NetFlix 2004 Annual Report Download - page 23

VOD and downloading of movies over the Internet have received considerable media attention recently.
VOD, for example, is now widely available in most major hotels and has early deployments in many major cable
systems. Within a few years, we believe VOD will become widely available to digital cable and satellite
subscribers. VOD carries as many titles as can be effectively merchandized on a set-top box platform, which we
believe to be generally up to 100 recent releases plus adult content. For consumers who primarily want the latest
big releases, VOD may be a convenient distribution channel. Downloading of movies over the Internet is
currently available from a limited number of providers, such as Movielink and CinemaNow, and typically
involves delivery of content to a personal computer. We believe that our strategy of developing a large and
growing subscriber base for DVD rentals and our ability to personalize our library to each subscriber by
leveraging our extensive database of user preferences positions us favorably to provide digital distribution of
filmed entertainment as that market develops.
Employees
As of December 31, 2004, we had 940 full-time employees. We also utilize part-time and temporary
employees, primarily in our fulfillment operations, to respond to the fluctuating demand for DVD shipments. As
of December 31, 2004, we had 253 temporary employees. Our employees are not covered by a collective
bargaining agreement, and we consider our relations with our employees to be good.
Intellectual Property
We use a combination of patent, trademark, copyright and trade secret laws and confidentiality agreements
to protect our proprietary intellectual property. In 2003, we were issued a broad business method patent covering,
among other things, our subscription rental service. The patent will expire in 2020. In addition to the patent
covering the rental method invention, we have filed additional patent applications. We have a registered
trademark for the Netflix name and copyrights on the content of our Web site. We have filed applications for
additional trademarks as well.
Enforcement of intellectual property rights is costly and time consuming. To date, we have relied primarily
on proprietary processes and know-how to protect our intellectual property. It is uncertain if and when our other
patent and trademark applications may be allowed and whether they will provide us with a competitive
advantage.
From time to time, we encounter disputes over rights and obligations concerning intellectual property. We
believe that our service offering does not infringe the intellectual property rights of any third party. However, we
cannot assure you that we will prevail in any intellectual property dispute.
Other Information
We were incorporated in Delaware in August 1997 and completed our initial public offering in May 2002.
Our principal executive offices are located at 970 University Avenue, Los Gatos, California 95032, and our
telephone number is [phone]. We maintain a Web site at www.netflix.com. The contents of our Web site
are not incorporated in, or otherwise to be regarded as part of, this Annual Report on Form 10-K. In this Annual
Report on Form 10-K, “Netflix,” the “Company,” “we” and the “registrant” refer to Netflix, Inc.
Our investor relations Web site is located at http://ir.netflix.com. We make available, free of charge, on our
investor relations Web site under “SEC Filings” our Annual Reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to these reports as soon as reasonably practicable after
electronically filing or furnishing those reports to the Securities and Exchange Commission.
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