Netflix Inc (NFLX) — Q4 2025 Earnings Call Transcript

Good afternoon, and welcome to the Netflix, Inc. Q4 2025 earnings interview. I'm Spencer Wong, VP of finance and capital markets. Joining me today are co-CEOs, Theodore Sarandos and Gregory Peters, and CFO, Spencer Neumann. As a reminder, we'll be making forward-looking statements, and actual results may vary. We'll now take questions submitted by the analyst community, and we'll begin first with questions about our results and forecast. The first question comes from Robert Fishman of MoffettNathanson. Who asks, 'The Wall Street Journal report last year discussed an internal memo with long-term goals to double revenue and triple profits. Without commenting on those specific targets, about nine months later, is there anything you have seen in the core business to reevaluate the speed of growth over the next few years, and can you clarify if those targets included any M&A?'

Sure. We find it useful to talk internally about our long-term aspirations, which, as we said at the time that this was reported last year, aren't the same as a forecast. However, having said that, those goals were based on organic progress. They did not contemplate or assume any M&A because we didn't have any M&A on the horizon at the time. Over the last nine months, we've seen continued growth. We are now forecasting healthier growth for the upcoming year—organic growth. Of course, there's a lot of hard work ahead to fully realize those opportunities both short term and long term. But based on the progress that we've made so far and expect to make, and our continuing assessment of the opportunity, we still feel good about those targets. Putting maybe a little bit more meat on that bone, in 2025, we met or exceeded all of our financial objectives, achieving solid progress on our key priorities. We delivered 16% revenue growth and roughly 30% operating profit growth, expanding margins and growing key free cash flow, especially in Ad sales, which grew two and a half times in 2025. We expect that business to roughly double again in 2026 to about $3 billion. So we're making good progress, and the opportunity ahead of us is massive. We are still under 10% of TV time in all major markets where we compete, with hundreds of millions of households around the world still to sign up. We're just about 7% of the addressable market in terms of consumer and ad spend. So there’s a lot of room ahead of us. Anything you want to add there?

I would just say that looking ahead to 2026, we're focused on improving the core business. We do that by increasing the variety and quality of our series and films, enhancing the product experience, and growing and strengthening our ad business. We're also building out some newer initiatives, like live events outside of the US, including the World Baseball Classic in Japan that launches in March. We're expanding into more content categories like video podcasts, which just kicked off this week. We're continuing to scale our cloud-first game strategy. We're working really hard to close the acquisition of Warner Brothers Studios and HBO, which we see as a strategic accelerant. And we're doing all this while driving and sustaining healthy growth. We forecast 2026 revenue at $51 billion, an increase of 14% year on year. It’s an exciting time—there's a lot of innovation and competition. But that's also been true for us for twenty-five years. Netflix, Inc. embraces change and thrives on competition because it pushes us to keep improving the service even faster for our members. Years ago, when we moved from DVD by mail to streaming, we were in a heated battle with Walmart for that DVD business. So we’re no strangers to competition, and we’re no strangers to change. Through that change and competition, we've grown into an entertainment company that is thrilling an audience that is now approaching nearly 1 billion people, producing series and films around the world with hits that resonate with local and global audiences.

Thank you, Ted. To circle back to Greg's point quickly, we’re very excited about the business and the organic opportunities ahead. We see that in our performance, and we’re as energized as ever to achieve our mission to entertain the world. Thanks, Ted. Our next question is about our outlook. It comes from Steve Cahall of Wells Fargo. The content amortization growth forecast of 10% in your earnings letter implies a bit of an acceleration from 2025. Can you provide some context as to where you’re pushing for the most incremental investment, e.g., events, reality series, films, licensed content, etcetera?

Yeah. Look. I think the cadence of our releasing is really strong. We have a very strong push out in the first half of this year already, with some great hits right out of the gate. So do you want to talk to that, Spence?

