Netflix, Inc. (NFLX) Q3 2025 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Netflix, Inc. Q3 2025 earnings interview. I am Spencer Wang, VP of Finance, IR, and Corporate Development. Joining me today are Co-CEOs, Theodore Sarandos and Gregory Peters, and CFO, Spencer Neumann. As a reminder, we will be making forward-looking statements, and actual results may vary. We will now take questions submitted by the analyst community, and we will start with our results and outlook. The first question comes from Ben Swinburne of Morgan Stanley, who asks, as you begin to wrap up 2025 and look to 2026, can you talk broadly about the health of the business and how you would frame the opportunity ahead?

Yeah. We think the business is very healthy. We feel good about our progress on our key initiatives. We have a lot of opportunity ahead of us, and we have a lot of work we need to do to accomplish and fully realize those opportunities. So what's working? We had a good Q3. We had revenue in line with expectations. Our operating income would have exceeded our forecast absent the Brazilian tax matter. We are also seeing good progress against our key priorities. Engagement remains healthy. We achieved record share of TV time in Q3 in both the US and the UK. We recorded our best ad sales quarter ever. We are now on track to more than double ad revenue this year. We are continuing to build out both live offerings and games as emerging capabilities. On the live side, we saw Canelo Crawford, which was the most viewed men's championship fight this century. We recently announced the ability to play Netflix, Inc. games on TV with friends and family playing together at home using just the TV and the phone as the game controller. This progress in these areas is indicative of how we think we can best compete and grow the business over the long term. We focus on a few key areas that we think matter the most, then we work hard to deliver continuous improvement in those areas. It sounds super simple, but building a real path-scale global streaming business is hard because you have to combine great tech product and great content from all around the world. We believe we can continue to improve in both those areas. Ted, maybe you want to comment on that?

We continue to have a massive opportunity since we are only about 7% of the addressable market in terms of consumer spending and only about 10% of time spent on TV in our biggest markets. So there is enormous room for profitable growth in the core business. This is a very exciting time in terms of a lot of innovation and a lot of competition. But that has been true for the last twenty-five years. One thing as a company, we have always embraced change. We thrive on competition. It pushes us to improve the service even faster for our members. Back at the beginning, in the early DVD days even, and now in streaming and global streaming of original content, we compete with the biggest players in the world, tech and media. As you see, we keep growing engagement, revenue, and profit. Today, we are an entertainment company. We program for an audience that's approaching a billion people around the world. We are producing series and films for local audiences in multiple markets. Many of those films and series resonate around the world. A really great example of that, I think, is this summer's K-Pop Demon Hunters. Obviously, a smash hit, but it's also emblematic of exactly what we are trying to do every day. In fact, feature animation is an example of that continuously improving the core. We have been grinding away at original feature animation for a few years now, and K-Pop Demon Hunters is our most popular film ever. It again proves our ability to create breakthrough hits and move the culture. Today, we announced Mattel and Hasbro have been named the global co-master toy licensees for K-Pop Demon Hunters. This is a rare, maybe unprecedented partnership for them. We are going to need them both to help meet the massive demand for fans to get closer to their characters off-screen every day. We are here to entertain the world, and we are delivering tremendous value to our members every day. When you have a hit the size of K-Pop Demon Hunters, it stirs the imagination of how big we could take this. As long as we keep improving on the core business every day. So we feel great about the business. As Greg said, we are as energized as ever.

Thank you, Ted and Greg. Our next question comes from Steve Cahall of Wells Fargo. Can you please provide more color on the nature of the tax expense and why it fell above the operating line?

