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This was a blowout number. I can feel like it shocked all of us. First quarter streaming paid net change in terms of the subscribers up nine point three to three million. Timmy estimate was four point eight four million.

This was a blowout number. I can feel like it shocked all of us. First quarter streaming paid net change in terms of the subscribers up nine point three to three million. Timmy estimate was four point eight four million.

That's not the only beat. First quarter EPs coming at five dollars and twenty eight cents per share. Estimates were for four dollars and fifty two cents. The company also out with second quarter EPs the guidance four sixty eight versus estimates of four to fifty four, and then another big headline. We should note they're going to end reporting quarterly membership numbers next year. We got a great group of folks with us right now to help us break down these numbers. Paul Sweeney is co host of Bloomberg Surveillance. He joins us on the phone from New Jersey. Paul spent thirty years as a media analyst, also with US as Bloomberg News earnings reporter Red Brown. Hey, Paul, I want to start with you, because I got to tell you, I'm pretty surprised by the reaction to these numbers, considering they were it was such a blowout quarter Why do you think the stock is moving lower in the after hours.

That's not the only beat. First quarter EPs coming at five dollars and twenty eight cents per share. Estimates were for four dollars and fifty two cents. The company also out with second quarter EPs the guidance four sixty eight versus estimates of four to fifty four, and then another big headline. We should note they're going to end reporting quarterly membership numbers next year. We got a great group of folks with us right now to help us break down these numbers. Paul Sweeney is co host of Bloomberg Surveillance. He joins us on the phone from New Jersey. Paul spent thirty years as a media analyst, also with US as Bloomberg News earnings reporter Red Brown. Hey, Paul, I want to start with you, because I got to tell you, I'm pretty surprised by the reaction to these numbers, considering they were it was such a blowout quarter Why do you think the stock is moving lower in the after hours.

Yeah, I think it's a little bit by the rumor. Still, the news people have been hyping up this quarter as a really big quarter because you know, the paid subscription was going to fuel subscriber growth. Yet again, you're that a big beat on subs last quarter. Some the stock was up about twenty five percent since they reported in January, so it's probably just taking back some of those games. But you know, across the board, the subscriber numbers really really were impressive. One thing to note about that big subscriber beat to the last couple of quarters. These are kind of short term phenomena, as you know, they the people that were sharing accounts now are paying for their owns, and that'll fade out over the next several quarters and then the focus will become, i think, on the advertising side of the business as well.

Yeah, I think it's a little bit by the rumor. Still, the news people have been hyping up this quarter as a really big quarter because you know, the paid subscription was going to fuel subscriber growth. Yet again, you're that a big beat on subs last quarter. Some the stock was up about twenty five percent since they reported in January, so it's probably just taking back some of those games. But you know, across the board, the subscriber numbers really really were impressive. One thing to note about that big subscriber beat to the last couple of quarters. These are kind of short term phenomena, as you know, they the people that were sharing accounts now are paying for their owns, and that'll fade out over the next several quarters and then the focus will become, i think, on the advertising side of the business as well.

Yeah, it's interesting. Do you care, Paul to hear that they're going to end reporting quarterly membership numbers next year? It feels like it's something we focus on.

Yeah, it's interesting. Do you care, Paul to hear that they're going to end reporting quarterly membership numbers next year? It feels like it's something we focus on.

Yeah, yeah, it really is, and that quite frankly, that had been the primary driver of this stock really since it switched to this digital streaming format. That was the metric that moved this stock. The company really wants to get away from that and get more towards Hey, guys, just view us as you would any other company stock. Look at revenue, look at cash flow, look at profitability, all those types of things, and let's focus less on subscriber growth because quite frankly, we pretty much got pretty much everybody that's out there, So it's really not so much as a subscriber story. It's more how much money can we make off each subscriber?

Yeah, yeah, it really is, and that quite frankly, that had been the primary driver of this stock really since it switched to this digital streaming format. That was the metric that moved this stock. The company really wants to get away from that and get more towards Hey, guys, just view us as you would any other company stock. Look at revenue, look at cash flow, look at profitability, all those types of things, and let's focus less on subscriber growth because quite frankly, we pretty much got pretty much everybody that's out there, So it's really not so much as a subscriber story. It's more how much money can we make off each subscriber?

Paul one one more to you. And then I want to bring in Red Brown, our earnings reporter, who's been watching these numbers closely. Why would a company? Is there any positive way to read into a company like Netflix? No longer reporting this? I mean, no question, the more data for investors the better. Is this a negative? This is a negative sign?

Paul one one more to you. And then I want to bring in Red Brown, our earnings reporter, who's been watching these numbers closely. Why would a company? Is there any positive way to read into a company like Netflix? No longer reporting this? I mean, no question, the more data for investors the better. Is this a negative? This is a negative sign?

No?

No?

