Netflix, Greg. Warner Pet. Greg Peters, Greg, thank you for accepting our invitation.
My pleasure. My pleasure to have you here.
Greg, we are following of course the dispute between Netflix and Paramount for the Warner Bros. company. I'd like to understand why do Netflix thinks it has the best offer?
Well, I would say right now we have a signed agreement. So, we have the agreement that the Warner Brothers board has determined is the best offer. Unanimously approved it. And if you look at it quite frankly we think that one, it's an offer that provides certainty. It's very clear we've switched all cash to make that very undisputable. And I would say also when you look at the value of the combined entity both the streaming service and the studios plus then the Discovery Global Networks that'll be spun off. The board has determined that putting those things together that our offer was better than the competitive offers.
And Greg, what's the interest for the Warner Bros company? It's the infrastructure, it's the catalog. What's what you're looking for in this deal?
Yeah, I would say once we started analyzing the deal and learning more about it, really you could say the simplest way to put it is that we saw what Warner has built and the assets that they have would work better in our model. And that we would be actually better as a company as a result. Simple example of this is, you know, Warner Brothers has an incredible library of titles that they've produced over a hundred years. And we think we have quite frankly the best global streaming service. So we have more global reach. We think we have a better product experience. So if we take those titles and we put them in that service, we automatically are creating more value for consumers and for our members as a result.
Greg, do antitrust policies concern you in that deal? Of course, here in Brazil, that is important market for you. In the United States, in Europe, does it concern you?
I think of course regulators are going to want to look at the deal. We expect that that's natural and of course we'll participate and help them in that process. But we feel very confident that they will ultimately conclude based on the data that this is a deal that they should approve. And there's really sort of two lenses that you might say to answer that question and it's why we're confident. One is if you look at the stakeholders that are involved in this. So if you look at consumers, this is a better deal for consumers. We're going to give them more entertainment value. If you look at creators, we are going to grow the amount of production that we are doing. We are going to create more opportunities for creators around the world and give them bigger audiences as well. That means more productions, that means more jobs. You know, we're also more, you know, frankly focused on innovation and driving those experiences forward. So we think basically everyone wins from that. And then the other lens you might look at it is what's the competitive environment. And if you look at TVs, these are increasingly competitive environments. So that we've got folks like YouTube coming to the TVs. They're doing things like American football games. One of the American football games was actually here in Brazil not too long ago. They're doing Oscars. You can see long form film and series on YouTube. So they are looking more and more like what we traditionally saw TV. Whether you've got tech competitors like Amazon and then MGM, you've got Apple competing for Emmys and Oscars. You know, there's just Globo here in Brazil. You know, a very fearsome competitor, I would say. So you just have so much competition for TV time. That's going to get even more competitive. I would say you've got Instagram coming to the TV as well. So, we just think that the regulatory authorities will look at that and will determine, you know, there is no problem with competition and there is space for so many players in that market. There is when we see actually more and more players coming in to compete for time on the television.
Okay. Thinking about Amazon for example or Google, the streaming business is not their core business. How can Netflix compete with them? Thinking the core business of Netflix is the streaming service.
Yeah. Well, I think you just said it right, which is that, you know, there are advantages that they have and there are disadvantages. And some of the advantages is they're gigantic companies that bring tremendous amount of capabilities. They can leverage other things into the mix. But the disadvantage they have is it's not their primary focus. And for us, it is our primary focus. Essentially, our business is are we satisfying consumers, our members with entertainment or not? And we live or die by that essentially. So we have to be great at that because otherwise we do not have a business.
But they have a capacity to do investments for example that is comparable to you.
Well or exceeds us I would say if they really want to they have way more economic capacity than we do for sure but again they're trying to solve multiple problems. They have many many priorities. We have one priority which is you know work with the best storytellers on the planet and give our members the most compelling entertainment.
Greg, last year you had generated 1.5 billion dollars in advertising revenue. Last year I would like to understand if the consumer is willing to see advertising while watching a movie for example.
Well, I would say the best part of our entry into the advertising business has been to give more consumers on the planet the ability to access the library of content that we have at a lower price point because they think that actually a lower price point plus ads is a better option for them. You mentioned film. It's a great example like we actually do just advertising at the beginning of newer films so we don't break up that film. So, we're trying to be, it's just one example of where we're trying to be thoughtful about the content, thoughtful about the content experience, and balance essentially giving the viewer a great entertainment experience while supporting the brand and the brand's need to tell their story. And so that we can actually balance the advertising revenue with the subscription.
Right? And that advertising is focused on each consumer of it.
You mean targeted and personalized? Yes. I mean, it's a really good point actually because you have the old world of television advertising. You know, you have some amazing, we've all seen commercials that have, you know, made us laugh and things like that. So, it's a very fun way to tell brand stories, but there was no targeting. There was no personalization. Everyone got the same ad. Digital, of course, has the ability to personalize, to target, to measure. So, now we can bring these two worlds together and essentially bring the best of both worlds.
Greg, thinking about the Brazilian tax scenario, you had an impact of tax matters last year. It was deeply discussed. I'd like to understand how is it to operate here in Brazil, a market that is so important to you, but I would like to understand these difficulties. Of course if we think for example the tributes you pay here.
Yeah. Well, I'd say every country is different, right? And every country has opportunities and challenges, but you know, maybe just stepping back, we're in an office that we just spent some time building out here that we hope will serve us, you know, in Brazil for, you know, decades to come. We've built more capacity here to handle growth. We've actually grown the number of people, number of employees we've had in Brazil by 20% over the last year because that's the kind of commitment we have to the country and to work with the great storytellers that come from Brazil. So, you know, I'd say we're, you know, we always work with the governments as well. We want to be positive contributors to the communities that we operate in and you know, partly that means paying taxes. That's a good thing. You know, we want to do so in a smart, predictable way. And so our job is to, you know, have a discussion with the government and make sure that we're both getting what we want.