Sure, Spencer. I will take that one. Greg and Ted were on a roll, but I think I will take the short straw for this one. I will spend a minute on it because this Brazilian tax matter is a bit complicated, and I want to be sure we are being really clear about what it is and what it is not. It is not an income tax. It is a cost of doing business in Brazil. It is a gross tax on outbound payments. It is called the Contribution for Intervention in Economic Domain. It involves a 10% tax on certain payments made by Brazilian entities to companies outside of Brazil. It is not a tax that is specific to Netflix, Inc. It is not even specific to streaming, so we assume other companies will be impacted by this. In our case, Netflix Brazil pays Netflix US for services that enable Netflix Brazil to offer subscriptions to our Brazilian customers. We actually received a favorable ruling from a lower court back in 2022 that concluded we were not subject to this tax, which is why we believed we could not accrue this previously. The legal issue in question relates to the scope of the transactions covered by the tax, and in particular, whether the tax applies to service payments that do not involve a transfer of technology. We flagged this as a potential exposure in our prior 10-Ks and 10-Qs dating back to our 2023 10-Ks. In August, the Brazil Supreme Court reached a 7-4 decision against an unrelated company ruling that the tax applies to a wider range of transactions than we thought was legally permissible. In particular, that it applies even to service payments that do not involve a transfer of technology. Given that court's ruling, that has caused us to reevaluate the likelihood of prevailing, and we now deem the loss to be probable. Again, it is not an income tax, and that is why we recorded the expense in Q3 as a component of our cost of revenues. As we said in the letter, the expense we booked in this quarter covers the periods from 2022 through 2025. Of the amount we booked in cost of revenues this quarter, just about 20% of it is for the year 2025, with the remainder related to those 2022 to 2024 periods. So look, I know that was a lot, but there are just two really important takeaways that I want to leave you with. The first is that the Contribution for Intervention in Economic Domain is a unique tax. It is a mouthful. No other tax looks or behaves like this in any other major country in which we operate. Secondly, absent this expense, we would have exceeded our Q3 2025 operating income and operating margin forecast, and we do not expect this matter to have a material impact on our results going forward.

Great. Thanks, Spence. I will move on to the next question, which comes from Tom Champion of Piper Sandler. Do you have any early views on revenue and operating income growth for 2026?

I will take this one as well, Ed. Yeah. Okay. So, well, look, we will issue a full-year 2026 guidance on our next call in January, but our financial objectives are unchanged. Look to sustain healthy revenue growth, to expand margins, and increase free cash flow. Now we did last year on our Q3 call, we did issue full-year guidance, but that was in advance of sunsetting membership reporting. So it was a pretty unique timing given that upcoming change in reporting. For 2026, again, we will issue the full-year 2026 guide as we more typically would, on our next call in January.

Thanks, Spence. I will move this along to a few questions we have received on the topic of advertising. The first one comes from Jason Helfstein of Oppenheimer. Given your comment of doubling upfront commitments in the earnings letter, should we interpret this to mean that full-year 2026 advertising could also double?

I will start by just saying it is exciting to see our progress in 2025 more than doubling our ads revenue there. While, of course, it is still off a small base relative to the size of our subscription revenue. But we feel like we have established the fundamentals of the business now. We have proven we know how to scale. We see plenty of room for growth ahead. What is making up that growth right now? As you mentioned, we more than doubled our US upfront commitments. That lands partly in 2025 and partly in 2026, which I think you are alluding to here. Perhaps even more importantly, we are seeing even higher rates of growth in programmatic, and that is more because we believe that is going to be an increasing part of that incremental revenue contribution going forward. What is driving those results? Advertisers are excited about our growing scale. We have a highly attentive and engaged audience. The rollout of our ad tech stack means we have more formats, more measurement, more ways to buy. Of course, our slate is a critical and important source of competitive differentiation. While I will refrain from offering any 2026 guidance, I would say we are feeling good about our growth trajectory.

Thanks, Greg. A follow-up on that one from Vikram Kesavabhotla of Baird. Your offering to advertisers has evolved significantly in 2025, including the launch of the ad suite and the integrations with additional demand sources. As we look into next year, what are some of the key priorities for the advertising business?