Oh yeah, I think I think for an investor in an analyst, you always want more information, particularly when it's critical information in terms of what drives the growth of the business. And it's obviously just it's subscribers and how much revenue you dandergenerate off each subscriber. It's pretty simple. So I need take one of those data points away. But we've seen other companies in other industries do that, subscriber based industries. They try to get you away from that number and get you back to where are Look how they are managing the business, and what they're telling you is we're not managing the business to maximize subscriber with We're managing the business to maximize revenue and profit per user. That's our management focus and that's how we look at it, and that's how we think you should look at it.

Oh yeah, I think I think for an investor in an analyst, you always want more information, particularly when it's critical information in terms of what drives the growth of the business. And it's obviously just it's subscribers and how much revenue you dandergenerate off each subscriber. It's pretty simple. So I need take one of those data points away. But we've seen other companies in other industries do that, subscriber based industries. They try to get you away from that number and get you back to where are Look how they are managing the business, and what they're telling you is we're not managing the business to maximize subscriber with We're managing the business to maximize revenue and profit per user. That's our management focus and that's how we look at it, and that's how we think you should look at it.

Red Brown, come on in on it. We talk earnings with you all the time. You know, I'm watching Netflix shares that have been bouncing around in the aftermarket, a lot of moves right now. The stocks still lower down about three and a half percent.

Red Brown, come on in on it. We talk earnings with you all the time. You know, I'm watching Netflix shares that have been bouncing around in the aftermarket, a lot of moves right now. The stocks still lower down about three and a half percent.

Yeah, I mean, I think what might be explaining a little bit of the negative movement too, is we saw them actually boost their full year outlook for operating margin. They beat EPs in the first quarter. They their guidance to the second quarter was ahead of estimates as well. But it seems like there's a little bit of a disconnect between the full year number. If you know, those two pretty healthy beats are not translating to the full year, analysts investors might start to question maybe where in the back half of the year is are things starting to slow down as well? So I think that might also be factoring in here a little bit to the to the negative price movement we're seeing.

Yeah, I mean, I think what might be explaining a little bit of the negative movement too, is we saw them actually boost their full year outlook for operating margin. They beat EPs in the first quarter. They their guidance to the second quarter was ahead of estimates as well. But it seems like there's a little bit of a disconnect between the full year number. If you know, those two pretty healthy beats are not translating to the full year, analysts investors might start to question maybe where in the back half of the year is are things starting to slow down as well? So I think that might also be factoring in here a little bit to the to the negative price movement we're seeing.

Let's speak a little bit to what Paul was saying, and I think it's a good point that we talked about it earlier. Just you know, this stock has been on fire this year, and you know, it looks like the numbers are are pretty upbeat, but it has been such an outperformer this year, and I just do wonder how much of that is at play as well.

Let's speak a little bit to what Paul was saying, and I think it's a good point that we talked about it earlier. Just you know, this stock has been on fire this year, and you know, it looks like the numbers are are pretty upbeat, but it has been such an outperformer this year, and I just do wonder how much of that is at play as well.

Yeah, I mean, if you look at what analysts are rating for the stock, that it's kind of topped out at the analyst ratings point at this point. So you know, even with these really impressive numbers, maybe the it's just kind of a hit hit its ceiling for the time being.

Yeah, I mean, if you look at what analysts are rating for the stock, that it's kind of topped out at the analyst ratings point at this point. So you know, even with these really impressive numbers, maybe the it's just kind of a hit hit its ceiling for the time being.

Hey, Red, it's so interesting, you know, I was saying as we were going into our Beyond the Bell our coverage with TV as we you know, waited for these Netflix earnings, I was saying, you know, this could really set the tone for the quarter for a lot of the consumer tech companies that are set to report in the coming weeks, and yet yet we get a blowout number pretty much across the board, and we see a negative reaction like this, and I'm wondering how we can extrapolate this beyond Netflix.

Hey, Red, it's so interesting, you know, I was saying as we were going into our Beyond the Bell our coverage with TV as we you know, waited for these Netflix earnings, I was saying, you know, this could really set the tone for the quarter for a lot of the consumer tech companies that are set to report in the coming weeks, and yet yet we get a blowout number pretty much across the board, and we see a negative reaction like this, and I'm wondering how we can extrapolate this beyond Netflix.

Yeah, it's a good question. I mean, people have been really focused on earnings this quarter, and a lot of analysts are saying, you know, focus on the numbers, don't buy unto the hype and has really big implications for the stock market at general at the moment. So I don't know if people kind of are on edge and looking for any excuse to sell at the moment. Yeah, it could paint a pessimistic picture for the remainder of the quarter here, probably for us.

