Back to All NewsGreg Peters Keynote: Deloitte and Enders Analysis Media & Telecoms 2024 and Beyond Conference
Greg Peters
co-CEO
Business
03 June 2024
GlobalUnited Kingdom (Great Britain)
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Many thanks, and good morning to you all. It's great to be here.
We live in a time of fierce competition - for time, attention and entertainment spend. In this competitive modern entertainment environment, consumer choice and control are the price of entry. And consumer control means streaming.
Streaming is what consumers want, and how our industry stays relevant - and growing - in the face of new forms of media.
And like cable and Pay TV, home video sales and rental before it, streaming creates new opportunities - for entertainment companies to reach bigger audiences, for more creators to have their voices heard, and for people to discover new stories.
Just look at the UK.
Our team here have been on quite the roll -
from Beckham, Heartstopper, Top Boy and The Crown in 2023 to
Fool Me Once, One Day, The Gentleman, Scoop and Baby Reindeer in 2024.
And we're only half way through the year!
These series and films are so diverse - and an amazing testament to the strength of British talent and storytelling.
But it's taken time to get here. And some big transitions. From DVD to streaming, US to global, and second run titles to originals. These were big bets that were hard for us to accomplish. They took significant time, effort and investment. We were far from brilliant when we started each of these initiatives, but we knew that we had to stick to it, learn, and improve (we're still improving, by the way) to succeed long term.
And that persistence has paid off. Since our global launch in 2016
We've invested heavily in our slate - with spending on Content up roughly 2.5X from nearly $7B in 2016 to $17B this year alone;
While also steadily increasing our operating margins - up more than 6X, from 4% to 25% over the same period; and
Growing our free cash flow - from negative $2B in 2016 to approximately $6B this year alone.
So what are the big lessons we learned over the last 10 years, and what does the future hold?
Our key learning - which I believe is now pretty widely accepted across the industry - is that success in streaming starts with engagement. It's the best proxy for consumer happiness.
And in a subscription business, when people watch more, they're more likely to stick around, more likely to recommend Netflix to their friends, and they place a higher value on the service.
Today, over 270M households across 190 countries use Netflix.
If you assume over 2 people per household - which is conservative - that number is well over half a billion people.
Lesson #2 is much more heavily debated. But we believe you need a huge breadth of great programming.
People often ask why we make so many shows and movies? Do we really need them all? All the evidence we have suggests the answer is yes . To satisfy our audience of over half a billion people, we need lots of great stories that appeal to lots of different tastes.
No entertainment company has ever programmed with this ambition before. It's why we continue to invest in our slate, even as competitors are pulling back.
And by great, I mean films and TV shows our members love. It's an audience-centric approach to quality. Because audiences today care as much about authenticity and originality as critical acclaim.
Now you may be thinking it's impossible to make so many movies, TV shows or games, and make them great.
And if one person was making every decision, that would be true. But we aren't relying on a single tastemaker!
All of this happens in small, tightly knit, creative groups led by executives with long track records and a huge passion for what they do - like Anne Mensah here in the UK.
It's their job to understand our audiences, and program for them. Data can help, but programming is an art, not science.
No algorithm could have told you that a series set in Wales from a first time showrunner featuring a therapist's son giving sex education lessons to his schoolmates would be a hit.
If it were as simple as more data or the best algorithms, we'd have no flops. But we do - because TV and film are quintessentially human endeavors, with all the success and failure that entails.
All Quiet on the Western Front, Top Boy and Sex Education were all beloved by audiences because a creative executive saw something that was bold and distinct.
And a title like Sex Education also shows the importance of investing in the next generation of storytellers.
Through our $100 million Fund for Creative Equity we partner with over 80 organizations in 35 countries including Cin Fabrique in France Academia del Cinema in Italy and the National Youth Theatre here in the UK. All to help support the next generation storytellers.
Now many of you may have worked in linear TV or theatrical, where the biggest challenge is getting people to tune in or turn up at a specific time.
With streaming, our members can watch whenever they want. They have so many choices, and lots of distractions, all just a tap or the press of a button away.
So our challenge is getting people to watch something that engages them, to press play and stay. So it has to be something that will delight them. Otherwise they will switch off. It's why we can't manufacture a hit just by putting movies and TV shows front and center on Netflix.
Which brings me to lesson #3 - discovery.
With so many films and series, we need to make it easy for people to discover the right title for them - something they can't wait to finish and share.
It's why our product and marketing are all designed to do one thing: help fans discover their next obsess