Consistent with the last comment and answer, we made considerable progress in building out our general capabilities in the ad space. So if you use our beloved crawl, walk, run model, we are now squarely in that walking phase. The rollout of the ad suite, our own ad suite, has been great because it means we are just continuing to learn and improve the stack based on client feedback. We have a really fast iteration loop going there that we are excited about. Key priorities and focus for us are making it easier for advertisers to buy on our service. We want to increase the diversity of advertisers we have. That is a key direction of growth for us that enables that revenue growth. We are adding more demand sources like Amazon DSP, AJA in Japan. We are improving our own ad sales and go-to-market capabilities. We are also iterating on ad formats. Later this quarter, we will be introducing ad interactivity. Taking that into 2026, you are going to see us continue to develop along some of those lines. More ways to buy, more data for targeting and media planning capabilities globally, more modular in our interactive ad formats with enhanced AI capabilities, and more measurement functionality in all of our markets. Then in 2027, we get to pivot to make more focused investments in data capabilities such as ML-based optimization, advanced measurement, advanced targeting. So I would say, you know, we are getting we have got our legs underneath us. We are making a good pace, but we have got a lot ahead of us to go do. Quite frankly, we expect we are going to be able to move quickly than other streamers as we leverage preexisting tech and data science assets and expertise.

Thanks, Greg. And to round out our last question on advertising, this one comes from Dan Salmon of New Street Research. Are fill rates improving in line with your expectations as the Netflix, Inc. ad suite and new demand partnerships scale up?

We focus on overall revenue as the most important metric we are seeking to optimize. But having said that, fill rates have improved, and we believe they are going to continue to improve as we continue to develop our go-to-market capabilities, more measurement, more targeting.

Thanks, Greg. I will now move us along to the topic of content and engagement. A lot of questions there. We will begin first with Steve of Wells Fargo. Are you seeing a pickup in engagement like you have expected?

Yes. Total view hours grew a bit faster in Q3 2025 than in the first half of 2025. In fact, in Q3, we achieved our highest quarterly view share ever in the United States at 8.6% and in the UK at 9.4% according to Nielsen and Barb, respectively. These are two countries that we have really good measurement on that share. We also believe we are going to continue to see steady growth in view hours over time. We grow engagement by expanding our programming and the range of our offering. This is a critical and very proven dimension of growth for us. But we are also seeing that certain engagement delivers outsized and different value. We saw pretty good examples of this in Q3. You have the Canelo Crawford fight, the most viewed men's championship boxing match this century. You have K-Pop Demon Hunters, our biggest film ever, huge impact on the cultural zeitgeist. Both are great examples, and they are also from really different parts of our programming spectrum of this punctuated value. We believe we have a better understanding of the streaming business than any of our competitors, but we are also continuing to learn. We are in the process of really building a better understanding of how these particular moments delivered differential value to our members and the business.

Let me just add here, Steve. We are going to continue to benefit long term from the trend of folks moving from linear viewing to streaming. It has a kind of a natural adoption curve. But I also look for and we have an incredible slate in Q4, and we are really excited to follow that up in 2026. But it is not about any one single title in Q4 or next year. As you know, even our largest titles and the biggest success generally drives less than 1% of our total viewing. So it is really about having a steady drumbeat of shows and films that our members love. That is what drives continued steady growth and engagement over time. We gave a lot of detail about our Q4 coming up in the letter, including an incredible slate of film and a wild ride finale of Stranger Things. But I want to give you a little bit of color on 2026. Maybe this is a longer answer than you were bargaining for, Steve. But we are really particularly excited about a few things coming up next year, like the return of some of our biggest and most loved shows, like Bridgerton, Beef, Emily in Paris, One Piece, Outer Banks, Virgin River, The Gentleman, Avatar: The Last Airbender, Running Point, Ginny and Georgia, Lou all coming back for new seasons in 2026. We have got an amazing slate of films with a big event film Greta Gerwig with Narnia. Here Comes the Flood starring Denzel Washington. Ben Affleck is directing this great movie for us called Animals. Apex from Charlize Theron, an incredible action movie. Matt Damon and Ben Affleck are on screen together and starring in The Rip. A couple of great rom-coms, Office Romance with Jennifer Lopez, People We Meet on Vacation. Our French team has got an incredible epic film, Quasimodo, coming up. Peaky Blinders fans are going to freak out for the Peaky Blinders movie The Immortal Man with Cillian Murphy. It is really great. And lots and lots of brand new series work coming out in 2026. Golf with Will Ferrell, Little House on the Prairie, Man on Fire. We have new series from the Duffer Brothers. Amazing slate of K-dramas. That is just to name a few. But in other words, we have got a pretty great 2026 coming up after this phenomenal Q4.