Yeah, it's a good question. I mean, people have been really focused on earnings this quarter, and a lot of analysts are saying, you know, focus on the numbers, don't buy unto the hype and has really big implications for the stock market at general at the moment. So I don't know if people kind of are on edge and looking for any excuse to sell at the moment. Yeah, it could paint a pessimistic picture for the remainder of the quarter here, probably for us.

Paul Sweenie, come on back in here. I'm just thinking, you know, we're getting ready for the analyst calls, and I feel like there's going to be a fair amount of questions, especially as you see the stock kind of bouncing around here. What's kind of the top one or two questions that you would want to be putting up on that call.

Paul Sweenie, come on back in here. I'm just thinking, you know, we're getting ready for the analyst calls, and I feel like there's going to be a fair amount of questions, especially as you see the stock kind of bouncing around here. What's kind of the top one or two questions that you would want to be putting up on that call.

Yeah, one revenue and one cost question. The revenue side is talk to us about the advertising component how well is that catching on with subscribers. How many subscribers are going to the advertising tier and that's a big thing because that's gonna be one of the drivers going forward. And then a second one on the call side is where are we on our programming budget? You need to spend more to drive more subscriber growth? Or or is a company and a good level of spend because if they are at a good level of spend, boy, the profits just really start churning for this company and the free cash flow as well.

Yeah, one revenue and one cost question. The revenue side is talk to us about the advertising component how well is that catching on with subscribers. How many subscribers are going to the advertising tier and that's a big thing because that's gonna be one of the drivers going forward. And then a second one on the call side is where are we on our programming budget? You need to spend more to drive more subscriber growth? Or or is a company and a good level of spend because if they are at a good level of spend, boy, the profits just really start churning for this company and the free cash flow as well.

I do want to bring in some of the advertising information that you mentioned, Paul in the letter. The company did come out and say that ADS membership grew sixty five percent quarter on quarter after rising nearly seventy percent sequentially in each of Q three twenty three and Q four twenty three. They're also saying that over forty percent of all sign ups in our ads markets, remember it's not fully rolled out, are coming from our ads plan for advertisers. The companies focusing on measurement solutions, including new partnerships with Kantar and Lucid for brand awareness and recall, and then Nielsen Catalina solutions for sales lift Paul, I don't have to tell you because you've been covering this for years. How wild is it for us to talk about Netflix and measurement because this is a company that for years was like, we don't care about ratings, We're never going to share any numbers. We're never going to do ads, never, never, never, And here they are talking about yis Yeah, exactly, this is crazy.

I do want to bring in some of the advertising information that you mentioned, Paul in the letter. The company did come out and say that ADS membership grew sixty five percent quarter on quarter after rising nearly seventy percent sequentially in each of Q three twenty three and Q four twenty three. They're also saying that over forty percent of all sign ups in our ads markets, remember it's not fully rolled out, are coming from our ads plan for advertisers. The companies focusing on measurement solutions, including new partnerships with Kantar and Lucid for brand awareness and recall, and then Nielsen Catalina solutions for sales lift Paul, I don't have to tell you because you've been covering this for years. How wild is it for us to talk about Netflix and measurement because this is a company that for years was like, we don't care about ratings, We're never going to share any numbers. We're never going to do ads, never, never, never, And here they are talking about yis Yeah, exactly, this is crazy.

It's a great point. They're going to have to start the disclosing audience levels of some degree. But we already know that the advertising video on demand model is a very successful model. Advertisers are switching some linear TV broadcasting cable to the more digital platforms, and they've been itching to get to the streaming base of Netflix. So there will be a lot of advertisers demand. And you know, Netflix is going to have to provide the advertisers and their agencies with some data the consistent they can just get a sense of pricing and value.

It's a great point. They're going to have to start the disclosing audience levels of some degree. But we already know that the advertising video on demand model is a very successful model. Advertisers are switching some linear TV broadcasting cable to the more digital platforms, and they've been itching to get to the streaming base of Netflix. So there will be a lot of advertisers demand. And you know, Netflix is going to have to provide the advertisers and their agencies with some data the consistent they can just get a sense of pricing and value.

Yeah, you know.

Yeah, you know.

And the other thing is like I'm thinking about content, right, you know, original content versus licensing. And when we were talking with Githa rang an ant On earlier, she said, you know, one of the upsides is that they are you know, doing a lot of licensing deals.

And the other thing is like I'm thinking about content, right, you know, original content versus licensing. And when we were talking with Githa rang an ant On earlier, she said, you know, one of the upsides is that they are you know, doing a lot of licensing deals.

They had suits.

They had suits.

They just did something with Sex and the City that's just coming out. I mean, when you think about it, Paul as an analyst and somebody who understands the space, I mean, cheaper to do a licensing deal versus creating that original content.

They just did something with Sex and the City that's just coming out. I mean, when you think about it, Paul as an analyst and somebody who understands the space, I mean, cheaper to do a licensing deal versus creating that original content.

