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Netflix executives read financial statements: satisfaction with China's content authorization strategy

via:博客园     time:2018/4/17 17:43:47     readed:526


Tencent Tech News , Nasdaq : NFLX released Monday ' s first quarter of 2018 on Monday .

The following is the main content of the question and answer link of the telephone conference analyst:

Q: is it possible to talk about what the company is doing is different from two years ago because of the strong performance again this quarter? Your scale may expand significantly, especially when the market you are entering now may be quite different from the developed market that you have already secured.

Hastings: the similarity is far greater than the difference. We are still investing in content, marketing, products, and we have been investing all the time. The audience is obviously shifting to the Internet. We have a wide range of contents. Ted, you should talk about the local programs we make around the world, because American investors may not know much about it.

Sarados: we've worked with local producers around the world to launch a lot of original content. So far, we've been shooting original programs in 17 different countries and expect to continue to increase in the future.These content is specific to country or region, but in fact has been successful in the global scope.The new season, < 3="" percent="">, will be released this season, a Brazilian show that has been well received around the world.Although we filmed the show for Brazil in Portuguese, people are still looking forward to the new season.It may be the first TV series to be produced in a local language, but it is popular all over the world

Q: are you going to speed up the progress of the distribution model in the emerging markets and partners? What is the impact of this on financial data?

Peters: our cooperation strategy in various markets has been evolving. We first worked with TV manufacturers and CE manufacturers, which brought great additional value to their products and made us a great success. Let's cooperate with operators over the past few years, such as MVPD (multi-channel video distributor), ISP (Internet service provider) and mobile operators. According to the effect of the new bundling model we reached with Comcast and Sky last quarter, the effect of customer acquisition and retention is very good. We like to contact these new consumers through these cooperation, make it easier to find Netflix, then register and get our services, and then watch more content. So you will find that we are not only using this evolutionary strategy in the market that has already existed for many years, but we will continue to adjust our strategy in all markets.

Wells: from a financial and economic perspective, the international average selling price expectations we discussed in the letter may have begun to happen, which will affect our subscribers and net revenues. I think this will bring growth in the future. So far, besides the gift card, it has been growing at the level of Mao camp. In my opinion, from the technical point of view of GAAP accounting standards, we have always been in the main position, not the agency status. But for some transactions, if some conditions are met, we may take it into the net revenue level. But it has not been implemented yet. If it is increased, we will disclose it in the future.


Q: can you talk about more fierce competition in emerging markets, both at the retail level and the wholesale level? Do you think there is a mobile platform in a market like India that is more likely than paid TV? From the point of view of pricing and channel, do you consider entering the market in different ways. Greg, from the product level, how do you ensure that Netflix can flourish on the mobile platform?

Hastings: from the price point of view, we are very satisfied with the price of the 500 to 800 rupees in India. We are pricing different countries in different countries. So there's no short-term plan. Of course, we have been studying all the time.

Peters: we certainly want to touch more markets through the mobile experience, and get in touch with more people who want to build a relationship with Netflix by mobile devices. So we need to make sure that our application is lightweight enough that you can quickly load the content and get a first - class experience. We should also ensure that our decoder has a high efficiency, so that you can still get first-rate viewing experience through mobile phone when the network speed is not good enough. I think we can achieve high efficiency and allow you to watch quality - class videos in a very general network. We even hope to provide download function, so that when you can't go online, the network speed is not good, or if you want to save traffic for other services, you can also download programs in advance, and then watch offline. I think this is a good illustration of the fact that we are developing some differentiation functions for emerging markets, but at the same time, it is also in line with our global product mode, so that members from all over the world can benefit from it.

Q: what are your top product pipes that are worth looking forward to?

Peters: we are developing a lot of products, and we can give a few examples. One of them is a relatively new field, and we are going to develop a content support technology, so that we can improve the efficiency of the content production. It is clear that as the number is increasing, the more opportunities are available to affect the results through technology. We have great content, but when we have these high-quality content, we are thinking every day how to make users see the perfect content whenever they visit Netfxli. You should see more innovation in this area. How do we launch a new program? How do you get users from all over the world to access these programs, whatever language he uses, where is it? These are all very exciting.

