Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. I want to start
everyone acts like Netflix has won everything, right, I get
a lot of people don't. People, even people a Netflix,
don't like it when you say that Netflix has won
the streaming wars. They think it's the wrong But I
want to so I want to start with something. Let's
let's go negative.
Speaker 2 (00:23):
All right, well it is you're speaking to my personality here.
Speaker 1 (00:26):
What is something that Netflix needs to do better?
Speaker 2 (00:30):
We need to do everything better.
Speaker 3 (00:31):
And I think you know the reason I hate, like,
you know, when I hear we've won everything or whatever.
I actually I think the worst position for a company
to be in is to feel like they've actually won everything,
because I think success has this, uh, you know, vulnerability
where you start to breed, you know, complacency, error against
and things like that. And I think in the world
that we live in entertainment, this has been the most
(00:53):
competitive entertainment environment that's ever existed in the planet, you know,
in the history of humankind. It's getting more and more competitive,
and if you don't maintain the sense that you are
constantly vulnerable, I think you will lose.
Speaker 1 (01:06):
So I think the biggest thing that people point to
as perhaps a side of vulnerability at least that I
noticed is that your engagement, the amount of time people
spend on the service has been pretty flat over the
last couple of years. And then you look at the
regular drops from Meelsen and you see that streaming share
of TV time has gone up quite a bit, and
your share that's gone up is a pretty small fraction
(01:27):
of that. A lot of the growth has gone to
these free services. So how do you address that?
Speaker 3 (01:32):
Well, I think you just essentially explained it right, which
is that we moved on demand very early on in
the process, so we sort of got the benefit or
basically built our business around that benefit. And then you know,
everyone over a period of time caught up and essentially
from our perspective, they're all now moving to that model
and moving to that benefit from consumers. So you know, frankly,
(01:55):
the fact that we were actually keeping pace in that
sort of you know, shifting tide if you will. I think,
as you know, reasonably good thing. It's not great, you know.
Speaker 1 (02:02):
I mean good thing, but from everything I've heard inside
the company, like the goal is basically to replace television,
right like have Netflix be the ones or if you
can watch basically anything on television on Netflix except for
news and until recently sports.
Speaker 3 (02:17):
Well, I think, you know, expressing that as an ambition
and also that is a way to organize how the
company thinks about what we're trying to go do is great.
I also think that that's not consistent with saying that
we thought it was realistic that we were going to
be the only thing that people were going to watch, right,
because I also don't think that that's realistic at the
end of the day. So I think there's always going
to be like multiple sources of entertainment, even in the
categories that we serve. We want to be you know,
(02:39):
we want to win as more much of that as
we possibly can. So I'm not you know, the don't
back to being complacent. I'm not happy with the fact,
you know that we're not growing engagement. We should grow
more engagement. I think we will. I expect you'll see
engagement numbers will go up for us. But also I
don't think that I don't think there's a world in
which we be the only thing that people watch.
Speaker 1 (02:56):
A big project I assumed to help grow engagement was
the new you Use or interface UI that you rolled
out over the last year plus.
Speaker 2 (03:02):
Yep.
Speaker 1 (03:03):
Can you point to some key ways in which that
has already helped or you think it will help.
Speaker 3 (03:08):
Well, I would say a lot of what we've been
doing is essentially re architecting the entire stack. This is
from sort of how algorithms get calculated. We used to
calculate overnight everyone's recommendations. When they show up in the morning,
we would have that baked. Now we do it dynamically
on the fly, and now we've created a UI where
essentially you can you know, connect those those algorithm pipes
(03:30):
in and also launch new modules.
Speaker 1 (03:32):
Can you use words that I'm not even going to
insult the audience here that I will understand.
Speaker 2 (03:38):
Yeah, so thank you.
Speaker 3 (03:41):
Basically, what happens now is that when we think about.
Speaker 2 (03:44):
What titles do you want to watch? Right?
Speaker 3 (03:47):
We used to do that overnight and you'd show up
and we'd give you those titles, right. But now the
way that we do it essentially is as you're navigating
the UI, we think about, oh, what are signals that
you're giving.
Speaker 1 (03:58):
I skipped over this thing really quick. I'm not interested
in that, right.
