NetFlix 2008 Annual Report Download - page 39

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Marketing
Year Ended December 31,
2008 2007 2006
(in thousands, except percentages and
subscriber acquisition cost)
Marketing ........................................ $199,713 $218,212 $225,436
As a percentage of revenues ...................... 14.6% 18.1% 22.6%
Percentage change over prior period ................... (8.5)% (3.2)%
Other data:
Gross subscriber additions ....................... 6,859 5,340 5,250
Percentage change over prior period ............... 28.4% 1.7%
Subscriber acquisition cost ....................... $ 29.12 $ 40.86 $ 42.94
Percentage change over prior period ............... (28.7)% (4.8)%
The decrease in marketing expenses in absolute dollars in 2008 as compared to 2007 was primarily
attributable to a decrease in marketing program spending, principally in direct mail and inserts. In the second half
of 2007, we lowered prices on our most popular subscription plans and decided to partially offset the cost of our
investment in lower prices by reducing our spending on marketing programs. Subscriber acquisition cost
decreased in 2008 as compared to 2007 primarily due to more efficient marketing spending.
The decrease in marketing expenses in absolute dollars in 2007 as compared to 2006 was primarily
attributable to a decrease in marketing program spending, principally in television advertising and direct mail.
Subscriber acquisition cost decreased in 2007 as compared to 2006 primarily due to more efficient marketing
spending.
General and Administrative
Year Ended December 31,
2008 2007 2006
(in thousands, except percentages)
General and administrative ................................ $49,662 $52,404 $35,987
As a percentage of revenues ............................ 3.6% 4.3% 3.6%
Percentage change over prior period ......................... (5.2)% 45.6%
The decrease in general and administrative expenses in absolute dollars in 2008 as compared to 2007 was
primarily attributable to a decrease in costs related to our subsidiary, Red Envelope Entertainment, as well as a
decrease in costs related to legal proceedings. These decreases were offset by an increase in personnel-related
costs.
The increase in general and administrative expenses in absolute dollars in 2007 as compared to 2006 was
primarily attributable to an increase in personnel-related costs due to growth in headcount. The increase was also
attributable to higher costs related to legal proceedings.
Gain on Disposal of DVDs
Year Ended December 31,
2008 2007 2006
(in thousands, except percentages)
Gain on disposal of DVDs ................................. $(6,327) $(7,196) $(4,797)
As a percentage of revenues ............................ (0.4)% (0.5)% (0.5)%
Percentage change over prior period ......................... (12.1)% 50.0%
The decrease in gain on disposal of DVDs in absolute dollars in 2008 as compared to 2007 was primarily
attributable to a decrease in the sales price of DVDs.
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