>> WELCOME BACK TO THE
THING THOSE EVERYONE YES
NETFLIX WAS THE TOP PERFORMER
OF THE DECADE,
THE STOCK DELIVERING MORE THAN
A 4,000% RETURN AMID THE LOSS
OF POPULAR SHOWS NETFLIX THAT'S
ON ITS
MUST WATCH THE ORIGINALS AND
MADE A BIG BET ON THOSE LIKE
THE IRISHMAN STRANGER THINGS
AND IT'S FOCUSING ON
INTERNATIONAL EXPANSION HERE
DISCUSS
FOR OTHERS, OUR RAY WONG WHO IS
THE PRINCIPAL ANALYST AND
FOUNDER AT CONSTELLATION
RESEARCH IN A MUCH SUNNIER
PLACE THAN
WE ARE. THANK YOU SO MUCH FOR
JOINING MERRY CHRISTMAS EVE,
AND HAPPY HOLIDAYS TO YOU THE
TOP PERFORMING STOCK OF THE
DECADE. WHAT DO WE ATTRIBUTE
NETFLIX'S SUCCESS IN THE S AND
P 502.
>> YOU KNOW THE BIG THING IS
THEY'VE BEEN ABLE TO TRANSFORM
THEMSELVES AT EVERY CHANGE IN
TECHNOLOGY AT EVERY CHANGE A
BUSINESS PAULK I REMEMBER LIKE
GETTING THAT A LITTLE ON THE
LOW SHOPPING
IT BACK WAITING FOR SOMETHING
ELSE TRYING TO TIE MY RETURNS
AND THAT WAS
A WEIRD TRANSITION TO STREAMING
LIKE REALLY HONEST REMEMBER
GOING TO THE STREAMING THING TO
ACTUALLY FIGURE OUT THAT THERE
GLOBAL AN INTERNATIONAL
EXPANSION BEFORE EVERYBODY ELSE
TO PURCHASING ORIGINAL CONTENT
THEY MADE THOSE BIG SHIPS AND
AS WE ENTER THE NEXT DECADE
RIGHT THAT SHIFT USE
DREAMING OF THE ABILITY TO STAY
TRUE TO THEIR CORE WHICH IS NOT
DOING ADS GOING SUBSCRIPTION
ONLY THAT'S GOING TO BE PART OF
THE GROWTH AS WE THINK ABOUT
WHERE ENACT EXPANSION WILL TAKE
THAT.
>> YEAH THE ABILITY TO A SHIFT
THE ABILITY TO ADAPT OR SOME OF
MAYBE THE BIGGEST THREATS TO
NETFLIX HAS A GRILL AND HOW ARE
THEY ABLE TO COMBAT SOME OF
THOSE THREATS.
>> SO YES, A LOT OF THREATS
RIGHT NOW RIGHT WITH THE MIDDLE
STREAMING WORKS RIGHT INSIDE
THIS BUSINESS OF CONTENT MEDIA
ENTERTAINMENT
AND TECHNOLOGY WE'RE SEEING
THIS WE'RE SEEING THE
CONVERGENCE OF CONTENT NETWORK
AND TECHNOLOGY YOU OWN YOUR
CONTENT TO DISTRIBUTE CONTENT
AND YOU HAVE THE RIGHT
TECHNOLOGY TO BE THERE TO BE
SUCCESSFUL. ONE OF THINGS THAT
THEY'VE MANAGED TO DO IS
BASICS. SHE DID ALL THESE
AREAS, I MEAN POWERING
15 BILLION IN THE CONTENT
BARRING 2 BILLION TO GET TO
THAT CONTENT RIGHT SURE THAT
OFFERS AND CREATIVES AND ARTIST
ACTUALLY HAVE THAT AUTHORITY TO
ACTUALLY BE INDEPENDENT IS
ACTUALLY MAKING A BIG SPLASH
RIGHT SO THE FIX IN THE
CONTENT PEACE OTHER PEOPLE ARE
JUMPING INTO THE GAME AND THE
QUESTION IS IS IT GOING TO BE
AN ANSWER STRATEGY WE'RE IN WAR
STRATEGY AND WE THINK IT'S
GOING TO NEW TO NETFLIX AND
DISNEY PLUS WE'RE GOING TO DO
ROKU AND THAT WHAT YOU DO
SOMETHING PLUS AND WE THINK
THAT YOU'RE GOING TO HANDLE 3
OF THESE BUT NETFLIX IS TOP OF
MIND, LET'S TALK.