Dan Kurnos from Benchmark Company has a question about our Spotify partnership. How should we think about the recent deal with Spotify? How aggressively will you build out this podcast category?

This deal is a video co-exclusive partnership with Spotify that secures a curated selection of their top podcasts. To help us provide even more entertainment options for our members when they are looking for pop culture, lifestyle, sports, or true crime. We get to deliver to them wherever and however they want to watch. We are going to build into this category like we do with our other categories based on demand signals that we get from our members. We see this as really the opportunity to integrate high-quality video podcasts that broadens the Netflix, Inc. offering beyond all the incredible films and series that Ted just mentioned, beyond the live events that we are building, stand-up specials, and games. We hope that ultimately reinforces us as the most important service for entertainment needs.

Thanks, Greg. Our next question comes from Robert Fishman of MoffettNathanson. Following the strong theatrical performance of K-Pop Demon Hunters, can you share your updated perspective on monetizing some of your content in the theatrical window on an exclusive or non-exclusive basis?

Well, first of all, thanks, Robert. There is no change in the strategy. The strategy is to give our members exclusive first-run movies on Netflix, Inc. We occasionally release certain films in theaters for our fans, like we did with K-Pop Demon Hunters, or as part of our launch strategy, publicity, marketing, qualification, all those things. We will continue to do that. We believe that this film K-Pop Demon Hunters actually worked because it was released on Netflix, Inc. first. Look, we had a film that people fell in love with. That is first and foremost. But not in a huge way on the first day or even the first weekend. In fact, it was the super fans who watched the movie and repeat watched the movie that drove the recommendation engine, that got it in front of more super fans, who also fell in love with the movie. So that ease and value that allowed folks to repeat view it, the ubiquity of distribution which took all the guesswork out of how to watch it when you did finally see it show up in your social media feed. All of this contributed to K-Pop Demon Hunters blowing up all over the world. I would argue in a way that it could not happen anywhere else. If anything, this actually reinforces our strategy because being on Netflix, Inc. gave the film a chance to build momentum, and it allowed fans to learn the song and to watch it over and over again and to make their own posts and their own dances around K-Pop Demon Hunters. Now for some films, seeing it together and singing out loud is super fun. It is a differentiated experience, and we were able to do that with K-Pop Demon Hunters sing-alongs eight weeks after the film premiered on Netflix, Inc. We did have a good weekend, but we created a great night out, and we are going to do it again on Halloween weekend. This time, every major theater chain is on for the ride. We are also adding a few international markets. It has been really fun to see this film and to see our ability to break through pop culture on par with some of the biggest theatrical films ever. It is even better that it is with an original feature because it is so hard to do.

We now have a question on our live events from Vikram Kesavabhotla of Baird. What were your observations from the Canelo versus Crawford fight in September? Are these types of events impacting engagement, acquisition, and retention on the platform?

Well, like Greg said earlier, the Canelo Crawford fight was the most viewed men's championship fight of the century. It had over 41 million live plus one viewers. It was in the top 10 in 91 countries. It was a great fight. We believe these big events that attract mass audiences are differentially valuable for our members. It is a kind of urgent viewing that our members love and value. These events typically have outsized positives for conversation and for acquisition, and we strongly suspect retention. However, we have said earlier, live is only a small portion of our content spend, and it is a very small portion of our 200 billion hours viewed. It is relatively small still, but it has a hugely outsized impact. Like we have seen with other titles, this has had that kind of positive impact on acquisition. It is a little too early to say for sure in retention, but so far, it looks a lot like the Jake Paul, Mike Tyson performance. We remain incredibly excited about the opportunity in live. Upcoming, we have Jake Paul versus Tank Davis from Miami on November 14. We are really trying to grow our capabilities outside of the US as well, which you will see next year with the World Baseball Classic from Japan.