It is generally speaking, it is much cheaper to license the show than to create it, particularly the shows that they make, which are extraordinarily high quality, and they have very big budgets and other good and that's the that's the investment part. The good is is it does drive subscriber growth. So I think most investors would say that's a good investment to make in original programming. But you got to find a balance here and so, and that's the same. And that's true for the media companies. They have to find a balance on what they licensed to Netflix and what they keep on their own streaming services.

It is generally speaking, it is much cheaper to license the show than to create it, particularly the shows that they make, which are extraordinarily high quality, and they have very big budgets and other good and that's the that's the investment part. The good is is it does drive subscriber growth. So I think most investors would say that's a good investment to make in original programming. But you got to find a balance here and so, and that's the same. And that's true for the media companies. They have to find a balance on what they licensed to Netflix and what they keep on their own streaming services.

Red Let's say you had a chance to ask management a question today on the call that's coming up. What do you want to hear about.

Red Let's say you had a chance to ask management a question today on the call that's coming up. What do you want to hear about.

Yeah, I mean we're talking about programming and what's going to be driving growth in the future. I think there's a big question around sports. Yeah, what what what level of investment are they planning on putting in that that area. We know it's highly competitive, it's really crowded, it's very expensive. They are kind of stipping their toe in with some of these combat sports. But yeah, it would be w E WWE the Jake Paul and Mike Tyson fight later this summer. We will want to hear kind of what is their strategy. They've been on the sidelines for a while now, and you know, have they been able to see the mess that sports streaming has been from, you know, paying billions and millions of dollars? Do they have a different strategy like they have in so many other cases in the market.

Yeah, I mean we're talking about programming and what's going to be driving growth in the future. I think there's a big question around sports. Yeah, what what what level of investment are they planning on putting in that that area. We know it's highly competitive, it's really crowded, it's very expensive. They are kind of stipping their toe in with some of these combat sports. But yeah, it would be w E WWE the Jake Paul and Mike Tyson fight later this summer. We will want to hear kind of what is their strategy. They've been on the sidelines for a while now, and you know, have they been able to see the mess that sports streaming has been from, you know, paying billions and millions of dollars? Do they have a different strategy like they have in so many other cases in the market.

I do wonder too, And I'm just looking at something like a Walt Disney in the aftermarket, and obviously it's not just about streaming. It's just down slightly down about one tenth of one percent here, Warner Brothers, Discovery, same story. I mean, Paul, is there anything that you kind of extrapolgalate when you look at something like a Netflix and then what it means for some of the other streaming services that are out there.

I do wonder too, And I'm just looking at something like a Walt Disney in the aftermarket, and obviously it's not just about streaming. It's just down slightly down about one tenth of one percent here, Warner Brothers, Discovery, same story. I mean, Paul, is there anything that you kind of extrapolgalate when you look at something like a Netflix and then what it means for some of the other streaming services that are out there.

I think it's actually all net positive, which is it just shows you the strength of the streaming business model. We now know when you look at Netflix's financials that it can be extraordinarily profitable generate really high returns. So now the question is who else can join Netflix with those types of financial metrics Ken Disney do it, Warner Brothers, Discovery, Ken Powermount. That's kind of the question a lot of those investors are asking themselves, but they can be done here if you look at Netflix.

I think it's actually all net positive, which is it just shows you the strength of the streaming business model. We now know when you look at Netflix's financials that it can be extraordinarily profitable generate really high returns. So now the question is who else can join Netflix with those types of financial metrics Ken Disney do it, Warner Brothers, Discovery, Ken Powermount. That's kind of the question a lot of those investors are asking themselves, but they can be done here if you look at Netflix.

Listen, Paul Sweeney, thank you so much. We so appreciated our own Paul Sweeney, who has covered the media industry and did as a banker for many years, thirty years as a media analyst, so really great to get his insight. We're going to continue with Red Brown. We're also going to roll into it our Githa Ranganathan, who covers the media space for our Bloomberg intelligence team. You know, getha you called it on the subscriber number.

Listen, Paul Sweeney, thank you so much. We so appreciated our own Paul Sweeney, who has covered the media industry and did as a banker for many years, thirty years as a media analyst, so really great to get his insight. We're going to continue with Red Brown. We're also going to roll into it our Githa Ranganathan, who covers the media space for our Bloomberg intelligence team. You know, getha you called it on the subscriber number.

She did, she really did. Can you remind everyone what she told us a couple hours ago?

She did, she really did. Can you remind everyone what she told us a couple hours ago?

You said it was going to be a much higher number. It is a much higher number. Walk us through the quarter and why is it that?

You said it was going to be a much higher number. It is a much higher number. Walk us through the quarter and why is it that?

Though?

Though?

First of all, are you I'm assuming you're watching the stock in the aftermarket, it's down about two point six percent. It just has been bouncing around a lot. Walk us through the quarter, maybe why you think, I mean, should investors be disappointed here?

