Mark Douglas

"We're partnering with Google, with OpenAI... We actually went on Instagram, found a really good creator... The cost is coming down... but the amount of activity is going up substantially." This is a classic Jevons Paradox. As AI (Google/OpenAI models) drives the cost of ad *production* to zero, the volume of ads created will explode. This increased supply of creative content increases demand for *distribution* inventory (Instagram/YouTube) and the underlying AI compute/models (Google). Long the platforms that own the distribution and the AI models powering the creative explosion. AI regulation (watermarking requirements mentioned); saturation of ad inventory lowering CPMs.

"We're partnering with Google, with OpenAI... We actually went on Instagram, found a really good creator... The cost is coming down... but the amount of activity is going up substantially." This is a classic Jevons Paradox. As AI (Google/OpenAI models) drives the cost of ad *production* to zero, the volume of ads created will explode. This increased supply of creative content increases demand for *distribution* inventory (Instagram/YouTube) and the underlying AI compute/models (Google). Long the platforms that own the distribution and the AI models powering the creative explosion. AI regulation (watermarking requirements mentioned); saturation of ad inventory lowering CPMs.

"I continue to say their ad business is a big backlog of revenue. One out of every two new subscribers... are signing up for the ad tier. They haven't yet fully monetized it... I personally, I think it's an opportunity to buy." The market is currently pricing Netflix based on current ad revenue, but the "backlog" of unmonetized inventory suggests a future revenue ramp that isn't priced in. The recent "soft patch" provides an entry point before they optimize ad monetization. Long NFLX as they unlock the ad-tier revenue stack. Failure to attract advertisers to fill the growing inventory; consumer pushback on ad load.