To The Moon

Q&A（Question-and-Answer Session）is a session after the company's prepared remarks where institutional investors and analysts ask management questions. In this dialogue, you may find some valuable information that might affect the stock price in the following weeks.

Now let's look at some key points from Netflix Q3 2022 Q&A Session Transcript   $Netflix(NFLX)$

Q:There's been a lot of discussion in the press about CPMs that are really 2x to 3x those of CTV or other AVOD players. Is that accurate? And what justifies the much higher pricing for Netflix?

A:I'm not going to comment on any specific pricing, but I would just say that I think we've got a very attractive offering and that's a combination of the audience that we have that we're delivering to that oftentimes it's hard to access in other ways, certainly harder to access in traditional TV in many cases. And it's a result of the incredible content that we've got. So Ted's team is doing an amazing job at producing titles that advertisers want to be next to. And so that's I think what you see is driving the demand and the pricing that we can get.

Q:You've talked in the past about wanting the ad offering to be innovative and somewhat different over time. If we think about the range of four minutes to five minutes of ads per hour it's certainly lower. You've talked about tight frequency capping. What else do you think is innovative at least in the initial offering? And then how does that evolve more over time?

A:As you noted we want to start with an experience that's very pro-consumer-centric. And so that's definitely informed both our ad load and thinking about the frequency capping. What I love about those things is the more we talk to brands and advertisers there's actually a high degree of alignment between, sort of, what their desires are and we think is great for consumers. So they're enthusiastic about not having high frequency caps and having sort of -- a sort of more unique offering there. And also limited ad loads sets their ads apart more distinctly. So I think I love that alignment to begin with.

And then over time we're going to access a bunch of the capabilities that you've seen us leverage over the last 10 years to think about innovation in the space. So personalization I think is a great example where we don't need to think about the ads experience as being uniform across all of our members. And we think about we can leverage the personalization capability that we've built in terms of titles and how we present titles and also in terms of how we present ads. So I think that's an exciting dimension that we're going to work on as well.

And additionally we're also excited to work with partners and our advertisers to think about what is that ad experience, the ad format that is really best suited for premium connected TV. And we're starting with meeting the market where it's at today. That's important to access all the capabilities they've got but we don't need to stay there. And I think we're looking forward to over a couple of years understanding what is the right native format for premium connected TV and figuring out what that looks like.

Q:In terms of subscribers, how do you think about just this concept of new net adds versus trade-down from existing subs on the basic with ads tier? It's, obviously, a pretty frequent discussion with investors.

A:I think it's important just to reiterate that we don't see a lot of plan switching on the existing plan set. So that's I think a worthwhile point to note. And then, obviously, as we stated before we're not really trying to steer our members to one plan or another. We're trying to take a pro-consumer approach and let them find and land on the right plan for them. And as we stated we modeled out that expected performance on ad monetization and factor that into our thinking around price point for the basic with ads. And so we really anticipate that this is going to be a pro-consumer model that will be more attractive bring more members in because the consumer pricing price is low. But then again the economics and the revenue will be fine as a result even if some of those consumers switch plans. And again just to restate this when you factor in those extra members, we expect this leads to a significant and incremental revenue and profit stream.

The above Q&A are highlights that are edited for brevity. Click here for the full Netflix Q3 2022 Earnings Call Transcript.​​​​

If you want to know more details, you can click here to re-watch the Netflix Q3 2022 Earnings Conference Call