First of all, are you I'm assuming you're watching the stock in the aftermarket, it's down about two point six percent. It just has been bouncing around a lot. Walk us through the quarter, maybe why you think, I mean, should investors be disappointed here?

So absolutely, right, Carol, it was a blowout quarter. I mean, I think it came in much higher than expected. We were kind of thinking maybe six seven million dollar seven million subscriber ads net ads range. This was of course way above that. But I think what is really kind of causing a little bit of concern here is that they are going to stop reporting subscriber metrics altogether, and that I think is coming as a little bit of a disappointment. I mean, Netflix is out and out a subscriber story, or at least it always has been, and so this is kind of going to require a complete change in the mindset of investors, right. You know, this is this was always such an easy model to follow. You know, you just multiply subscribers by the monthly price that you pay, and you you, you know, you kind of have your whole model. But now they're going to stop reporting subscriber numbers. They're going to stop reporting the average revenue per user. So it's kind of going to it's it's definitely becoming. It's I would say, it's gone from kind of high growth to now more you know, uh, definitely a very profitable company. But obviously they do seem to be kind of signaling that subscriber growth that the party is going to be over at some point.

So absolutely, right, Carol, it was a blowout quarter. I mean, I think it came in much higher than expected. We were kind of thinking maybe six seven million dollar seven million subscriber ads net ads range. This was of course way above that. But I think what is really kind of causing a little bit of concern here is that they are going to stop reporting subscriber metrics altogether, and that I think is coming as a little bit of a disappointment. I mean, Netflix is out and out a subscriber story, or at least it always has been, and so this is kind of going to require a complete change in the mindset of investors, right. You know, this is this was always such an easy model to follow. You know, you just multiply subscribers by the monthly price that you pay, and you you, you know, you kind of have your whole model. But now they're going to stop reporting subscriber numbers. They're going to stop reporting the average revenue per user. So it's kind of going to it's it's definitely becoming. It's I would say, it's gone from kind of high growth to now more you know, uh, definitely a very profitable company. But obviously they do seem to be kind of signaling that subscriber growth that the party is going to be over at some point.

Correct me if I'm wrong, getha. But did Netflix used to report churn and then they stopped reporting churn and that was a really big deal to investors when that happened.

Correct me if I'm wrong, getha. But did Netflix used to report churn and then they stopped reporting churn and that was a really big deal to investors when that happened.

That was a very very long time ago. Yes, they did, they would, they would mention it, and yeah, they did stop reporting it. But subscribers, again, this is the bread and butter of this whole streaming business. So I think it's it's definitely going to require people are going to take some time to kind of digest that.

That was a very very long time ago. Yes, they did, they would, they would mention it, and yeah, they did stop reporting it. But subscribers, again, this is the bread and butter of this whole streaming business. So I think it's it's definitely going to require people are going to take some time to kind of digest that.

Getha. We've seen them, they have started to give us a little bit more viewership on information over the past year or so. Do you think that that is part of or them kind of trying to signal that, you know, ads are going to become a bigger part of our business, and you know how big of a part of their business. Do you think that will be in the next couple of years.

Getha. We've seen them, they have started to give us a little bit more viewership on information over the past year or so. Do you think that that is part of or them kind of trying to signal that, you know, ads are going to become a bigger part of our business, and you know how big of a part of their business. Do you think that will be in the next couple of years.

Yeah, so right now, they haven't really given us any concrete metrics around advertising, I mean, other than the first number that they gave us in January, which was roughly about twenty five million active users. They did report something today by saying, you know that they've seen like forty percent of their new signups are actually on the ad tyear, but we don't actually have a concrete number.

Yeah, so right now, they haven't really given us any concrete metrics around advertising, I mean, other than the first number that they gave us in January, which was roughly about twenty five million active users. They did report something today by saying, you know that they've seen like forty percent of their new signups are actually on the ad tyear, but we don't actually have a concrete number.

That said.

That said.

I think what they're doing, they're they're they're still kind of taking pretty a pretty measured approach, but there are signals that they really are looking to get or to scale up their advertising business, and I think sports is obviously a big way that they're going to do that. You know, you obviously saw that the WWE deal. There are a few more things that are out there on the horizon, obviously the NBA being a big one, and if they if they make an aggressive bid for that, then that really tells us how serious they are about advertising. And I think potentially what they're what we're looking at in terms of advertising dollars, if they get everything right. It has been a little bit underwhelming so far, but if they you know, if they're able to execute with the sports and the other live events expected to be at least ten to fifteen percent of their revenue by twenty twenty five. So you know, you're looking at a forty forty five billion dollar business. I think you're going to see four to five billion at least in advertising.