Speaker 2 (04:01):
Right, that's right. So I think that's something that's going
to take us.
Speaker 3 (04:04):
I think a while to really build the fullness of
how that delivers, you know, benefit for our users. But
the thing that I can point to right now that
the new UI structure is just designed to go do
and is doing for us, is serving new content needs
as we expand beyond just film and series.
Speaker 2 (04:18):
We spanned a live events and.
Speaker 3 (04:20):
The UI has to do a different job, which is like,
why do you want to show up at Thursday at
seven pm? Because oh you're going to watch a you know,
a boxing match that you know you would not otherwise
get to see, Or why do you want to play
a game or those kind of things. That's that's what
it's That's what it's doing for us right now.
Speaker 1 (04:34):
Right when it comes to to live that was something
that you sort of famously said you weren't going to
do sports for a while. And I know it's not
just sports, you also do other live events, but the
sports have been the biggest. Right Your NFL game was
really big. Boxing match was huge, or both boxing matches,
(04:54):
the logan or the the Jake Paul one will decide
if it's really a boxing match.
Speaker 2 (05:00):
Sure, very good offer you. Well, I'll refrain, how much more.
Speaker 1 (05:05):
Are you going to invest in live events over the
next few years and are there things that you know
that you want to add to the service that you
don't have right now.
Speaker 3 (05:14):
So it's a start with you know live, we think
of as an important additional form of entertainment that we
can deliver members. It's sort of a different style of
entertainment you know where. Actually it's interesting because in contrast
to our on demand service, which has tremendous benefit because
you control the entertainment when you want to watch it,
the big benefit alive is that we're all experiencing the
same thing at the same time, and that has tremendous
(05:36):
sort of social and conversational relevance. Right, So we want
to do more of it. It represents a very small
fraction of our total investment, It represents a small fraction
of our total hours, but we think it also does
a different job, so it sort of.
Speaker 1 (05:50):
Comes does it have a different impact, Like do you
see because from the third party data I've seen, you
tend to see huge surges and sign ups around some
of those bigger events.
Speaker 3 (05:59):
Yeah, I think we expected it will do the same
work ultimately that our other content does, which basically is
a reason to sign up and a reason to stay.
Speaker 2 (06:10):
That's you know, at the end of the day.
Speaker 3 (06:12):
Now, I think we back to your point about like
what do we know we want to get and stuff
like that. We're still really learning in the space, so
we're really trying to figure out, like, okay, what, how
is this delivering value to members? How is this delivering
value to the business. And there's definitely a different phenomena
where these are punctuated.
Speaker 2 (06:26):
Moments to your point, right, which you.
Speaker 3 (06:27):
Know, people go like, Okay, if I'm maybe on the
edge of signing up for Netflix, this might be the
thing that pushes me over, you know, to actually do that.
So I think we'll see different things for sure, but
we really are learning.
Speaker 2 (06:36):
As we go.
Speaker 1 (06:37):
I want to throw one poll to the audience before
we ask the next question, because they are related. If
we get it up there, I will ask. So I
just want to I promise Greg I would do this.
Keep in mind how much these sports cost. Football is
the most expensive, Tennis is the least expensive. Everything else
(06:58):
sort of.
Speaker 2 (06:58):
Fits in between there.
Speaker 1 (06:59):
So even though Greg and I both like tennis, probably
smallest audience but also least.
Speaker 2 (07:03):
Expensive international audience, what.
Speaker 1 (07:08):
Would you say the odds that you make a bid
for one of the football packages when the NFL ops
out of its current deal in twenty nine, or.
Speaker 3 (07:15):
Doesn't it you know, it doesn't really fit with our
strategy as we understand it right now. So again back
to your point, we think about what we're doing as
an event's strategy, and it turns out, as you said,
sports are big events, right, and so we can plug
those into that strategy. But we also want to make
sure that we're being really really disciplined about you know,
are we buying, are we investing in ways that are
(07:35):
profitable for the business and some of the big league
sports things.
Speaker 2 (07:40):
We don't actually have a way to figure out that math.
Speaker 1 (07:43):
So okay, all right, although it doesn't I mean, isn't
the sort of the magic of football. I get that
the NFL is maybe tricky for you, and that it's
not global and how expensive it is. But the reason
it's so successful it's the one sport where like every
Sunday sort of is an event.
