NetFlix 2009 Annual Report Download - page 42

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$11.5 million increase in marketing program spending, principally in TV and radio advertising and direct mail to
promote our hybrid service of streaming content and DVDs by mail. Subscriber acquisition cost decreased
primarily due to momentum associated with the launch of new consumer electronics partner devices and the
broad appeal of streaming content.
Year ended December 31, Change
2008 2007 2008 vs. 2007
Marketing ........................................ $199,713 $218,212 (8.5)%
As a percentage of revenues ...................... 14.6% 18.1%
Other Data:
Gross subscriber additions ....................... 6,859 5,340 28.4%
Subscriber acquisition cost ....................... $ 29.12 $ 40.86 (28.7)%
The $18.5 million decrease in marketing expenses was primarily attributable to a $34.2 million decrease in
marketing program spending, principally in direct mail and inserts, offset partially by an increase of $11.5
million in spending related to affiliates including our consumer electronics partners. 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. The decrease was partially offset by
higher personnel-related costs due to higher headcount and an increase in the costs of free trial periods due to the
28.4% increase in gross subscriber additions. Subscriber acquisition cost decreased in 2008 as compared to 2007
primarily due to more efficient marketing spending.
General and Administrative
General and administrative expenses consist of payroll and related expenses for executive, finance, content
acquisition and administrative personnel, as well as recruiting, professional fees and other general corporate
expenses.
Year ended December 31, Change
2009 2008 2009 vs. 2008
(in thousands, except percentages)
General and administrative ........................... $51,333 $49,662 3.4%
As a percentage of revenues .......................... 3.1% 3.6%
The $1.7 million increase in general and administrative expenses was primarily attributable to a $7.4 million
increase in legal costs offset partially by a $2.7 million decrease in costs related to our subsidiary, Red Envelope
Entertainment, a $2.1 million release of accruals in 2009 associated with a former class action suit that was
settled in 2008, and decreases in personnel-related costs.
Year ended December 31, Change
2008 2007 2008 vs. 2007
(in thousands, except percentages)
General and administrative ........................... $49,662 $52,404 (5.2)%
As a percentage of revenues .......................... 3.6% 4.3%
The $2.7 million decrease in general and administrative expenses was primarily attributable to a $2.6
million decrease in costs related to our subsidiary, Red Envelope Entertainment, as well as a $3.2 million
decrease in legal costs. These decreases were partially offset by an increase in personnel-related costs due to a
9.6% increase in headcount.
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