NetFlix 2009 Annual Report Download - page 11

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office in Beverly Hills, California in order to maintain effective working relationships with the major
studios. We obtain content through direct purchases, revenue sharing agreements and license agreements.
We work with the content providers to determine which method of acquiring titles is the most beneficial for
each party. Our growing subscriber base provides studios with an additional distribution outlet for popular
movies and TV episodes, as well as niche titles and programs.
Expanding the number of devices capable of streaming video from Netflix. We have engaged a number of
consumer electronics partners to offer instant streaming of content from Netflix to various devices. We
currently offer subscribers the ability to stream content through their computers and other devices, including
the Xbox 360, PlayStation3, Internet-connected TVs and Blu-ray players, TiVo, and the Roku video digital
player. We intend to broaden our partner relationships over time so that more devices, such as the Nintendo
Wii game console, are capable of streaming content from Netflix. By providing consumers with a broad
array of devices capable of streaming content from Netflix, we believe that we enhance the value of our
service to subscribers as well as position ourselves for continued growth as the Internet delivery of content
becomes more popular.
Our web site—www.netflix.com
We apply substantial resources to develop and maintain technology to implement the features of our Web
site, such as subscription account signup and management, personalized movie merchandising, inventory
optimization and streaming content. We believe that our Web site provides our subscribers with an easy-to-use
interface that enhances the value of our service. We believe that our ability to personally merchandise our content
through the Web site optimizes subscriber satisfaction and management of our library by integrating the
predictions from our recommendation and merchandising technology, each subscriber’s current queue and
viewing history, inventory levels and other factors to determine which movies to promote to each subscriber.
Subscribers pay for our service by a credit or debit card. We utilize third party services to authorize and process
our payment methods. Throughout our Web site, we have extensive measurement and testing capabilities,
allowing us to continuously optimize our Web site according to our needs, as well as those of our subscribers.
We use random control testing extensively, including testing service levels, plans, promotions and pricing.
Merchandising
We use our proprietary recommendation and merchandising technology along with other data to determine
which titles are presented to a subscriber. In doing so, we believe we provide our subscribers with a quick and
personalized way to find titles they are more likely to enjoy while also effectively managing our inventory
utilization. Our merchandising efforts are used throughout our web site to determine which titles are displayed to
subscribers, including the generation of lists of similar titles. We believe our merchandising efforts create a
powerful method for catalog browsing and efficient library utilization.
We also provide our subscribers with detailed information about each title in our library which helps them
select movies they will enjoy. This information may include:
• factual data, including length, rating, cast and crew, special DVD features and screen formats;
• movie trailers and other editorial perspectives, including plot synopses and reviews written by our
editors, third parties and by other Netflix subscribers; and
• data from our recommendation and merchandising technology, including personal rating, average rating
and other similar titles the subscriber may enjoy.
Marketing
We use multiple marketing channels through which we attract subscribers to our service. Online advertising
is an important channel for acquiring subscribers. We advertise our service online through such vehicles as paid
search listings, banner ads, text links and permission based e-mails. In addition, we have an affiliate program
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