Yeah. I mean, I would say just generally, we've got a strong lineup throughout the year. But, yeah, Steve, as you noted, in 2025, our slate was heavily back-half weighted, and we expect more typical seasonality this year. So still a bit heavier in the back half of ‘26 than the front half. In particular, Q4, the fourth quarter is always generally the most packed for us in any given year, but overall, a smoother slate and smoother timing this year relative to ‘25. So as a result, you should see higher year-over-year content expense growth in ‘26 growing off of that smaller base that we had in the first half of last year. But for the full year, as you see in our letter, content amortization is estimated to increase roughly 10% year over year. Our content cash to expense ratio should hold steady at about the 1.1x ratio that we've managed over the last few years. So there's no change in our approach. We aim to grow content spend slower than revenue so that it can contribute to our margin expansion while strengthening and expanding that entertainment offering, as you heard from Greg and Ted, across not just our core film and series, but also expanding into more content formats.

Yeah. Let me tell you what that weighting looks like to the members as well. In the first half of this year, we said we’d come out of the gate with some great hits. 'People We Meet on Vacation', 'The Rip', 'His and Hers', and a New Year's Eve release of 'Stranger Things' finale is still performing extraordinarily well. We’ve got 'Bridgerton' season four coming up later this month and next month. So you see that we’re really excited about the 2026 slate—both H1 and H2. We've already mentioned the return of 'Bridgerton', but we also have the return of 'One Piece' season two, third season of 'The Night Agent', second season of 'Beef', 'A Hundred Years of Solitude' from Colombia back for a second season, 'Avatar: Last Airbender', and Emmy and Golden Globe nominations for 'Diplomat' season four back again for a new season. We've also got 'Tires' season three and the series finale of 'Outer Banks'. That’s the returning stuff. For new things, we’re really excited about 'Something Very Bad in the Burrows', both new series from the Duffer Brothers following up 'Stranger Things', 'Pride and Prejudice' from the UK, 'Man on Fire', and 'Can This Love Be Translated?' just launched from Korea, which looks like it’s going to be another really nice hit for K-drama lovers. I mentioned some of our early films like 'People We Meet on Vacation', 'The Rip', featuring Ben Affleck and Matt Damon, which is already off to a great start. We’re still looking forward to 'Peaky Blinders', 'Immortal Man' featuring Cillian Murphy, 'Narnia' from Greta Gerwig, and 'Apex' with Charlize Theron. We have Denzel Washington and Robert Pattinson in a great heist caper, 'Here Comes the Flood', along with a bunch of surprises upcoming too for 2026.

Thanks, Ted. Thanks, Spence. That's a good segue into our next question on the outlook from John Blackledge of TD Cowen. For your 2026 guidance, can you walk through the key drivers of the top-line revenue range, which was above consensus at the midpoint? And for the operating margin guidance of 31.5%, can you talk about the puts and takes to that guidance, and any other color would be great.

Yeah. Sure, John. I'll take this one. We've got a strong growth outlook. As you heard from Greg and Ted, we feel great about the organic growth outlook. I hope you see that on our top and bottom line guide. On the revenue side, for 2026, key drivers are similar to ‘25. Membership growth, pricing, and a rough doubling of our ad revenue in 2026 to about $3 billion. So you can expect a bit more relative contribution from ads as we scale that business. We feel great about that and about our operating profit growth and margin growth too. For 2026, we're targeting 31.5% operating margins, which is up two points. So there’s no change to our approach there. We set margin targets. To think about the puts and takes, we’re always balancing the investment into our core business to drive sustained revenue growth with spend discipline. We aim to grow our margins each year, and that rate of year-over-year growth bounces around a bit based on investment opportunities and other considerations in a given year. If you look back over the last handful of years, we’ve expanded our operating margins about two percentage points annually on average. This guide at two percentage points includes about a half percentage point drag from the anticipated M&A expenses referenced in the letter. So if you exclude that, we're guiding to about two and a half points of margin expansion, which aligns with what we've been delivering. This year in particular, again, getting back to the puts and takes, we're seeing a number of attractive investment opportunities to strengthen and expand our entertainment offering and capabilities.

