NetFlix 2004 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2004 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.

Page out of 95

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95

In฀addition,฀we฀plan฀to฀launch฀Internet฀delivery฀of฀movies฀in฀2005.฀One฀of฀the฀฀
reasons฀the฀online฀DVD฀rental฀space฀has฀become฀so฀attractive฀to฀competitors฀฀
is฀that฀it฀is฀the฀gateway฀to฀success฀in฀Internet฀delivery฀of฀movies.฀Our฀long-term฀
strategy฀has฀always฀been฀to฀seize฀leadership฀of฀that฀new฀market฀by฀building฀฀
a฀large฀subscriber฀base฀and฀offering฀those฀subscribers฀the฀choice฀of฀mail฀or฀
Internet฀delivery.
We฀expect฀that฀Internet฀movie฀delivery฀will฀eventually฀become฀a฀large฀business.฀
But฀we฀also฀believe฀that฀since฀movie฀studios฀today฀derive฀more฀than฀half฀of฀their฀
revenues฀from฀DVD฀sales฀and฀rentals,฀they฀will฀wait฀to฀license฀the฀rights฀for฀elec-
tronic฀distribution฀of฀new฀releases฀until฀they฀have฀maximized฀their฀income฀from฀
DVD฀sales฀and฀rentals.฀For฀the฀foreseeable฀future,฀digital฀download฀will฀be฀mostly฀
back-catalog฀titles,฀and฀therefore฀it฀will฀be฀a฀very฀small฀contributor฀to฀our฀total฀
revenues฀in฀the฀near฀term.฀
An฀Exciting฀Future
We฀look฀to฀2005฀with฀a฀great฀deal฀of฀optimism.฀While฀we฀will฀respond฀aggres-
sively฀to฀near-term฀competitive฀threats,฀we฀are฀confident฀that฀the฀superiority฀of฀฀
our฀product,฀the฀strength฀of฀our฀balance฀sheet฀and฀business฀model฀and฀the฀skill฀
and฀dedication฀of฀our฀employees฀will฀enable฀us฀to฀sustain฀our฀market฀leadership฀
and฀deliver฀long-term฀value฀to฀our฀shareholders.
Thank฀you฀for฀your฀continued฀support.
Sincerely,
Reed฀Hastings
10
The฀best฀keeps฀getting฀better.฀Netflix฀has฀earned฀the฀loyalty฀of฀nearly฀3฀million฀customers฀by฀making฀it฀easier฀฀
for฀people฀to฀discover฀and฀watch฀movies฀they฀will฀enjoy.฀We฀are฀able฀to฀provide฀an฀easy฀and฀seamless฀experience฀฀
for฀our฀customers฀because฀we’re฀focused฀on฀our฀promise฀to฀deliver฀the฀best฀online฀entertainment฀experience฀and฀฀
we฀continue฀to฀innovate฀to฀keep฀“the฀Netflix฀experience”฀the฀best.