Thanks, Ted. That is a good segue to our next question, which is the quarterly question about sports for us. This is from Robert Fishman of MoffettNathanson. Since last earnings, we have seen several sports rights deals, including Apple F1, Paramount, UFC, etc. While we still await an official MLB update, can you help us think about the importance of global sports rights versus local rights to Netflix, Inc.? Do the sports rights you look to acquire need to materially accelerate your advertising growth?

As for local versus global, it is just a scale question, local cost versus the size of the local audience. No real change in the approach. We are focused on big live events, which sports are a subcomponent of the live strategy. We said before we are not currently focused on the big season packages. In terms of global versus local, we think about it just like series. It varies. Some, like the Canelo Crawford fight, had big global appeal. We think the World Baseball Classic in Japan was actually built and designed and budgeted for a specific geography. As far as advertising is concerned, the number one important thing we have to do is thrill our audiences. The revenue from advertising or subscription is the reward for thrilling the audience. We have to stay disciplined on that approach. For upcoming live events that we are excited about, I mentioned Jake Paul versus Tank. That is November 14. We have our doubleheader NFL Christmas Day games with Dallas versus Washington, Detroit versus Minnesota. Skyscraper Live is going to be wild. The SAG Awards, WWE every week. I mentioned the World Baseball Classic in Japan in 2026. In 2027 and 2031, we have FIFA's Women's World Cup as well. We are pretty excited about the slate, and there is going to be a lot more that will come in between.

Thanks, Ted. We will take our next question from Rich Greenfield of LightShed Partners. Are you testing premium tier free trials? We recently, meaning Rich, recently opened Netflix, Inc. and were prompted with a 4K upgrade screen. Is this a typical promotion, or are you selectively testing free trials?

Yes. We test and productize a variety of offers that we think help members understand and sometimes try a feature or benefit that we think they might enjoy. If you have a 4K TV, as Rich does, you might get a notice from us and say, do you want to try watching, let's say, Skyscraper Live that Ted mentioned, somebody free climbing Taipei 101 in 4K and decide if that is a good option for you. Ultimately, we want a range of plans. We want a range of features, different price points, and we want to help members choose the right plan for themselves. We think that yields better member satisfaction, and that yields better engagement and retention, and a long-term business.

Thanks, Greg. We have gotten a series of questions on M&A on that topic today. Not surprising given the announcement from our friends at Warner Brothers Discovery. We will take this next question from Jessica Ehrlich of Bank of America. Do you see potential industry reshaping the competitive landscape? Do you see that as an opportunity or threat? What implications might that have for Netflix, Inc.'s content strategy and differentiation?

Thanks, Jessica. We will take it in two parts. First, the opportunity. It is true that historically, we have been more builders than buyers. We think we have plenty of runway for growth without fundamentally changing that playbook. Nothing is a must-have for us to meet the goals that we have for the business. But as we wrote in the letter, we focus on profitable growth and reinvesting in our business both organically and through selective M&A. When it comes to M&A opportunities, we look at them and we apply the same framework and lens that we look at when we look to invest in a build. Is it a big opportunity? First question. Second, if it is IP, does it strengthen our entertainment offering? Is there additional value in ownership? Does it strengthen our existing capabilities somehow? Does it accelerate our existing strategy? By the way, you look at all these things relative to the price, relative to the opportunity cost, and relative to other alternatives. We have been very clear in the past that we have no interest in owning legacy media networks, so there is no change there. But in general, we believe that we can be and we will be choosy. We have a great business, we are predominantly focused on growing organically, investing aggressively and responsibly into the growth, and returning excess cash flow to shareholders through our share repurchase. Greg, do you want to add there?