Wells: look at the financial papers again. David, you've started working on this year's operating profit budget. Can you talk about the changes in the budget, or what changes have to be compared with the month?

Wells: our performance is far beyond expectation. So if you look at the over - expected performance of the last 3 quarters, you will find that the growth of the company is more than we expected. We can redeploy and invest these resources into some content, but it will take a while to marketing the content. But I think investors will benefit from the overall growth of the company. We can redeploy some of them, and business profit margins have increased. It's about 12%. There is a lot of content and marketing in the second half of this year, but it is also equivalent to recognizing the good growth of the business.

Question: is marketing in the second half of the year is only the question of the content time? Why is marketing especially large in the later period?

Wells: the main problem is the time of content. So there's such a big release. Ted should talk about the next third and fourth quarters.

Question: Ted, please talk about what the content area should pay attention to in the future. I'd like to hear what you think the news programs will have on the current business or the future strategy. You seem to have spent more time thinking about how to perform this kind of program.

Sarandos: we had a huge success in the long documentary.But we have been repeatedly misinterpreted into the field of journalism.Apart from our current work in short and long documentaries, we are not prepared to expand further.The exciting part of our season is that this quarter will launch a new season of < 13="" reasons].the="" first="" season="" became="" one="" of="" the="" most="" watched="" tv="" shows="" in="" the="" world="" last="" year,="" so="" we're="" happy.new="" season="">< lu="">

Q: there is news that Netflix is working with Obama on a program that might not be live news, maybe a current affairs review.I think David

Saran Doss: this kind of current event interview is mainly entertainment, which is also a form of entertainment. Letterman is a good talk show host, but not a news announcer. So we are sure to do more work in this area. But I will not comment on Obama or other details, as it is still in the process of negotiation.

Ask: ask the question of the film festival again. You were tough at the Cannes Film Festival. Can you talk about how this will be deductive? Do you think this will affect the ability of Netflix to attract talent, resources, movies, and content? After all, there are some adverse effects on the lack of movie - winning works.

Saran Doss: we have already mentioned the question of Cannes in our letter. We released 33 films at the cinema last year. I think this is becoming more and more acceptable and a part of the distribution code. According to what room you see in the room to define the distribution is not the business we want to enter, we want to make good movies for users.

Q: don't you want to expand the scope of the issue so that your talents will be able to win awards that may be important to them?

Saran Doss: don't forget that we got 5 nominations at Oscar last year.

Ask: ask David again. I think it spent about $250 million in cash in the first quarter. You are also expected to reach $3 billion to $4 billion. Do you still think it's this interval? Can you drop it in the lower limit?

Wells: of course. I think this is related to the later burden of the content mentioned. Compared to the first quarter, cash is relatively moderate, but we expect the second half of our task to be heavier, still from 3 billion to $3 billion 500 million to $4 billion.

Q: can you talk about your views on the opportunity for China? I know that you have partners there, but the market is developing rapidly, which is a dynamic market. Have you ever thought of adjusting strategy in China?

Hastings: you mean IT is open now. Should we enter later? No, we are satisfied with the authorisation of programs like HBO in China. This is our strategy.

Ask: come back to the American market. For example, the OTT model is already very prosperous, and there are 5000 channels on the Roku platform. OTT is not something new, and the Internet is not new. How many OTT services or television services do you think the consumer will have to make the business mature? Do you think this becomes a fully distributed Internet TV network in the long run? Just like a pay TV model? Or do you think fragmentation and diversification will lead to a more fragmented market?

Hastings: the good news is that it's much easier to develop a TV network through its applications. For example, all applications or most applications on your mobile phone will provide some kind of video. So you'll see a wide range of entertainment options, including movies and TV programs, and some interactive elements. All the developments on these phones will spread to the TV of the Roku system. So I think it's a long tail. Of course, we also want to be an application that almost everyone can put on the main screen, including mobile phones and TV sets. But if you look at the cell phone ecosystem, it will find it very rich, and we'll see TV closer to it.

Question: in the long run, what impact does this have on the interaction? When television started, there were 3 prepaid broadcasting networks, which began to fragmented in the next forty or fifty years. Does the Netflix in 2017 don't look like the NBC or CBS in 1950, that is, when the market hasn't begun to evolve yet? Do you think the interaction will continue to grow and start to integrate around big businesses?