>> INTERNATIONALLY AS WELL FOR
NETFLIX THE GROWTH TRAJECTORY
THAT WE'VE SEEN FROM THEM OVER
THE PAST DECADE. CAN THEY
CONTINUE THAT GOING INTO
THIS NEXT DECADE, ESPECIALLY
GIVEN THE FACT THAT THEY NEED
TO IT IF AN INTERNATIONALLY HOW
DOES THAT LOOK IN COMPARISON TO
THE US AND THE GROWTH HERE.
>> WELL LOOKS LIKE NORTH
AMERICA HAS FLATTENED YOU LOOK
THE WAY THEY REPORTED THEIR
NUMBERS THE GROWTH RATES ARE 6,
7%. BUT WHAT WE'RE SEEING IS
BIGGER GROWTH RATES CAN ME A
BIGGER GROWTH RATES
IN 8 THAT WAS UNTAPPED WE'RE
SEEING GREER WERE GREATER
GROWTH RATES ALSO HAPPENING IN
LATIN AMERICA AND IT'S REALLY
BECAUSE THEY'VE BEEN ABLE TO.
CONTENT
THAT'S ACTUALLY THE LOCAL
REGIONS AND THAT'S ACTUALLY
HELP THEM A LOT WESTERN BEST
THING IN THAT CONTENT FOR LOCAL
LANGUAGE LOCAL
REGIONAL AREAS.
>> YES, I FROM THAT LOCALIZED
CONTENT THERE ARE ALSO TESTING
DIFFERENT PRICE POINTS LOWERING
THE PRICE
IN INDIA, HOW MUCH IS THEIR
PRICING POWER AND ABILITY TO
TEST THAT KIND OF THING GOING
TO PLAN TO THE INTERNATIONAL
GROWTH.
>> YEAH THAT FLEXIBILITY IN
PRICING HELPS THEM A LOT THEIR
BELATED ACTUALLY TAKE A SHOW
AND BILL MURRAY IN DIFFERENT
REGIONS THAT HAVE THE RIGHTS TO
DO THAT AT THE RIGHT PRICE
POINTS THAT'S GOING TO BE ART
TO MAKING SURE THAT THEY CAN
ACTUALLY TAKE CONTENT REUSE
THAT ACROSS
THE GLOBE. BUT WE'RE ALSO
SEEING CROSS OR SOMETHING
CONTENT IS PRODUCED IN INDIA IS
ACTUALLY MAKING ITS WAY OVER TO
THE LASER TO THE US WHERE
TO CANADA AND SO THERE'S A LOT
OF MIXING MATCHING THAT'S GOING
ON SO THEY'RE GETTING A LOT OUT
OF THE CONTENT AND BEST
BUT THAT THEY'RE MAKING THEY
HAVEN'T DISCLOSED THOSE NUMBERS
YOU ALREADY SAW NUMBERS FOR
IRISHMAN HIM AS A PRETTY
WHOPPING 27 MILLION VIEWERS
ALREADY AND THAT IS ACTUALLY
PRETTY
INTERESTING BECAUSE WE'RE
SEEING PEOPLE USE NETFLIX AS
BOATS FIRST RUN OR ALSO IN THE
THEATERS JUST TO MAKE THE
OSCARS. SO PRODUCERS APIC.
>> AND THAT'S AMAZING TO THINK
ABOUT WHEN IT'S NOT EVEN JUST
VIEWERS, THAT'S JUST THE NUMBER
POUNDS THAT ARE ACTUALLY
WATCHING IT AND COMPLETING 70%
OF IT
SEPARATELY THE BEST THAT YEAH
EXACTLY THINK ABOUT
THE ACTUAL EYEBALLS THE NUMBER
OF PEOPLE THAT ARE POTENTIALLY
WATCHING AS WELL AND IT COULD
BE A CONSIDERABLE MULTIPLIER AS
WELL THAT'S ON TOP
OF THAT BUT PARTICULARLY DISNEY
PLUS APPLE TV. PEACOCK I MEAN
YOU'VE GOT A BUNCH OF SERVICES
THAT ARE IN NOW THEY'RE OUT
THERE IN MARKET ALREADY
LAUNCHING IN EARLY TO MID 2020
WHO
HAS THE BEST OPPORTUNITY TO
COMPARE AND COMPETE AGAINST
NETFLIX.