So we are increasing our expense growth a bit this year. A bit higher pace of growth relative to last year to invest into those opportunities, all while continuing to expand our margins and deliver strong dollar and profit growth. I don’t know. Maybe, Greg, Ted, don’t know if you want to talk a little bit more about our focus areas of investing in the content.

I'll tell you a couple of things that we're excited about in this space because our members are showing a lot of excitement for them. We’ve got some new license deals in place with Sony that include the first-of-its-kind global pay-one movie deal. We've expanded our universal licensing deal to include live-action films, in addition to the animation films that we were already working with. We have a new slate of licensed titles from Paramount that is going to introduce a lot of new series and television shows that Netflix has never had around the world. This is incredibly exciting. In the live area, we've executed more than 200 live events, and we're expanding to do more outside of the US, including the World Baseball Classic in Japan that I mentioned earlier. This Friday, we have Skyscraper Live, which is going to be an edge-of-your-seat TV experience for viewers for sure. So more to come there. We just kicked off podcasts this quarter, which has also been really exciting. We've launched new ones from Spotify, The Ringer, IHeartMedia, and Barstool. We have a lot more to come and some new originals. These are all areas that have shown great promise and our members love them. We're excited to broaden the investment to include them. Greg, do you want to jump in?

Yeah. I'd say on top of content, we have a number of other areas that we expect will drive meaningful growth and returns on the tech and development side. We’re continuing to build out that ad tech stack. We’re evolving our mobile UI, adding two more live operation centers in ‘26—one in the UK and one in Asia to support the growth of our live efforts outside the US. In ads, beyond the tech side, we continue to invest in more sales and go-to-market capabilities; these are direct drivers of advertising growth. Regarding games, we will continue to invest in the cloud-first gaming strategy we’ve added. This makes TV games more accessible as we roll out cloud games to more customers in more countries. If you take all of that, stepping back within the margin expansion model that Spence described, which keeps us disciplined on returning to shareholders as we invest in new growth, we also think about investing across our portfolio based on our capability to translate those investments into value for members and returns for the business. We have a solid track record of doing that and our core content categories, so we’re going to continue to grow there. We're also increasingly optimistic about our ability to do that in ads and live where the 200 live events Ted mentioned indicate that we should ramp and grow in those areas. And then for our other initiatives, those represent a small fraction of our overall investment, and we always remain very disciplined and measured in increasing those investments based on demonstrating that we can deliver member value, translate that investment into member value, and move the business forward.

Thanks, Greg. Thanks, Ted. Thanks, Spence, for that insight. I’ll now move this along to a few questions around engagement. The first comes from Rich Greenfield of Light Shed Partners. At this stage of Netflix's maturity, how directly tied is engagement to churn and pricing power as you started taking more openly about how all hours of engagement are not the same?

So viewing hours, that’s really important in assessing the value we deliver to customers, and value delivered is what drives the outcomes you mentioned, Rich, which drives most outcomes that we care about. But it’s just one of many metrics that we look at, and we continue to develop an increasing understanding of how to measure that value delivered. To start by noting that total view hours in 2025 grew 2% year on year, which is a billion and a half additional hours—a slight acceleration from the 1% growth we saw in 2025. But even with that number, there's some nuance underneath that. Viewing of our branded originals was actually up 9% year over year in the second half, versus 7% in the first half. That represents roughly half of our overall viewing. However, viewing on second-run titles was lower year on year because the volume of licensed titles that we're carrying came down across most regions. This is largely due to the fact that we stepped up our licensing in 2023 and 2024 during the strikes that had shut down new productions, so that’s balancing out that volume right now. Beyond view hours then, as you stated, not all hours of engagement are the same. We really care about the quality of that engagement. For example, we've stated in our letter that live programming is an example of where any given hour of entertainment has the potential to deliver outsized value. That's certainly also the case when you have a huge fan of a particular series or movie. As viewers, we feel this intuitively— we feel that excitement and difference, that value when we watch something we’ve been anticipating and just can’t wait to see. As a business, we’re getting better and more sophisticated in evolving our measures of that quality of engagement that we deliver. It’s very hard to do this, but we're getting better. Our primary quality metric achieved an all-time high for the service in 2025; we set a high goal for that metric, and Bella and our content team stepped up and achieved that goal. That means we deliver more entertainment value for our members, and that shows up in core metrics like acquisition and retention. Retention among the best in the industry, and we just completed a quarter where churn improved year on year. Customer satisfaction is at an all-time high. We also saw strong member growth. We’re managing more towards that complete understanding of value delivered because it’s what translates best and directly to revenue growth. It better captures the overall health of our business.