Speaker 3 (07:59):
It's amazing regard, right, But I think to some degree
that lack of substitutability is of course what gives the
rights holders the leverage.
Speaker 2 (08:06):
And it's done a pretty good job at Yeah, I
know you have.
Speaker 1 (08:11):
I can tell that you guys have this vision of
where like you have more leverage than the sports leagues
that are negotiation and that has basically never happened in media.
Speaker 3 (08:18):
That's right, until it happens, I would say you should
have some skepticism about that.
Speaker 2 (08:23):
Okay.
Speaker 1 (08:25):
One other thing that you guys have basically never done
is large scale em a day. But the bigger you get,
the more you tend to get tied to different companies,
different deals. There's been some reports around you guys being
interested in Warner Brothers Discovery. Is there any truth to that?
Speaker 3 (08:40):
I would say this, you know, we come from a
deep perriage of being builders rather than buyers. I also
think that it's you know, one should have a reasonal
amount of skepticism.
Speaker 2 (08:51):
Around big media mergers.
Speaker 3 (08:53):
They don't have an amazing track record over you know,
the history of time, so you know, I would say
it's our also, it's our responsibility to evaluate all our
options and.
Speaker 1 (09:03):
Try so you'll look, you'll have a conversation, but the
odds of an offer are pretty low.
Speaker 2 (09:08):
Yeah.
Speaker 3 (09:08):
Our job is to figure out, like what's the best
way to grow our business? Right, and we have to
think you know, really carefully, like how do we invest
our capital, our time, and our attention and if that's
the best way to do it, great, and if it's not,
then we should do something else.
Speaker 1 (09:22):
What area you're investing a lot of capital right now?
Or you might quibble with a lot, but it is
gaming small fraction of our total investment. But yeah, I
appreciate you saying that you've been offering video games for
four years? What would you what grade would little over three?
Little over three? Sorry? What grade would you give your
gaming efforts so far?
Speaker 2 (09:42):
I'll give us a B minus? How's that?
Speaker 1 (09:43):
Okay?
Speaker 2 (09:44):
Yeah?
Speaker 3 (09:44):
I would say, look, you want maybe just to start
where we're at right one. You know, it's a big
market you one hundred and forty billion dollars X China
X Russia. That doesn't that's just consumer spend that has
include ads. So we think it's a real opportunity for
us to try and earn a percentage of that over
a period of time. A lot of what we've been
doing is really just building the foundation, right We've been
(10:05):
doing a lot of like you know, real hard plumbing work.
But now we're getting to a really interesting place where
you know, we're going to deliver more of what our
vision of what we.
Speaker 2 (10:14):
Should be doing in the space is.
Speaker 3 (10:16):
And we call it games because that's a you know,
a rubric or you know, a name that we all
can relate to. But really I would look at this
as how do we add more interactive capability? So that
means even things like taking our live program back to
the live program and how to add interactivity with live.
So we've got voting right now that we're in testing
on with David Chang and his live clicking show. You'll
see that interact those interactive features come up with star Search,
(10:38):
we do a lot another live event and non sports
live event of star Search.
Speaker 2 (10:41):
So that's an exciting place to be. And then it
gets also.
Speaker 3 (10:46):
Yeah, so you can see this is sort of how
the Dave Chang experience is working. And you know, again
this is you know, the tip of the iceberg, and
we'll get deeper into this as we go. We're also
I think more clear around what are the gaming areas
back to the true you know, the more or traditional
gaming areas that we are operating in. You know, it's
a lot of interactive games around our IP. So you
think about what you did with skid squid game. I
(11:08):
don't know if you saw Throng. Let's based on the
Black Mirror universe, but it's worth checking out because if
you're a Black Mirror fan, it's so in universe, it's
and the fans of Black Mirror just loved it because
it was like they were having a meta experience there too.
But even like Happy Gilmore, we did a golf game
with Happy at Gilmore that got a remarkable amount of consumption.
Speaker 1 (11:26):
So do most of the people who use Netflix know
you offer games?
Speaker 3 (11:30):
I would say, And that's part of frankly, what's been
hard about this, And I think it's it's hard for
any brand that has a deep, you know, consumer sense
of what are you doing for me?
