NetFlix 2003 Annual Report Download - page 7
Download and view the complete annual report
Please find page 7 of the 2003 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.5Netflix2003AnnualReport 5
Netflix2003AnnualReport
regionalshippingcentersthroughouttheUnitedStates.TheNetflixwebsite,fromwhichour
subscribersrequesttheirmovies,providesextensiveinformationabouttitles,aswellascritic
reviews,memberreviews,onlinetrailers,ratingsandpersonalizedmovierecommendations.
InvestinginTheNetflixExperience
In2003weinvestedinmoreinventorytoimprovetheNetflixsubscriberexperience.
Wealsoinvestedinfasterdeliverytooursubscribersbyopeningmoreshippingcenters.
Wenowoperateanationalnetworkofshippingcentersthatallowsustoreachmore
than80percentofourcustomersnationwidewithgenerallynext-daydelivery.
Ourinvestmentsincontinuallyimprovingthe“Netflixexperience”havebeenrewarded
handsomely.Customersatisfactionisatanall-timehigh.Churnisatanall-timelow.Andour
extraordinarygrowthinsubscriberscontinuestoincreaseataviralpace.Satisfiedcustomers
telltheirfriendsaboutNetflix,thesefriendsjoin,becomesatisfiedcustomers,andthentell
theirfriendsabouttheservice.Thisgrowth,inturn,improvesourefficienciesandmargins.
We’rereachingeconomiesofscalethatcontributeevenmoretothebottomline.
Continued,AcceleratedGrowth
Alloftheseresultsmakeusconfidentthatwewillbeabletoreachournextgoaloffive
millionsubscribersand$1billioninrevenuesinthe2006-2007timeframe—onetotwo
yearsearlierthanourpreviousprojections.
Manyfactorsunderlieourincreasingconfidenceinthebusiness:
First,DVDadoptioncontinuestogrow.Morethanone-halfofallU.S.homesnowhave
aDVDplayer,andinthespaceoffiveyearsitisexpectedthatvirtuallyeveryU.S.TV
household—100millionofthem—willhaveoneormoreplayers.Withtoday’sDVDrental
marketaccountingformorethan$5billioninrevenue,and2008estimatespeggedat
$10billion,DVDisclearlytherocketpropellingstudioprofitsandgrowth.
Thesecondfactorunderlyingourincreasedconfidenceisgrowingpublicacceptanceof
theInternet,notonlyasamediumforsafeandsecureshopping,butasanintegralpart
ofpeople’slives.Eachyear,consumersaregettingmorecomfortableusingtheInternetin
moreaspectsoftheirlives,andalltheleadinge-commercecompanies,includingNetflix,
aregrowingimpressively.
Thelargeandgrowingbarrierstocompetitiveentryarethethirdfactor.Verylarge
companieshavetriedtogainafootholdinourmarketandhavenotsucceededafter
morethan15monthsofeffort.Ourserviceissuperior,veryhardtoduplicate,andour
1.5millionsubscribersareverysatisfied.Wehavegreatmomentum.
LettertoShareholders