I would just add, Greg, if you don't mind, that of course, we look at the view hours, but we also look at a myriad of other signals to assess how our members are engaging and how they value that engagement. Members have different value for different types of programming. In the letter, we talked about the fandom around K-pop and 'Stranger Things' season five. How fandom is a powerful engine for our business because it creates advocates for Netflix. Valuable even beyond the ten hours spent watching 'Stranger Things', or the hour thirty-nine spent watching 'K-pop Demon Hunters'. We’re confident we will continue to grow engagement, but more importantly, the value of that engagement as well. It’s what allows us to sustain healthy revenue growth in the long term.

Thanks, Ted. Our next question on engagement comes from Ben Swinburne of Morgan Stanley. The engagement report gives us a sense of aggregate engagement across all titles and all members. Arguably, it's an overly simplified lens to view the health of the business. But one that suggests to some that the Warner Bros. acquisition reflects a need for Warner and HBO's IP to address stagnant engagement levels on Netflix today. Why is that the wrong conclusion, and how do you see the underlying engagement trends in the business? Very succinct bear case from Ben Swinburne. Over to, you know, Ted or Greg.

You’re right, Ben, and as we sort of got to in the previous answer, total view hours by itself is an overly simplified view into engagement and trends. Why? Because view hours is a broad metric influenced by many factors. Plan mix, tenure mix, geographic culture differences are big factors. Just as an example, take consumers in Japan. They watch roughly half to two-thirds the amount of TV as American consumers. So more member growth in places like Japan, and there are a lot of places like that where we have more upside and potential growth over the years to come skew the view hours per member. So we look at engagement at a portfolio level. View hours is one element, but we also look to the quality metrics we were talking about. We’ve seen that improving quality translates into core metrics like better retention, and just to reiterate, our retention is among the best in the industry. Customer satisfaction is at an all-time high. Those are more complete, or better said, those are outcome measures that we really, really focus on. We have multiple tools to keep improving those measures and the value that we deliver. More and better production drives quality scores and improvements. More licensing, partnerships with local creative communities, and broadcasters improve local content market fit. We’re optimistic about organic growth prospects, as you see from our forecast and the aspirational goals referenced before, which don’t include M&A, we see a huge opportunity to keep improving things there. But we see Warner Bros., with its one hundred years of IP, an incredible library, great new shows and films as accelerants to our strategy—another mechanism to improve our offering for our members. Our job is to identify the best opportunities to improve that offering, both organically and through selected M&A, remaining flexible and disciplined in pursuing those opportunities.

Thank you, Greg. Since Ben brought up Warner Brothers, I'll shift us to a few questions on the Warner Brothers acquisition. First, from Mike Morris of Guggenheim. Does your planned acquisition of WB impact your approach to pricing in the near to intermediate term? Would you consider raising the price of the service during the regulatory review process?

There is no impact or change to our approach in how we’re running the business in that regard.

Right. Next one comes from Rich Greenfield of LightShed Partners. What surprised you most from the Warner Brothers due diligence, Greg? You in particular sounded less enthusiastic about major M&A back at the Bloomberg Screen Time Conference in October. As you went through the due diligence process, what got you more excited about the acquisition?