Speaker 2 (11:42):
Right? And then you're like, well, I'm going to do
this as well, and you have.
Speaker 3 (11:46):
It takes a while to really build up that sense
of what's happening. But it's not it's not that dissimilar
to let's say we launched, you know, in a new country,
like you know, you went to Japan, right, So when
we started in Japan, two percent of the Japanese population
it ever heard of Netflix, So nobody knew what nobody
would nobody eve knew our name much.
Speaker 2 (12:06):
Let's be able to tell you what we were doing.
And we're doing pay TV.
Speaker 3 (12:08):
Service in a country that doesn't really have a great
PayTV you know operation we're doing over the internet in
a way, it was totally new, and so you've got
to every day build a little bit of like what
are we doing, who we are, what are we you know,
how are we here to serve you? So that ten
year journey, let's say, you know, just did the tenth
universary in Japan. You know, tremendous progress over ten years,
but it took us a long time. And I think
you know, the gaming situation is not dissimilar to that.
Speaker 1 (12:31):
How much is it an impediment that for the most
part now you can only play it on your on
your phone.
Speaker 3 (12:37):
Well, I would say, you know, the phone is what's
great about it is it's a well developed gaming ecosystem,
right so you know, folks notifying games there. But it's
also a highly competitive gaming ecosystem, so it's developed. This
gives you both that upside and the downside. But what's
exciting is that now we are moving beyond the phone
(12:57):
to the TV. So I mentioned like one of the
gaming areas we're going after. One of the big gaming
areas we're going after now is you know, social gaming experiences.
Speaker 2 (13:06):
It will show up on your TV.
Speaker 3 (13:07):
So we are now announcing we're announced here actually that
we're going to have these social party games, a pack
of social party games that you can play on your
TV with your phone as the controller. And it's things
like you know, recognizable games like Boggle. You got Pictionary,
We've got a Lego party game, We've got Tetris, We've
got like a Mafia style Who've done it? This is
(13:28):
This is me and our CTO Elizabeth playing Boggle here,
which is it's we're two very competitive people, so it
got it got pretty ugly.
Speaker 2 (13:38):
Who I'm not going to say that means he lost.
Speaker 3 (13:42):
Oh does it when she watched a video my friend,
you triggered my competitors. But this is again, this is
you know, so it's your phone, which is an incredible device,
and there's all sorts of things you're going to be
able to do on your phone that you.
Speaker 2 (13:56):
Can't do on a normal controller, like touch screen.
Speaker 3 (13:59):
And this is USA basically picking our words on that,
and it's you know, it's dead simple to use, it's intuitive.
And then this is you know, us on the earliest
days of how we actually can use that and if
we you know, basically are going to like unleash this
with a bunch of creators and they're going to go
figure out stuff that we didn't even imagine that they
can do with that interactivity.
Speaker 1 (14:20):
Got so you made to comment earlier about how it's
never been more competitive in media. How worried are you
about competition from the second richest person in the world.
Speaker 3 (14:34):
Well, I guess I'm not sure that that's exactly who's
competing with us, And that's maybe a good question. Well, look,
I mean start with like, it's fun to have some
new vigor in the competitive ecosystem and the dynamic there.
Speaker 2 (14:48):
I think it's exciting.
Speaker 3 (14:49):
It sort of you know, keeps everybody on their toes
and we're trying to figure out everyone like sort of
figure ouare what.
Speaker 2 (14:53):
Does that mean and what does it do?
Speaker 3 (14:54):
I also think you have to go back to like
doesn't change the business fundamentals, right, you know, you still
have a bunch of problems to go solve and a
business to grow, and so we'll.
Speaker 2 (15:03):
See what happens.
Speaker 1 (15:04):
So you bid against them for UFC, they come way
over the top, that doesn't worry, that doesn't send the
signal that maybe they'll be able to spend somewhat irrationally for.
Speaker 3 (15:13):
Loucause we are constantly dealing with situation where our competitors
outbid us. And what I try and remember our team
is we should bid up to the point where we
think it's going to deliver value back to business. And
if somebody outbids us, I say you should applaud and
say go with God and try and monetize the heck
out of that.
