SEC EDGAR Filing·18 OCT 2023
How Netflix Turned Content Spending Into a Flywheel
If you want to justify a massive cost center, show how it drives margin expansion at the same time — then the spending becomes the strategy.
Source document — Netflix Q3 2023 Shareholder Letter · SEC EDGAR · EX-99.1 · NETFLIX INC · EX-99.1 · filed 2023-10-18 · Accession 0001065280-23-000272
Excerpt · In Ted Sarandos & Greg Peters & Spence Neumann & Spencer Wang's own words
We're optimistic about our prospects and the future of entertainment. Over the last year, there's been an intense debate about streaming's impact on the creative community. Like all new technology including TV, home video, and DVD, the internet has driven a lot of change in our industry, while also opening up significant new opportunities. Increased convenience, choice and control for consumers has expanded audiences and created additional value for older titles, with series like Breaking Bad, Arrested Development and Ballers generating huge viewing and new revenue. It's given many more creators the chance to have their voices heard, whether in front of or behind the camera. But most important of all, streaming has helped ensure that film and TV remain relevant for the next generation. Since 2016, when we launched our service globally, we've been able to invest heavily in our slate (with content amortization up ~3X from $5B to ~$14.5B a year) while steadily increasing Netflix's operating margin (up 5X, from 4% to 20%) and improving our free cash flow from -$1.7B to about ~$6.5B this year. As a result, we're able to grow our content investment — almost all of which goes directly to the creative community. We want to sustain that virtuous cycle because when we partner with the best creators, we can delight our members, invest more in amazing TV series, movies and games and build an even more valuable business.
The daily letter · Free
This edition is for members — but the daily letter is free.
One real corporate email, and the lesson it teaches, in your inbox every weekday morning. Free. Unsubscribe in one click.
How this surfaced
- Source type
- SEC EDGAR Filing
- Case / record
- SEC EDGAR · EX-99.1
- Citation
- NETFLIX INC · EX-99.1 · filed 2023-10-18 · Accession 0001065280-23-000272
- Date authored
- October 18, 2023
- License
- Public domain
- Original
- View the primary source →
More from Ted Sarandos
Reed Hastings & Netflix Leadership ·Netflix ·16 JUL 2020
Promote The Partner Who Already Runs Half The Company
Formalizing power someone already has is cheaper than losing them — and clearer for everyone watching.
Peter Stern & Matt Fischer & Philip Schiller & Carson Oliver & Adrian Ong ·Apple Inc. / Match Group ·28 JAN 2019
How to Negotiate When You're the Whale but Not the Favorite
When you're a top customer paying a rack-rate meant for someone else, quantify the mismatch and name the comparable — don't complain, benchmark.
Sam Altman ·OpenAI ·31 AUG 2018
Structure Your Cap Table Around Your Mission, Not the Reverse
If your mission truly comes first, your legal structure has to prove it — even to yourself.
Ilya Sutskever ·OpenAI ·13 SEP 2017
How to Split Control When Everyone Brings Something Different
In a founding negotiation, spelling out who decides what — in writing — is more valuable than any equity number.