We compete very broadly for a share of members’ time and spending, against linear networks, pay-per-view content, DVD watching, other Internet networks, video games, web browsing, magazine reading, video piracy, and much more. Over the coming years, most of these forms of entertainment will improve. Linear networks have mostly exclusive content against each other, and this is increasingly true for Internet networks. Piracy and pay-per-view are the only two competitors that offer a nearly full set of TV show and movie content. We call competitors for entertainment time and spending “competitors-for-time”. We call the narrower set of firms that do bid against us for content “competitors-for-content”. The network that we think is likely to be our biggest long-term competitor-for-content is HBO. In the USA for example, HBO recently won long-term exclusive domestic movie output deals with Universal and Fox. HBO bids against us on many original content projects though is not currently a bidder against us for prior-season television from other networks. HBO has global reach and a strengthening technology capacity. In addition to HBO, there are Amazon Prime Instant Video in the USA and UK, Hulu in the USA, Now TV in the UK, Viaplay in the Nordics, Clarovideo in Latin America, and many cable and broadcast networks in various territories. Amazon and Hulu are spending heavily and commissioning their own original programming, presumably because they see the same exciting big picture for Internet TV that we do. Many consumers will subscribe to multiple services if they each have unique compelling content. Success relative to these competitors-for-content would mean us having substantially larger revenue and therefore sustainably increasing content, tech and marketing spending, leading to further growth, and a virtuous cycle.

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