Speaker 1 (15:30):
Is it fair to say that YouTube is the stiffest
competition or at least for attention.
Speaker 2 (15:35):
Sorry saying YouTube? Oh, YouTube, Yeah, for sure, they're a competitor,
of course.
Speaker 1 (15:38):
Yeah, would you say that the toughest for you?
Speaker 2 (15:41):
I mean, they're a formidable competitor, for sure.
Speaker 3 (15:44):
I mean, and I think because of some degree they
compete in a different access you know. I think it's
you know, our thought on competition is always the hardest
competition to deal with because they you know, it's hard
to measure how you're doing things. They have angles against
you that you might not you know, be familiar with.
And so I think we're developing an understand ending of
like what's our place in the ecosystem relative to them
that we basically shore that up. We want to be
(16:06):
the place where we invest ahead with.
Speaker 1 (16:09):
What is that like. Do you look at that and
say we need to do UGC? Do you look at
that and say we should skim off their biggest talent.
Speaker 3 (16:15):
I think the dumbest move would be to try and
match them in every way, because I think you have
to really know what lane you're operating in and then
you try and be excellent at that and then defend
that lane.
Speaker 2 (16:25):
And so you know what do we do? We invest
ahead with creators.
Speaker 3 (16:28):
So that they can tell their stories in really really
compelling ways, in a way that the YouTube model doesn't
really allow them to go do. So we want to
work with the best creators in the planet. Some of
those folks are going to come from YouTube, they're going
to come from TikTok, They're going to come from traditional
places all over the place. We want to be the
place that they want to go when they're ready to
tell that story at that level. And then our job
is to find the biggest global audience for them and
make that really you know, a strong reinforced loop.
Speaker 1 (16:51):
Yeah, I was talking with your old friend Robert earlier,
and he made a parallel of sorts that I think
other people have done between two of the dawn of
UGC and where we're at with AI entertainment right now.
A lot of people over the last week in Hollywood
very alarmed about Sora, new product from Open Ai Netflix.
(17:12):
It seems like has been slightly less reactionary than some
of its peers, if I'm being fair. You guys have
talked openly about using AI at least one project, So
why disclose that? And how are you using AI in
terms of the creative process, not tech product, any of that.
Speaker 3 (17:30):
So I think a better parallel, in my mind is
actually the Internet rather than u GC. Sure, So that's
how I think about it generally. Maybe just to start with,
we've been in the AI business for people that haven't
tracked for two decades, and so we think of that
heritage our tech DNA, large sets of data, scaled consumer products,
(17:51):
scaled business processes, including on the content production side, as
being the reason that we actually have an advantage to
lean into how we use these technologies. We want to
do so in a disciplined way, though, because I think
you can you can throw a lot of stuff around
that's not really going to matter, and we want to
figure out where the places that that deliver value to
the business. Consumer experience is one, Advertising is another big one.
(18:13):
You mentioned content production. We feel like our job is
to give our creators a suite of tools that we've
vetted in our work together orchestraight together. Well, they can
use other tools to them. That's up to them to
figure out what they want to go do. But you know,
we see a lot happening in previews and shot planning,
you know, and scheduling and perform a budgeting.
Speaker 2 (18:31):
And all that stuff.
Speaker 3 (18:32):
We see a lot happen in the you know, sort
of post side of things, the VFX, and you know.
Speaker 2 (18:36):
You mentioned examples that we've used before.
Speaker 3 (18:37):
That's a pretty good example where we've been able to
do shots that we wouldn't able to do in other ways.
And so we see that, you know, continue to proliferate,
and you know, we'll let the creators lead the way
in that process, but I think our job is to
is to assist them in that rather than you know,
hold back.
Speaker 1 (18:52):
So do you I'm curious because some of your peers
in Hollywood have sued some of the AI companies. Do
you feel confident that an open AI I, a Google,
a Meta or some of the smaller ones like the
Journey have violated copyrights to you guys own Well.
Speaker 3 (19:05):
I mean, I think we're in this process where you're
going to see a lot of you know, people trying stuff.
But I would say we have a very strong position
that you know, IP should be protected.
Speaker 2 (19:16):
You know, we believe in supporting creators.