I think what they're doing, they're they're they're still kind of taking pretty a pretty measured approach, but there are signals that they really are looking to get or to scale up their advertising business, and I think sports is obviously a big way that they're going to do that. You know, you obviously saw that the WWE deal. There are a few more things that are out there on the horizon, obviously the NBA being a big one, and if they if they make an aggressive bid for that, then that really tells us how serious they are about advertising. And I think potentially what they're what we're looking at in terms of advertising dollars, if they get everything right. It has been a little bit underwhelming so far, but if they you know, if they're able to execute with the sports and the other live events expected to be at least ten to fifteen percent of their revenue by twenty twenty five. So you know, you're looking at a forty forty five billion dollar business. I think you're going to see four to five billion at least in advertising.

It is kind of interesting, you know, Githa, We all kind of kid. It's like, I only have so many hours to watch all this stuff, and so we're picking and choosing, and it seems like there's so much out there. I mean, the company said in their letter to shareholders, with more than two people per household on average, we have an audience of over half a billion. And then they go on to say no entertainment companies ever programmed at this scale and with this ambition before. But it does feel like, you know, and listening to you talk about, you know, them not reporting their quarterly membership numbers in the future, that they are conceding that there is just a point that we're going to max out. We can just only sign up so many people. And that means even on a global scale, right.

It is kind of interesting, you know, Githa, We all kind of kid. It's like, I only have so many hours to watch all this stuff, and so we're picking and choosing, and it seems like there's so much out there. I mean, the company said in their letter to shareholders, with more than two people per household on average, we have an audience of over half a billion. And then they go on to say no entertainment companies ever programmed at this scale and with this ambition before. But it does feel like, you know, and listening to you talk about, you know, them not reporting their quarterly membership numbers in the future, that they are conceding that there is just a point that we're going to max out. We can just only sign up so many people. And that means even on a global scale, right.

Yes, on a global scale. So back in the day, you know, maybe even about three four years ago, they would always talk about this one billion number as their total addressable market about two years ago. That's when the great Netflix reset and the Great Correction happened.

Yes, on a global scale. So back in the day, you know, maybe even about three four years ago, they would always talk about this one billion number as their total addressable market about two years ago. That's when the great Netflix reset and the Great Correction happened.

They kind of toned that down.

They kind of toned that down.

They said, you know, it's probably closer to about four hundred five hundred million as the total addressable market looks like it's you know, probably even slightly smaller than that. You know, so they definitely are conceding that there is an upper limit, There is a ceiling to kind of the growth here.

They said, you know, it's probably closer to about four hundred five hundred million as the total addressable market looks like it's you know, probably even slightly smaller than that. You know, so they definitely are conceding that there is an upper limit, There is a ceiling to kind of the growth here.

But is there something like I always laugh about this sometimes when we talk about some of these big tech names. We used to talk about this a lot. By Apple, We'd be like, Oh, it's a disappointing number. Yet they still sell a lot of stuff, And I understand it's growth trends and trajectory. Can we still, though, can see that Netflix still is kind of the big behemoth in this space.

But is there something like I always laugh about this sometimes when we talk about some of these big tech names. We used to talk about this a lot. By Apple, We'd be like, Oh, it's a disappointing number. Yet they still sell a lot of stuff, And I understand it's growth trends and trajectory. Can we still, though, can see that Netflix still is kind of the big behemoth in this space.

They absolutely are.

They absolutely are.

They They have completely cemented their dominance when it comes to this whole streaming wars. I mean, I think the streaming wars are pretty much over. They are the winner, there's no.

They They have completely cemented their dominance when it comes to this whole streaming wars. I mean, I think the streaming wars are pretty much over. They are the winner, there's no.

Doubt about that.

Doubt about that.

And now it's just about them kind of you know, getting into different verticals, kind of becoming that you know that one service they probably will you know, kind of absorb absorb a lot of the other smaller streaming services, I think just because they're licensing so much of content from them and they you know, it's just but at this point, it's definitely going to become you know, how much pricing power do they have? So right now we are at about fifteen and a half dollars for a standard plan in the US. How much upside is there? Can that go to twenty twenty five dollars? That is kind of the big question.

And now it's just about them kind of you know, getting into different verticals, kind of becoming that you know that one service they probably will you know, kind of absorb absorb a lot of the other smaller streaming services, I think just because they're licensing so much of content from them and they you know, it's just but at this point, it's definitely going to become you know, how much pricing power do they have? So right now we are at about fifteen and a half dollars for a standard plan in the US. How much upside is there? Can that go to twenty twenty five dollars? That is kind of the big question.

So it's funny as you're saying this, I'm thinking to myself, Okay, well, you know, twenty years ago, all we wanted was it all the card options for TV, and we kind of got that now. And I think a lot of us are spending more on all a combination of all these services given that you know, it's Paramount, it's Hulu, It's Max, it's Disney Plus, it's Netflix, just to name a few. I do wonder, Githa, where the growth is for Netflix at this point. Is it is it in the ad supported model, is it outside of the United States? Where where is that growth coming from? As the company matures? Is it raising prices?