>> I THINK DISNEY PLUS IS
PROBABLY THE BIGGEST THREAT TO
NETFLIX BUT I THINK IT'S GOING
TO BE AN AND STRATEGY, THE
CONTENT LIBRARY AT DISNEY
IS TREMENDOUS RIGHT, BUT IT'S
ALSO FAR PEACOCKING COMCAST
COME IN AFTER THIS PRETTY HARD
BUT IT'S REALLY CONTENT LIBRARY
AND REACH BUT NETFLIX GIVE HIM
A GLOBAL EXPANSION, IT'S MORE
THAN JUST THE
US FLAG. IT'S A GLOBAL PLAN
THAT GIVES THEM AN EDGE UP FOR
QUITE SOME TIME THAT'S WHY
WE'VE GOT $400 PRICE TARGET
FOR THEM. WE THINK THEY CAN HIT
THAT AND I THINK IT'S GOING TO
BE A VERY INTERESTING YEAR TO
SEE WHO FALL DOWN ALONG THE
WAY. APPLE IS TRYING TO PLAY
THE NEUTRAL GROUND. SO I THINK
THEY'VE GOT CONTENT THERE IT'S
PART OF A BROADER STRATEGY,
IT'S A LITTLE DIFFERENT
STRATEGY NOT TRYING TO DOMINATE
THE CONSTANT WARS,
BUT WHAT THEY WANT PEOPLE TO
THINK OF THEM AS POP OF MINE IN
A SUBSCRIPTION BUSINESS AND
CONTENT AND CONTENT AND MOVIES
AND STREAMING AN ARCADE IS JUST
ONE PART OF THAT.
>> MONITISE NATION STRATEGIES
FOR THESE DIFFERENT PLATFORMS
THAT NETFLIX HAS INSISTED THAT
IT'S NOT GOING TO HAVE
TRADITIONAL ADVERTISEMENTS.
DO YOU BUY THAT FOR NETFLIX'S
FUTURE ARE THEY GOING TO HAVE
TO FIND OTHER STREAMS OF
REVENUE ASIDE FROM
SUBSCRIPTIONS.
>> I ACTUALLY THINK THEY MIGHT
SHOOT AN OPPORTUNITY TO DO
PRODUCT PLACEMENT GIVEN WHAT
THEY'RE DOING WITH
THE CONTENT SO I THINK YOU MAY
SEE SOME REVVING ITS COME
THROUGH ON THE PRODUCT
PLACEMENTS I I DON'T THINK
THEY'RE GOING TO SPRAY PASTOR.
NON ADS OR DID MODEL WHICH IS
ALL PURE SUBSCRIPTIONS THEY
HAVE THE CUSTOMER'S TRUST AND I
DON'T THINK THEY'RE GOING TO
BREAK THAT.
>> DEPOSIT GOING INTO 2020 WHAT
DO YOU THINK INVESTORS ARE
GOING TO DO.
>> YOU KNOW IT'S UP THERE AND I
INVESTORS WHO HAVE BEEN WITH
NETFLIX FOR A WHILE MIGHT SELL
A LITTLE
BET, BUT I THINK THEY'RE STILL
BETTING ON THAT PUTS THE DO
REALLY WELL UM I
THINK THAT BANK STOCKS FROM
THIS IS PART OF THE BROADER
PORTFOLIO THE FANG THIS IS THE
BEST
PERFORMING ONE OTHER MISS YOU
MIGHT BE BUYING DOMINOES PIZZA
WHICH ALSO DID REALLY WELL WHAT
ABOUT IT TECH STOCK THAT HAS
THAT KIND
OF RETURNS BUT I THINK VISIT
ONE OF THOSE UH YOU KNOW I
THINK IS ONE OF SPYING HOLD
STOCKS AT LEAST FOR THE MID
PART OF THE DECADE.
>> ALL LOOK RE YOU CERTAINLY
PROBABLY WON THE CHEDDAR SUPPER
LIVE AWARD FOR BEST SKYPE
BACKGROUND HERE IN
20 YET. YES, WELL, TELL YO