Maybe I will try and speak to that second part of this, the threat part of the question. We have always faced significant competition. We still face it today. This is an incredibly competitive entertainment environment. We have also seen a lot of industry consolidation over the years. Think about Disney Fox and Amazon picking up MGM. Of course, Time Warner and AT&T and then Discovery and Warner. But none of those mergers were a fundamental shift in the competitive landscape. We have seen also a wide range of outcomes from such mergers. Watching some of our competitors potentially get bigger via M&A does not change, in and of itself at least, our view on the competitive landscape. We do not think it changes the substance of the challenge that our competitors face. Specifically, the range of activities that we and our competitors have to get great at has never been assembled in a single company before. Producing film and TV shows across multiple genres and multiple languages and dozens of countries around the world. To figure out how to incorporate the latest technology, including AI and GenAI. We are trying to figure out how we build better product experiences, serve consumers better around the world. How about customer acquisition and retention? How do we optimize global payments? How do we optimize global partnerships? There is so much, and we want to get better at all those things. Our competitors are seeking to get better at all those things as well. But you have to do that by the hard work of developing those capabilities in the trenches day to day. You do not get there simply by buying another company that is also still developing those same capabilities. Maybe I will just end by reiterating what Ted said, which is it is our responsibility to look at every significant opportunity. We do that. We have a clear framework to evaluate those opportunities, and we will do whatever we think is best to grow the business.

Great. Thank you. David Joyce from Seaport Research Partners has a slightly different angle on the M&A question. Should potential industry consolidation with embedded studio and streaming assets lead to less third-party content accessibility for Netflix, Inc.?

Thanks, David. Look, original titles are the big business driver for us. That is why we got into this more than ten years ago. It is why we continue to grow and expand the original content investment across new genres, new content forms, and multiple geographies. We are happy to license titles from industry suppliers to complement our offering. But it is worth noting that we have always seen these kinds of ebbs and flows from third-party content in terms of access to it. Our competitors are also our suppliers. They change their mind sometimes about selling to competitors. We have been dealing with that since the beginning of streaming. But as we sit here today, we are not dependent on any single supplier. No single supplier represents more than a small minority of our total view hours. More importantly, we have proven time and time again that licensing to Netflix, Inc. is the best way to build audience, build revenue, and create value for your IP. Whether it is Suits or Peaky Blinders or Breaking Bad, we have played a very positive role in the life cycle of other folks' IP, and we suspect that dynamic will continue.

We now have a question from Justin Patterson of KeyBanc. Netflix, Inc. recently launched party games that are playable on the TV. How do you think gaming could change the time members spend with Netflix, Inc. each day?

Games are clearly a form of entertainment consumers care about in terms of the time they spend, which you noted, as well as the money they spend. It is approximately a $140 billion opportunity in consumer spend, excluding China and Russia. That does not even include the ad revenue, which, of course, is linked to the time and engagement. We have mostly talked so far about our work in this space as games because that is an easy shorthand. We see this initiative as more about interactivity broadly and how does interactivity become complementary to linear storytelling? How does it enable us to unlock new entertainment experiences? For example, real-time voting will be our first live interactive feature. We are currently testing it on Dinner Time Live with David Chang. It is going to roll out more broadly, starting with Sarsearch in January. We expect to provide other interactive features to deepen engagement with live events as we go in the future. When it comes to actual games, we have been building a ton of foundations for the last few years. Things like the ability just to develop games, to get those games onto the service, connect games with players, give them a high-quality experience. Going forward, we are building on top of that foundation, but focusing on offering more high-quality games in a few key genres and targeting the right cohort of users. This is a less is more strategy on a few identified verticals. Those verticals include immersive narrative games based on our own IP. You can think about Squid Game Unleashed, or Thonglets from the Black Mirror Universe, or Golf with Happy Gilmore. We have got games for kids. This is Peppa Pig, no ads, no in-app payments. Safe within your subscription. Mainstream established titles, think about what we did with Grand Theft Auto. As well as socially engaging party games, which you noted. We are rolling out this holiday season a slate of party games on TV. It is great for the whole family. When you are in front of that TV, all you need is the TV, and your phone is a controller. It is like Boggle Party, Pictionary game night, Lego Party, Tetris. We have got Party Crashers, which is a social deception game. Part that I like most about this is these games are super easy to access. It is just like our series and films. You scroll to the games tab, you pick whatever you want, click it, and you are in. You do not need a special controller. That is key to this access. In the years ahead, actually, speaking of controllers, we expect creators will really find interesting and novel ways to unlock all of the power that is in this incredibly advanced controller that we all happen to have in our pockets, which, of course, is our phones. We are just starting to scratch the surface today. There is much more we can ultimately do in this space. Yet we already see how this approach not only extends the audience's engagement with the story, but it creates a synergy that reinforces both mediums, the interactive and the non-interactive side. It drives engagement. It drives retention, and therefore, the business. Looking ahead, we are going to ramp our investment in this area judiciously based on demonstrating that we are ramping returns to the business, but we are extremely excited about the progress we have got ahead of us.