Hastings: it all depends on us and execution. Yes, there are many competitors, especially in the world, some of which focus on a particular culture. And some like Sky cross a lot of different cultures. So consumers have a lot of options. Is our share of growth or decline actually depending on whether we make the first class content, and whether we can do the right marketing and service? If we do well, if we attract more time to consumers, we will continue to grow. If we are lazy and laziness, we will go to the wall like everyone else.

Q: what is the biggest challenge for the company in the future? Your share price has risen by 60% this year. How do you avoid complacency, how to keep your enthusiasm, and how to manage such a large scale of output?

Hastings: our viewing time is far less than YouTube, and it's far less than linear TV. We have a lot of momentum, we are very excited. To achieve all of our goals, there is a long way to go.

Sarandos: from the perspective of the size of the production and the content authorization around the world, the main thing is to choose the best people, to provide them with a good working environment, and then to trust them.

Q: you spend $1 billion 300 million on technology and R & D spending this year, how do you use this money to develop the best products for users around the world?

Peters: as I said before, we look at this problem from a globalized product perspective. We have tried to provide a solution to meet the unanimous needs of users around the world. But now we obviously care about these different user groups, and how the consumers in different markets react to our products, and begin to absorb functions such as download, and understand the specific needs of some markets. So we are actually looking at the opportunities around the world. You need to listen and understand the user, but the specific response should be extended.

Q: there are a lot of media reports on the issue of mergers and acquisitions, involving many aspects and assets. I know you can't comment on it, but Netflix seems to be more capable in the future than it used to be. Can you talk about your idea of M & A, and the reasonable way you think about the growth of the company?


Saran Doss: we have started using Umbrella Academy to make the first batch of content, and we have just introduced the first comic book. So from the point of getting the IP transaction, M & A is a very useful tool.

Question: can you talk about the authorized product market. Is supply dried up as Disney and other companies push their products to market? Do you have a different view on the content of the third party?

Saran Doss: we are very radical in the field of homemade play, which means that we are not so radical in content authorization. Not only the absolute amount, but also the percentage of our investment, we have invested more and more money in the homemade play. Such works can serve us, help us to expand our business and increase our viewing time, and also contribute to a set of ecosystems, avoiding the content we buy, meeting the needs, or achieving the necessary qualities. So we are more selective when we are bidding. So when we have high quality content, we will still empower a lot of this, and also authorize a lot of quality film and TV content around the world. We are expected to authorize and produce more original content, not in the two market.

Q: you have just renewed or ordered a new season of "Jessica"

Sarandos: the League of Defenders and <>

Q: Hulu is getting more and more aggressive to buy the content that has already been broadcast. What does it have to do with you? Do you pay attention to this kind of content? Or will it be avoided because of the obvious reasons?

Saran Doss: we also mixed some content. Although not much, but it does. I think this is closer to their business models. They focus on broadcasting companies, and then match some few original contents, but we mainly choose the opposite direction.

Q: you are continuing to promote local original content. You'll probably launch 30 of this this year. Can you tell me what you can get from there. Is it hard to find localised talent to make the content? In terms of efficiency, what do you think of the financial rewards of these programs?

Sarandos: the advantage is that we can use our technology to bring good stories from anywhere in the world to other places.And then use our ability to add subtitles and dubbing, and then become more and more adept at doing this quickly and accurately.

Hastings: we will also invest in the quality of the dubbing and subtitles. So investors can look at "The Rain", a Danish film that we are going to launch a few weeks later. Just look at the quality of the dubbing, because we have invested a lot of cost, and I hope we can see it all over the world.

Saran Doss: we don't compromise. We don't reduce the localization element to facilitate its transmission. These local stories are very localized, and the effects are good and then spread all over the world. So "Dark" did not reduce the German element, and The Rain did not reduce the Danish elements. The content of Brazil is also used in Portuguese, and all of the Brazil actors are used. These are not hard to find. There are many first-class content makers around the world. They have not been in contact with the global audience before, and we can easily find them.

