NetFlix 2002 Annual Report Download - page 34

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Please find page 34 of the 2002 NetFlix annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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In addition to these factors, our operating results may fluctuate based upon seasonal fluctuations in DVD player sales and in the use of the Internet. During our limited operating history, we
have experienced greater additions of new subscribers during late fall and the winter months, and these seasonal fluctuations may continue in future periods.
If our efforts to build strong brand identity, and improve subscriber satisfaction and loyalty are not successful, we may not be able to attract or retain subscribers, and our
operating results will be affected adversely.
The Netflix brand is young, and we must continue to build strong brand identity. To succeed, we must continue to attract and retain a large number of owners of DVD players who have
traditionally relied on store−based rental outlets and persuade them to subscribe to our service through our Web site. We may be required to incur significantly higher advertising and
promotional expenditures than we currently anticipate to attract large numbers of new subscribers. We believe that the importance of brand loyalty will increase with a proliferation of DVD
subscription services and other means of distributing titles, such as VOD. If our branding efforts are not successful, our operating results and our ability to attract and retain subscribers will
be affected adversely.
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