I would say do not play Boggle with Greg. He is very, very good.

No. I am not going to our head of the games unit. But he is good. He has a leg up on us. He is very good. He does. I think he gets to play quite often. Alright. We have another question from Steve Cahall of Wells Fargo. Last quarter, you talked about Netflix, Inc. being a great place for some creators on YouTube. Since then, you have announced one new creator deal with Mark Rober. Should we expect more on this front? What kinds of content are you looking for?

Thanks, Steve. I said before, but we want to be in business with the best creators on the planet wherever they are. Some of them are in Hollywood. Some of them are in Korea, some of them are in Paris, and some of them are sitting on social media platforms and have yet to be discovered. Not everything on YouTube is a fit for us, but there are some creators like Mark Rober, like Miss Rachel, that are great fits for us. Remember, working with content creators from other platforms is not a recent thing for us. Over the years, we made Hype House. We partnered with Miranda Sings. She had a stand-up comedy special and a series called Haters Back Off. King Bach, who is a big star in social media, you could see him in a lot of our films, Babysitter of Killer Queen, When We First Met, just to name a few. We also have created a curated selection of video podcasts as well. This stuff is just a very natural expansion, and there is plenty of room for the world's best creators wherever they are.

Great. We will now wrap up with our last topic, which is GenAI. Two sort of questions or maybe a two-part question. The first part comes from Doug Anmuth of JPMorgan, who is asking how has your thinking evolved over the past couple of years about Netflix, Inc.'s ability to leverage AI? Related, John Hulik at UBS asks, what are your thoughts on the impact from Sora 2 and other new AI content creation apps in terms of increased competition from short-form video? Do you think it creates new competition from an engagement standpoint?

Perhaps I will kick it off in the first part of that question. Our thinking about AI has not really changed over a decade and a half or more. We have had a long history of developing ML and AI solutions. We have a deep technology DNA, significant data assets, scaled consumer products, scaled business processes. All of that, we think, enables us to have the opportunity to leverage new technical capabilities as they come online. That is our job. We are engaging proactively to do so. As we said in the letter, specifically with GenAI, we see a huge number of places in the business where we can bring these technologies in. They provide more capable tools. They improve productivity. They improve the velocity of innovation. They deliver better results for members, for creators, for partners. The vast majority of those cases involve us going to market for solutions and just integrating them into our existing tools and products. But there are a few spaces where we think that making targeted investments is important. We think we can develop often using building blocks from others. Think about this as foundational models that we get open source or commercially. To make cutting-edge tools and cutting-edge experiences. Those targeted areas of investment are better product experiences, content production, and advertising. Maybe, Ted, you want to pick it up on the content creation apps part of the question?

Look. What we have seen so far from these content creation apps is that it is likely to have a lot more impact on UGC creators the most in the near term. In other words, AI content replacing viewing of existing user-generated content, that starts to make sense. Before we do, it takes a great artist to make something great. Writing and making shows and films well is a rare commodity, and it is only done successfully by very few people. AI can give creatives better tools to enhance their overall TV movie experience for our members. But it does not automatically make you a great storyteller if you are not. If music is a leading indicator of all this, AI-generated music has been around for a long time, and there is a lot of it. It is a pretty small part of total listening, and established artists like Taylor Swift continue to be more popular than ever. Even in a world filled with AI music, AI seems to be mostly a tool for musicians to take their sound in new directions. We are confident that AI is going to help us and help our creative partners tell stories better, faster, and in new ways. We are all in on that. But we are not chasing novelty for novelty's sake here. We are investing in what we believe delivers value for creators and members alike. We are not worried about AI replacing creativity. We are very excited about AI creating tools to help creativity.

Thank you all for your questions. We are now out of time. We thank you for joining us for our Q3 call. We look forward to speaking with you all next quarter. Thank you.