Wells: we are planning a world that is becoming more and more globalized and closer. So, we can tell the story of the locals in the language other than English, but we can still catch the audience in other markets. Although this will increase costs in many ways, the cost is still low compared to the cost of television production in the US market or the high cost market. So, more localisation does not necessarily reduce the profit margin for Netflix. We have emphasized many times before, but I would like to emphasize again that we are very satisfied with the portability of some of the contents, because it really opened the new world, but did not sacrifice the profit rate.

Q: if local original content is popular locally, does it mean it is also very likely to be popular around the world?

Saran Doss: not necessarily. Some of the interesting things are because the localisation elements are too heavy, so the extent of external penetration is small. But on the whole, the content of big production is also very strong in other markets.

Q: what do you think of the increase in marketing and content spending?Because you're obviously more on the marketing budget this year.One of the words in your annual report is

Wells: about watching the density, I think it's equivalent to public participation, but it may be more accurate. Because you don't need 75% people to watch, but you want a group of 75% people to watch. That's the density. You're right, we do think more about marketing, and some of them are actually trying. Because we have made more things that nobody has heard before, so we need to carry out more promotions. It's not enough to rely on the website. So I think you will see the contents of marketing expenses compared with the increase in the proportion of expenditure. We don't know what the perfect proportion is, but we'll try. We will increase and reduce the budget according to the results.

Q: does this lead to a slowdown in content spending growth? Because if you invest in a lot of marketing budgets, there's only so much money to support a particular group of people. I think the scope of concern is limited.

Wells: in fact, the revenue growth rate has been higher than the content growth, so the operating profit rate has increased. I can't say for sure that marketing is faster than content, or that it is fast and marketing. This is not certain. But we will gradually grasp the right degree.

Hastings: we have made a major plan for the growth of content, and this will continue. We will continue to learn.

Q: you have more than 100 million members now, both in the international market and in the United States, the profits have been corrected. We have already talked about marketing. What do you think is the long-term profit margin after stability?

Wells: you mentioned our only chance in Asia. This overlooks the growth of Latin America and Europe. I can answer confidently on behalf of the team, and we don't think it is taken for granted. So, there are still a lot of opportunities and growth in our core market. We have been doing business in some markets for 5, 6, and 7 years, and we plan to aim at 10 to 11 years this year. We speed up to about 300 basis points. It is difficult to know the specific situation, which depends on the size of our 5 or 10 years. I think we are chasing big opportunities, and the larger the size of the enterprise, the higher the profit rate. We obviously didn't fall. As I said before, we will not be subject to international growth and a reduction in profit margins. It depends to a certain extent on the competition in the place, and on our scale, and I think our market has a great chance. So we're going to do it.

Q: how do you look at the average price on the growth? You have been able to make a price adjustment or a price rise before. Is it possible to look at the average price of the future in the past few years?

Hastings: it really depends on the service, and it depends on our service to other platforms. So we must first make the first class content that we all want to see. But if you do, you can get people to pay a little more, because we can invest in making more and better content. But we always pay more attention to whether people have watched more than whether they can raise prices.

Q: is it possible for you to reduce the loss of users? Or do you reach a retention rate that is difficult to make substantial changes?

Wells: it's hard.We've explained before that there's a lot of noise about who's here, who's staying, so our main concern is to attract paying users and make them willing to pay all the time.We set this apart to provide a richer review.In some more mature markets, we are very close to the gradual loss.I think we've made modest improvements, but we're already big, so even a 10 or 20 basis point increase makes sense.In relatively new markets, the key is to increase the rate of interaction, because we think there is a close relationship between the rate of interaction and the rate of loss, and although the marginal effect is diminishing, we are still very young in many new markets.So we'll focus on increasing retention by increasing interaction.

Q: what has happened to Netflix in the past few months, such as supervision, user data, privacy and other issues that have happened in the technology industry? Are you going to make any changes?

Hastings: I'm glad that our business is not supported by advertising, but by subscription fees. We are very different from the advertising - supported enterprises, and we have always attached great importance to protecting users' viewing records. We don't sell advertising. So, we basically do not influence by these problems. This is very good. In addition, we will spend $about 10000000000 on content and marketing, and we spend about $1 billion 300 million on science and technology. So, objectively speaking, we are more like media companies than pure technology companies. Of course, we want to do well in all two aspects, but we do have a big difference from the pure technology company.

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