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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 memberships; the decline in our
DVD memberships and the resources allocated to our DVD segment; the market opportunity for streaming
content; contribution margins; contribution profits (losses); liquidity; free cash flows; revenues; net income;
legal costs; operating cash flows; stock price volatility; obtaining additional capital; our content library and
marketing investments, including investments in original programming; significance of future contractual
obligations; realization of 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 44 million streaming members in over 40 countries enjoying more than one billion hours of TV
shows and movies per month, including original series. Our members can watch as much as they want, anytime,
anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without
commercials or commitments. Additionally, in the United States (“U.S.”), our members can receive DVDs
delivered quickly to their homes.
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.
Our core strategy is to grow our streaming subscription business domestically and internationally. We are
continuously improving our members’ experience—expanding our streaming content, with a focus on
programming an overall mix of content that delights our customers, 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.
We continue to grow our streaming service both domestically and internationally. We began our
international expansion with Canada in 2010 and have since launched our service in Latin America and several
European territories. We anticipate a substantial expansion of our service in Europe in late 2014. We have also
expanded our streaming content offering to include more exclusive and original programming, including several
Emmy and Golden Globe nominated original series in 2013.
Prior to July 2011, in the U.S., our streaming and DVD-by-mail operations were combined and members
could receive both streaming content and DVDs under a single “hybrid” plan. In July 2011, we separated the
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