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PART I
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal
securities laws. These forward-looking statements include, but are not limited to, statements regarding: our core
strategy; the growth of Internet delivery of content; the growth in our streaming subscriptions and the decline in
our DVD subscriptions; the market opportunity for streaming content; contribution margins; contribution profits
(losses); liquidity; free cash flows; revenues; net income; legal costs; operating cash flows; impacts relating to
our pricing strategy; our content library and marketing investments, including investments in original
programming; significance of future contractual obligations; realization of future deferred tax assets;
seasonality; method of content delivery; and international expansion. These forward-looking statements can be
identified by our use of words such as “expects”, “will”, “anticipate”, “may”, “could”, “would”, “should”,
“intend”, “continue”, and derivatives thereof. These forward-looking statements are subject to risks and
uncertainties that could cause actual results and events to differ. A detailed discussion of these and other risks
and uncertainties that could cause actual results and events to differ materially from such forward-looking
statements is included throughout this filing and particularly in Item 1A: “Risk Factors” section set forth in this
Annual Report on Form 10-K. All forward-looking statements included in this document are based on
information available to us on the date hereof, and we assume no obligation to revise or publicly release any
revision to any such forward-looking statement, except as may otherwise be required by law.
Item 1. Business
About us
Netflix, Inc. (“Netflix”, “the Company”, “we”, or “us”) is the world’s leading Internet television network
with more than 33 million members in over 40 countries enjoying more than one billion hours of TV shows and
movies per month, including original series. For one low monthly price, our members can watch as much as they
want, anytime, anywhere, on nearly any Internet-connected screen. Additionally, in the United States (“U.S.”),
our subscribers can receive standard definition DVDs, and their high definition successor, Blu-ray discs
(collectively referred to as “DVD”), delivered quickly to their homes.
Our core strategy is to grow our streaming subscription business domestically and internationally. We are
continuously improving the customer experience—expanding our streaming content, with a focus on
programming an overall mix of content that delights our customers, including exclusive and original content,
enhancing our user interface and extending our streaming service to even more Internet-connected devices while
staying within the parameters of our consolidated net income (loss) and operating segment contribution profit
(loss) targets. Contribution profit (loss) is defined as revenues less cost of revenues and marketing expenses.
We are a pioneer in the Internet delivery of TV shows and movies, launching our streaming service in 2007.
Since this launch, we have developed an ecosystem for Internet-connected devices and have licensed increasing
amounts of content that enable consumers to enjoy TV shows and movies directly on their TVs, computers and
mobile devices. As a result of these efforts, we have experienced growing consumer acceptance of and interest in
the delivery of TV shows and movies directly over the Internet.
In September 2010, we began international operations by offering our streaming service in Canada. In the
past two years, we have continued our international expansion and now also offer our streaming service in Latin
America, the United Kingdom (“U.K.”), Ireland, and the Nordic countries of Finland, Denmark, Sweden, and
Norway.
Prior to July 2011, in the U.S., our streaming and DVD-by-mail operations were combined and subscribers
could receive both streaming content and DVDs under a single “hybrid” plan. In July 2011, we separated the
combined plans, making it necessary for subscribers who wish to receive both DVDs-by-mail and streaming
content to have two separate subscription plans.
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