Greg, can I interrupt you for one second here? Please go ahead. I just want to make it clear that our default position going in was that we were not buyers. We went into this with our eyes and minds open. When we got into it, we both got very excited about this amazing opportunity. Greg, you can share what was exciting for us.

That’s right. Thanks for bringing this up again, Rich. Yes, to Ted's point, when we got into the hood, there were several things we saw that were exciting and perceived as exciting additions to our current business. Take, first, the film studio. We already know that from existing film output deals that the theatrical model complements the streaming model. We’ve seen that before, and to be super clear on this point, we have often debated building that theatrical business in our history. But we were busy investing in other areas and it never made our priority cut. With Warner Bros, they bring a mature, well-run theatrical business with amazing films, and we’re super excited about that addition. Next, we have the television studio, which is also a healthy business; it complements our own and expands our production capability. We have great producers and developers, and we intend to continue producing shows for third parties and be a leading supplier to the industry. On the streaming side, you have HBO. It is an amazing brand, known for prestige TV. Customers know and love it, recognizing what an HBO show means. It’s also very complementary to our existing service and business. Owning HBO will allow us to evolve our plan structure, deliver more series, films, and value to consumers, leveraging our global footprint and streaming expertise to make it an even better service. Big picture, we just saw tremendous opportunities—very achievable opportunities—in bringing these two businesses together.

If it's okay, I’d like to pile on a little bit. Just maybe I’m the numbers guy. To put some numbers against it, Rich, when you look at the combined company on a pro forma basis, we estimate that roughly 85% of the revenues in that post-close business is from the core business we're in today. That’s why we view this deal primarily as an accelerator to our core strategy, with a big added benefit of a complementary scaled, world-class TV and film studio that we’re excited to run and continue to build.

Rich Greenfield also has a follow-up question on the transaction. What gives you the confidence the deal will get approved during the regulatory process? Ted, do you want to take that one?

Thanks, Rich. We've already made progress toward securing the necessary regulatory approvals. We submitted our HSR filing and are working closely with WBD and regulatory authorities, including the US Department of Justice and the European Commission. We’re confident we’re going to secure all the approvals because this deal is pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth. Warner Brothers has three core businesses that we don’t currently have, so we’ll need those teams. These folks have extensive experience and expertise, and we want them to stay on and run those businesses. We’re expanding content creation—not collapsing it. This transaction will significantly expand our production capacity in the US while continuing to invest in original content over the long term, leading to more opportunities for creative talent and more jobs. This is a vertical deal for us; it allows us to gain access to a hundred years of Warner Brothers' deep content and IP for development and distribution in more effective ways that benefit consumers and the industry. The TV landscape is extremely dynamic and very competitive. In fact, it has never been more competitive than it is today. There’s never been more competition for creators, consumer attention, advertising, and subscription dollars. The competitive lines around TV consumption are already blurring as many services put their content on linear channels and streaming services simultaneously. More platforms are making their way into your living room with TV. So, TV is not what it used to be. Awards shows and NFL games are on YouTube. Networks are simulcasting the Super Bowl on linear TV and streaming. Amazon owns MGM, and Apple's competing for Emmys and Oscars. Social media platforms are coming next, too. So, you know, YouTube has surpassed BBC in monthly average audience according to Barb, who publishes these figures in the UK. YouTube has full-length films, new episodes of scripted and unscripted TV shows, NFL games, and the Oscars. The landscape has completely changed; so we all compete for attention across a wider array of options that include streaming, broadcast, cable, gaming and other digital video platforms, big tech video platforms. Therefore, this deal strengthens the marketplace and ensures healthy competition that will benefit consumers and create jobs. That’s why we’re confident in the approval, Rich.

Thank you, Ted. We'll now go to a series of questions on the topic of content and content strategy. The next question comes from Ben Swinburne of Morgan Stanley. In light of the global Sony pay-one agreement and the pending WB transaction, can you talk about your film strategy looking ahead? Are you leaning away from original films and increasingly to licensing films after an exclusive theater run?

