00:00You write in your notes that it's all about advertising and live sports here.
00:04You take a look at what we learned at the top of the hour.
00:07How are you feeling on the progress that Netflix is making when it comes to that ad tier?
00:12I think it's picking up.
00:13I mean, I think the way to think about Netflix overall, for a long time,
00:17everyone looked at subscriber numbers and then they had the password sharing.
00:22It's just monetization.
00:24So no matter, they have many tools available to monetize.
00:28Advertising is by far the biggest one that's coming up.
00:32I continue to think it's just a huge backlog that they're tapping into because they've announced in the past
00:40half of the new subscribers are getting the ad-supported tier,
00:44but they are not selling ads and serving ads at a rate that matches up to that number of subscribers,
00:50but they will eventually.
00:51So it's only going to keep growing, and they're definitely making progress in doing that.
00:56Yeah, and we heard from the company that they still see 2026 advertising revenue on track to reach $3 billion.
01:03The estimate coming from our friends over at Bloomberg Intelligence,
01:07they see basically that reaching $10 billion by 2030.
01:13And Mark, you think about what we learned today.
01:14I mean, do you think that that sort of figure is realistic, $10 billion in four years or so?
01:20I think it's laughably small, honestly.
01:24I mean, the demand is there, both from the consumers who continue to subscribe to Netflix,
01:31and many of whom, half of the new ones who want the ad-supported tier.
01:36The demand is there from the advertisers.
01:38You have the SMB market coming into this picture, which Mount led with Performance TV.
01:44I honestly think the $10 billion is laughably small.
01:47It's going to be significantly bigger than that.
01:50And by the way, it is so profitable for them.
01:54So the EBITDA will grow much faster in their revenue in that business.
01:58Well, I am curious, too.
01:59Like when we talk about the ad build-out of the ad business, what's the balance, though, Mark?
02:05Mark, I know there's sort of this sense here that as they roll out these ads, customers aren't going to
02:09mind.
02:09The ones that want to pay for the higher tiers will pay for it.
02:12The ones that don't will trade down here.
02:13But is there any sort of risk, if you will, that they might go too far with the ads?
02:18I mean, because I can just tell you from personal experience,
02:20there are at least one other streaming service that I think went too far, certainly in our household.
02:25Yeah.
02:26So, well, I think most services, you know, tread lightly there in terms of you're referring to ad load
02:32and finding the balance between, you know, kind of consumers accepting the advertising
02:38and even in some cases liking it and just kind of pushing on revenue.
02:44Netflix is, you know, I think arguably the strongest player here.
02:49Disney is the only other company that really challenged them.
02:52Maybe the combination of Warner Brothers and Paramount over time.
02:56And so with that position, they don't have to push on the ad load in order to drive revenue.
03:02They can do it comfortably.
03:03But just given the number of subscribers and also the number of subscribers worldwide,
03:08the demand from every size business to access Netflix and also things like AI creative,
03:15so the ads are more tailored to the consumer that's going to see them.
03:18I think that it's not going to be a problem.
03:22People are willing to consider an ad or form of entertainment with one simple caveat,
03:27actually make it entertaining.
03:28That's all you have to do.
03:30And so as more businesses do that because the cost of creative is lower,
03:34the amount of customization you can do is easier,
03:38I don't think they're going to, you know, cross in the realm of just like too much advertising.
03:43And I don't think they think that way at all.
03:45Yeah. So, Mark, I want to get your thoughts on the technology side of things,
03:49particularly given, you know, the work that you've done at Mountain and kind of the melding of,
03:53I guess, content with the underpinnings of technology,
03:57which now has not only become the underpinnings, but might be front and center.
04:01And we were talking about this just a little few minutes ago with Jeff Goldstein over at Alex Partners,
04:06this idea that it's really the technology that might actually drive,
04:10not just for Netflix, but a lot of these content companies going forward.
04:12And I am curious, A, how you rate what they built there in terms of the technology platform
04:18and how, if at all, that might become the bigger driver,
04:22both in terms of driving more viewers to the platform and also, of course, building out the ad platform.
04:27Well, I think when you look at, it's an interesting question,
04:30because when you look at like Reed Hastings resigning from the board,
04:35which I think obviously is not a negative on Netflix,
04:38Reed Hastings created a tech company and the technology was to stream,
04:44you know, originally deliver eight DVDs, but then stream shows into the home.
04:50And Ted Sarandas, I think, is, you know, has done a great job at leading the company,
04:55but he's leading a media company.
04:58And so I think what's really critical is that those technology roots not leave with Reed,
05:03that they remain in the company, those roots are in Silicon Valley,
05:08you know, where I believe it's still global headquarters of Netflix.
05:13And so that's really, really important.
05:15They have to continue to be a tech company that provides technology for entertainment.
05:22If they do that successfully, then I think that's going to be a really, you know,
05:27valuable, important part of the continued growth of Netflix.
05:29Thanks.
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