The one material difference worth noting is original content production is cash-intensive and that means for us that cash is front loaded relative to the P&L. The expansion of original content will consume cash. Since we are otherwise using domestic profits to fund international markets, we will raise capital as needed to fund the growth of original content.
We’ve had a great start with our initial set of original series. Any linear network would be proud to show them. Our success is due in part to great creative execution by our team as well as the power of our large on-demand platform.
We’ll steadily grow our original content spending, and pace ourselves so that we have a high percentage of hits and stay efficient in terms of what we spend relative to licensed content.
International
The market structure for licensing movies and TV series is generally national, or, in some cases, a multinational region like the Nordics. We work within that distribution architecture, licensing our content for each market at prevailing prices.
Each market has a mix of local and global content tastes. We assess them from a variety of information sources before we enter a market, and then after launch we learn more about what is most popular and what is not. As we smartly add and renew deals, the content mix improves.
When we enter a market, we have to win the bidding for a substantial offering of content, and then market ourselves effectively to start the membership growth. It is an expensive process, but we believe any future competitor will have the same or larger challenges.
Our advantages internationally are that our global technology investment is creating a superior app and service, our process knowledge, our data from related markets, and our globally-known brand. We strive to meet local tastes, but our disadvantage is not knowing each specific culture as well as local competitors.
Our strategy is to expand as quickly as possible while staying profitable on a global basis, as long as there are compelling markets to expand into, and we are continuing to see growth in our current markets.
Economic power comes from market-specific scale. We would be stronger being the leader in a few markets than one of the herd in many markets. Of course, our ambition is to be the leader in many markets, but that will take us some time.
The one material difference worth noting is original content production is cash-intensive and that means for us that cash is front loaded relative to the P&L. The expansion of original content will consume cash. Since we are otherwise using domestic profits to fund international markets, we will raise capital as needed to fund the growth of original content.
We’ve had a great start with our initial set of original series. Any linear network would be proud to show them. Our success is due in part to great creative execution by our team as well as the power of our large on-demand platform.
We’ll steadily grow our original content spending, and pace ourselves so that we have a high percentage of hits and stay efficient in terms of what we spend relative to licensed content.
International
The market structure for licensing movies and TV series is generally national, or, in some cases, a multinational region like the Nordics. We work within that distribution architecture, licensing our content for each market at prevailing prices.
Each market has a mix of local and global content tastes. We assess them from a variety of information sources before we enter a market, and then after launch we learn more about what is most popular and what is not. As we smartly add and renew deals, the content mix improves.
When we enter a market, we have to win the bidding for a substantial offering of content, and then market ourselves effectively to start the membership growth. It is an expensive process, but we believe any future competitor will have the same or larger challenges.
Our advantages internationally are that our global technology investment is creating a superior app and service, our process knowledge, our data from related markets, and our globally-known brand. We strive to meet local tastes, but our disadvantage is not knowing each specific culture as well as local competitors.
Our strategy is to expand as quickly as possible while staying profitable on a global basis, as long as there are compelling markets to expand into, and we are continuing to see growth in our current markets.
Economic power comes from market-specific scale. We would be stronger being the leader in a few markets than one of the herd in many markets. Of course, our ambition is to be the leader in many markets, but that will take us some time.
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