, we're gonna keep working to improve discovery, to have buzzier and more creative marketing, because when we deliver for our members, we deliver as a business. We keep doing that by doing it just a bit better and a bit faster than our competition every month, every quarter, and every year. Thanks, Jessica.