So it's funny as you're saying this, I'm thinking to myself, Okay, well, you know, twenty years ago, all we wanted was it all the card options for TV, and we kind of got that now. And I think a lot of us are spending more on all a combination of all these services given that you know, it's Paramount, it's Hulu, It's Max, it's Disney Plus, it's Netflix, just to name a few. I do wonder, Githa, where the growth is for Netflix at this point. Is it is it in the ad supported model, is it outside of the United States? Where where is that growth coming from? As the company matures? Is it raising prices?

Yeah, it's actually Jim, it's all of the above, and it's just you know, it's going to be a very it's a very tough balancing act for them because they don't want to do anything too quickly and too rashly, which is why when they were kind of implementing their whole password sharing crackdown, they were very careful not to raise prices because you know, they didn't want to anger you know, existing customers. So again, it's going to be it's going to be tricky. They're kind of walking a tight trope here, but yeah, they are going to use all the different levers that they have to kind of keep profitability, which is their main metric right now, profitability and margins kind of climbing up.

Yeah, it's actually Jim, it's all of the above, and it's just you know, it's going to be a very it's a very tough balancing act for them because they don't want to do anything too quickly and too rashly, which is why when they were kind of implementing their whole password sharing crackdown, they were very careful not to raise prices because you know, they didn't want to anger you know, existing customers. So again, it's going to be it's going to be tricky. They're kind of walking a tight trope here, but yeah, they are going to use all the different levers that they have to kind of keep profitability, which is their main metric right now, profitability and margins kind of climbing up.

Githa. Before the report and the analyst I was speaking to a lot of them made a big deal about the T Mobile partnership that they were working on. How do you see that factoring into the future. Do you think that that has been a successful program and do you can you expect to see them maybe do some some more types of those partnerships.

Githa. Before the report and the analyst I was speaking to a lot of them made a big deal about the T Mobile partnership that they were working on. How do you see that factoring into the future. Do you think that that has been a successful program and do you can you expect to see them maybe do some some more types of those partnerships.

Absolutely, I think that is going to become a critical critical factor for Netflix if it really kind of wants to grow its subscribers. So what they did with T Mobile was kind of they're offering their ad supported plan, which is a seven dollars monthly plan to you know, select T Mobile members for free, and they're going to do a lot more of that. The having a low priced plan kind of really gives them a lot of flexibility because they can add subscribers. But then again, they're not necessarily losing our poop because remember they're the greater the subscribers they have, they can always kind of appeal to advertise the advertising community, so and kind of makeup or offset for any of that ar foo differential from from their advertising dollars. So I think that's going to definitely, uh play a much bigger role, not just in the US, but of course across the world as well. They're going to have lots of those kinds of telecom partnerships.

Absolutely, I think that is going to become a critical critical factor for Netflix if it really kind of wants to grow its subscribers. So what they did with T Mobile was kind of they're offering their ad supported plan, which is a seven dollars monthly plan to you know, select T Mobile members for free, and they're going to do a lot more of that. The having a low priced plan kind of really gives them a lot of flexibility because they can add subscribers. But then again, they're not necessarily losing our poop because remember they're the greater the subscribers they have, they can always kind of appeal to advertise the advertising community, so and kind of makeup or offset for any of that ar foo differential from from their advertising dollars. So I think that's going to definitely, uh play a much bigger role, not just in the US, but of course across the world as well. They're going to have lots of those kinds of telecom partnerships.

Keetha, what do we you know, kind of pull from this when it means to like Disney Streaming and Warner Brothers Discovery and some of the other services that are out there.

Keetha, what do we you know, kind of pull from this when it means to like Disney Streaming and Warner Brothers Discovery and some of the other services that are out there.

So for all of those other services, I think subscriber growth is not the primary focus anymore.

So for all of those other services, I think subscriber growth is not the primary focus anymore.

It's kind of moved now.

It's kind of moved now.

Carol to profitability, where obviously, again Netflix leads the back. A lot of these other services have made good progress, I would say really good progress when it comes to at least they're not profitable yet, but they're you know, moderating their losses. Disney obviously is the big one to watch for there, and now they have the model in place. You know, you've seen exactly what Netflix has accomplished. They all know exactly what they have to do. It's just going to be a question of how well they do it and can they get there quick enough.

Carol to profitability, where obviously, again Netflix leads the back. A lot of these other services have made good progress, I would say really good progress when it comes to at least they're not profitable yet, but they're you know, moderating their losses. Disney obviously is the big one to watch for there, and now they have the model in place. You know, you've seen exactly what Netflix has accomplished. They all know exactly what they have to do. It's just going to be a question of how well they do it and can they get there quick enough.