Thanks, Ben. No, there's no change to that approach. Dan Lynn and his team are going to continue to produce a slate of Netflix original films, and we'll also continue to license films in every available window. Our members love movies, and their tastes are very broad. Their appetites are huge, so we want to have the broadest offering possible.

Great. Next question is from Vikram Kisabhavola of Baird. What were your observations from recent live events such as Jake Paul versus Anthony Joshua and the NFL on Christmas Day? How should we expect your investment in live events to evolve from here?

Well, Vikram, remember, this is still a relatively small portion of total view hours. The big live events like the amazing fight you mentioned, NFL Christmas Day games, and this new halftime show are really important and differentiated parts of the service. But again, it’s a small portion of the total view hours. These events typically have outsized positive impacts on the business around conversation and acquisition, and we’re also starting to see some benefits to retention as well. But again, it’s a small portion of the total view hours, though we remain excited about it. That’s why we’re building out and strengthening that offering. With things like 'Star Search', premiering globally tonight with live voting. We’re beginning to invest in more events outside of the US, as I mentioned earlier with the World Baseball Classic in Japan for local markets.

Thanks, Ted. Another question from Vikram Kasavabola. What types of podcasts do you think will be most effective on the platform? What are your initial observations from the launches this past month?

Well, it’s still very early, but we’re super pleased with the early results we’re seeing. We think about video podcasts like a modern talk show. Instead of a single, defined show, you have hundreds of them. So it’s a broad offering versus a single show or format, but it generates a lot of passionate engagement with lots of variety. Looking forward, we’ll focus on what our members already love: sports—which you’ve seen—comedy and entertainment, and, of course, true crime. You may have heard we’ve got some true crime content on Netflix.

Great. The last question on content strategy comes from Rich Greenfield of LightShed. This is our quarterly theatrical question. Why has your view on theatrical windowing changed?

Well, Rich, I'll point out here that I’ve made observations about the theatrical business in the past, and we were not in the theatrical business when I made those observations. When this deal closes, we will be in the theatrical business. Remember, I’ve said it many times—this is a business and not a religion. Conditions change, insights change, and we have a culture that reevaluates things when they do. A short list of examples there are pivots we’ve made around advertising, live, and sports. In theatrical, we debated for many years whether we should build a theatrical distribution engine or not, and in a world of priority setting with constrained resources, it just didn’t make the priority cut. Now with this deal, we’ll have the benefit of having a scaled, world-class theatrical distribution business with more than $4 billion in global box office. We’re excited to maintain and further strengthen that business. Warner Bros. films will be released in theaters with a forty-five-day window, just like they are today. This is a new business for us, and one that we’re really excited about. I’m proud of our long track record of evolving the business, and I believe our results speak to that as well.

Thank you, Ted. We'll now move on to a few questions we have from analysts about advertising. Steve Cahall from Wells Fargo asks, as you look at the ads potential in 2026, do you think you could reach parity on ARM, average revenue per membership, of ad-supported versus ad-free plans?

Yes, there is still a gap between the ad tier ARM for standard without ads, but that gap is narrowing. Because there’s a gap, it means we are under realizing revenue growth in the near term; it also represents an opportunity for us. As we improve our ad capabilities, we can close that gap over time and drive more revenue. We've seen that ability to do that over the last year. We've expanded demand sources and improved our speed of execution on our ad tech stack, with more ad features, ad products, and enhanced measurement. This means increased fill rates, which has driven the ad ARM higher. Now that we've grown to relevant scale, meaning consumer reach and all our ad markets, our main focus is on increasing the monetization of that growing inventory. It will likely remain our focus for the next several years, so we believe we can close that gap, meaning upside in terms of revenue growth.