Speaker 3 (19:17):
They should tell amazing stories with us, with other people,
and they're that output should be protected. And so we
believe strongly that tool creators, some of the folks that
you mentioned, and also consumers. We have sort of a
legal standard around this, whether it's coming from an AI
model or from another human creator, like if you copy
you know without AI. You know, we've got a legal
standard around that, and we shouldn't force those standards and
(19:39):
be strong about that.
Speaker 1 (19:40):
Another area where some of your peers have gotten into
conflict that you have thus far avoided, although it flared
up a bit recently, is in politics at a moment
where you have a president who kind of has gone
after a lot of elite institutions, probably has treated nasty
things about your company at one point or another. How
do you think about you do you have to do
(20:02):
anything to proactively defend yourself.
Speaker 3 (20:05):
I think we try to stay focused on serving members
and serving the business as being our overarching organizing principle,
and it comes to, you know, some of the things
that trip you know, we've been pretty clear about our
position that we are in the business of entertaining the world.
That is our mission.
Speaker 1 (20:24):
But in entertaining the world, you are invariably going to
program certain things that a lot of people don't that
people don't like.
Speaker 3 (20:30):
Right, that we are doing our job well, and so
just to be clear, like we're trying to now program
for a number of human beings on the planet that's
approaching a billion people, those people all do not think
the same. They have different views of what their entertainment
should be delivering to them. So if we are doing
our job right, we're working with a wide diversity of
creators and we're supporting their ability to tell you their
(20:52):
story and their own way. And that again, if we're
doing it right, there's something on the service where every
one of us as employees, where every one of our
members probably thinks is not great or they don't like
or maybe they think it's harmful and frankly, if we
don't have that, we're actually not doing our job correctly, right,
And so we've been pretty clear that that's the business
(21:12):
we're in and we're going to keep doing that.
Speaker 1 (21:15):
But you do every so often take stuff down when
governments still like it. We just haven't had it happen here.
Speaker 3 (21:19):
Would well to be very clear, we do not respond
to government pressure. When the government has legal claim that
there's we have to be you're legally obliged to respond to,
then we react to that, but we then actually post
that so that there's transparents around that. And again that's
like happened five times in the last year, right, So
(21:40):
it's not I mean, it's if you think about the
kind of content that we carry in the number of
places that we carry, we've generally been successful at having
a wide range of content up in every place that
we operate.
Speaker 1 (21:50):
Okay, we're going to run through a few things quickly
because I really have a minute plus left. Would you
have made more money from kpe up Demon Hunters if
you'd released it in theaters?
Speaker 2 (22:03):
I don't think so.
Speaker 3 (22:04):
At the end of the day, I mean, it's worked
incredibly well for us. I mean, if you cherry pick
it and I don't, I don't know. Maybe I don't know,
it doesn't really matter, but that doesn't that would not
be a reason to go.
Speaker 2 (22:14):
Change the strategy. So that's probably the more fundament question.
Speaker 1 (22:17):
You've got a bunch of merchant Halloween costumes and stuff.
Speaker 2 (22:20):
One more K pop question.
Speaker 1 (22:22):
Has anyone approached you about a theme park attraction tied to.
Speaker 2 (22:26):
Not that I'm aware of.
Speaker 3 (22:27):
I bet you it's happened, though, you know, and I mean,
and you know we were doing these in a.
Speaker 1 (22:31):
Very delicate way of saying it's happened, But I'm gonna
because I'm far enough removed from it, I'm not going
to touch.
Speaker 3 (22:37):
That I don't actually know, So I'm legitim me telling
you I don't actually know, but I wouldn't be surprised
of it asn't happened. But we've got these Netflix houses
that we're building now, which would be the kind of
places where we want to put those kind of experiences in.
Speaker 1 (22:48):
Will Netflix syndicate its programming to third parties within the
next three to five years.
Speaker 2 (22:53):
I doubt it.
Speaker 3 (22:54):
I don't just I don't think there's a lot of
value in it, and I'm not sure why we would
do it.
Speaker 1 (22:59):
Okay, last one, who's a better tennis player? You or
Bill Gates?
Speaker 2 (23:06):
You're really pretty fine. I think I'm a pretty good
test player.
Speaker 1 (23:10):
That is not an answer to the question, Greg, Thank
you very much, Thank you, m HM.