Githa, do you think there's any consumer confusion? I mean, okay, I know the answer to this is yes, and I just don't know how to solve it. The consumer confusion about where to watch something. Yeah, I mentioned Sex and the City and I was shocked to hear that that's on Netflix. It's an HBO show. Somebody in our simulcast chat mentioned in the office, Well, I think that's now on Peacock, but it was on Netflix. Friends, a former NBC show or No Seinfeld is now on Netflix. I believe it's confusing, is that right? I don't know, like you know it is.

Githa, do you think there's any consumer confusion? I mean, okay, I know the answer to this is yes, and I just don't know how to solve it. The consumer confusion about where to watch something. Yeah, I mentioned Sex and the City and I was shocked to hear that that's on Netflix. It's an HBO show. Somebody in our simulcast chat mentioned in the office, Well, I think that's now on Peacock, but it was on Netflix. Friends, a former NBC show or No Seinfeld is now on Netflix. I believe it's confusing, is that right? I don't know, like you know it is.

How Discovery is the biggest's not content anymore. It's really just discovery is the biggest problem right now in the whole of you know, the streaming space. And at the end of the day, we're kind of looking for that one or what we're waiting for is that one aggregator or reaggregator that can kind of take all the shows that you really want to watch and do it.

How Discovery is the biggest's not content anymore. It's really just discovery is the biggest problem right now in the whole of you know, the streaming space. And at the end of the day, we're kind of looking for that one or what we're waiting for is that one aggregator or reaggregator that can kind of take all the shows that you really want to watch and do it.

I don't know who it's going to be. Is it going to be YouTube? Maybe it is.

I don't know who it's going to be. Is it going to be YouTube? Maybe it is.

It could be Amazon, it could be Apple, but but we're all waiting for that. Again, I'm not sure when exactly it's going to happen.

It could be Amazon, it could be Apple, but but we're all waiting for that. Again, I'm not sure when exactly it's going to happen.

Roku doesn't Okay, Roku does a really good job of that, but you've got to have be signed into everything on your Roku and plus that means you're only watching on TV. You're not watching it on the iPad or on like your phone, and.

Roku doesn't Okay, Roku does a really good job of that, but you've got to have be signed into everything on your Roku and plus that means you're only watching on TV. You're not watching it on the iPad or on like your phone, and.

It's there's still is friction.

It's there's still is friction.

Yeheah, there is still a lot of friction.

Yeheah, there is still a lot of friction.

Final thought, Githa, I'm just thinking of our investor audience as we work through this. Netflix share is still down about three and a quarter percent here.

Final thought, Githa, I'm just thinking of our investor audience as we work through this. Netflix share is still down about three and a quarter percent here.

Yeah, So I think the big question is really going to be, you know, on the call of you know what how many subscribers do or how many you know subscribers you think you've captured from the whole password sharing initiative. I think the numbers that they're originally identified was one hundred million households. I think people will definitely want to know what percentage of that has already been kind of captured, just given the strong subscriber metrics, and then they'll kind of try to figure out how much more runway is left Rockstar.

Yeah, So I think the big question is really going to be, you know, on the call of you know what how many subscribers do or how many you know subscribers you think you've captured from the whole password sharing initiative. I think the numbers that they're originally identified was one hundred million households. I think people will definitely want to know what percentage of that has already been kind of captured, just given the strong subscriber metrics, and then they'll kind of try to figure out how much more runway is left Rockstar.

As always, Githa Ringing Athen thank you so much. Tech and media analyst a Bloomberg Intelligence Red Brown, final thoughts for you just twenty seconds here. I mean stocks down in the aftermarket, but we'll see what happens tomorrow.

As always, Githa Ringing Athen thank you so much. Tech and media analyst a Bloomberg Intelligence Red Brown, final thoughts for you just twenty seconds here. I mean stocks down in the aftermarket, but we'll see what happens tomorrow.

Yeah, we'll see what happens tomorrow. And for the remainder of the year. I think, you know, they put up strong financials and that could easily bounce back. You know, this quick reaction, but the investors love the short term.

Yeah, we'll see what happens tomorrow. And for the remainder of the year. I think, you know, they put up strong financials and that could easily bounce back. You know, this quick reaction, but the investors love the short term.

It depends on what they say.

It depends on what they say.

On the call exactly, and it'll be interesting to do if some investors may say, well, wait, it's a little bit cheaper than it was and I want the exposure. Red Brown, thank you so Also a rock Star, Yes, yes, rock Crease here right now.

On the call exactly, and it'll be interesting to do if some investors may say, well, wait, it's a little bit cheaper than it was and I want the exposure. Red Brown, thank you so Also a rock Star, Yes, yes, rock Crease here right now.

Yeah, we had a great group.

Yeah, we had a great group.