Thanks, Greg. As a follow-up from Ben Swinburne, as you head into your second year with your own ad tech build-out across the 12 ad markets, what's the opportunity to drive revenues? Can you maintain your premium CPE and so meaningfully increase bill rates in the year ahead to deliver another rough doubling of advertising revenue?

As we mentioned before, the most immediate benefit we've seen from our rollout of our ad stack has been making it easier for advertisers to buy in our service—more places to buy. We hear that feedback directly from advertisers, and we see it reflected in our sales performance. In 2026, we’re making more Netflix first-party data accessible, of course, in a privacy-safe way for assessing media investments. The ability to tap into this deep library of insights enhances the performance of media buys. We’re also offering advertisers a wider array of ad formats and products, which should improve outcomes. By the end of last year, we began testing modular capabilities with interactive video ads. These ads cater to members' viewing behaviors and allow advertisers to benefit from dynamic templates that use mixed creative elements to drive better business outcomes. We’ve seen good early results in the testing, and we’ll roll those out globally by 2026. Additionally, now that we’ve been on our own ad stack for over six months, we have better historical campaign data we can use to enhance our RFP process, driving better media planning and better outcomes for our advertisers. So, to get to the point of the question, we see all of that contributing to similar performance as last year, meaning potential for doubling our revenue growth by improving fill rates and growing inventory with similar CPMs.

Thanks, Greg. We also have a question on gaming, which I'm excited for since I’m a big player of our new party game, Boggle. If my family’s watching, I’m still number one! This question comes from Vikram, from Baird. Netflix had some key developments in its video game offering throughout 2025. How would you characterize your success and progress at this stage? What are your key priorities for this business in 2026?

We’ve seen some positive results with games like 'Red Dead Redemption', with similar performance to 'GTA' for those who are familiar. We’re also excited about more kids and narrative feature releases in 2026, which are good growth areas. A big priority for us, as you alluded, Spencer, is our cloud-based TV games. This is an exciting launch for us. We’re still in the early stages of this rollout; roughly a third of our members have access to TV-based games. This is a process of upgrading technology and clients to handle that. Recently, with our party games, like Boggle, Pictionary, LEGO party games, we’ve seen significant engagement upticks, although it’s off a small base—about a 10% reach into those eligible members. Our TV-based games have enjoyed strong engagement following the launch of our party pack. In 2026, we'll be expanding our cloud-first strategy, adding a growing set of cloud games to the TV, like our newly reimagined, more accessible FIFA football simulation game. To step back for a second, if you look at this in totality, why is this important? As we've said in the past, it's a big market—roughly $140 billion worth of consumer spend. We are just scratching the surface today in terms of what we can do in this space, but we are already seeing multiple instances of how this approach extends audience engagement with the service and story, creating synergies that reinforce both mediums, the interactive and non-interactive sides, driving more engagement and retention. Bottom line: We’re very bullish on opportunity—we're seeing progress—but we still have a lot of work to do. All our developing initiatives will ramp up investment based on demonstrated value to members and returns to the business.

We will have Spencer give us a Boggle demo next quarter! I watched the video of Greg playing with Elizabeth, and there's no way I'm going to challenge Greg because I think he'd take me down in two seconds. With that, we'll take our last question from Rich Greenfield of Light Shed, on innovation. His question is, why isn’t vertical video a higher priority for Netflix?

We’ve actually been testing vertical video features for some time—about six months or so. A vertical video feed in the mobile experience has been available for several months; that feed is filled with clips from Netflix shows and movies. You can imagine us bringing more clips based on new content types like video podcasts, which Ted mentioned. We’re also working on a new mobile UI to better serve our business expansion needs in the decade to come, and we plan to roll this out later in 2026. Like our new TV UI, it then becomes a starting point—a platform for us to continue to iterate, test, evolve, and improve our offerings. So, don’t worry, Rich—we got more vertical video coming for you.

Thank you, Greg, Ted, and Spence. That is all the time we have now for our call. We thank all the listeners for tuning in to our earnings call. We look forward to speaking with you all next quarter. Thank you.