NetFlix 2015 Annual Report Download - page 13

and similar disruptions. These systems periodically experience directed attacks intended to lead to interruptions
and delays in our service and operations as well as loss, misuse or theft of data. Any attempt by hackers to obtain
our data (including member and corporate information) or intellectual property (including digital content assets),
disrupt our service, or otherwise access our systems, or those of third parties we use, if successful, could harm
our business, be expensive to remedy and damage our reputation. We have implemented certain systems and
processes to thwart hackers and protect our data and systems. To date hackers have not had a material impact on
our service or systems however this is no assurance that hackers may not be successful in the future. Our
insurance does not cover expenses related to such disruptions or unauthorized access. Efforts to prevent hackers
from disrupting our service or otherwise accessing our systems are expensive to implement and may limit the
functionality of or otherwise negatively impact our service offering and systems. Any significant disruption to
our service or access to our systems could result in a loss of memberships and adversely affect our business and
results of operation.
We utilize our own communications and computer hardware systems located either in our facilities or in that
of a third-party Web hosting provider. In addition, we utilize third-party “cloud” computing services in
connection with our business operations. We also utilize our own and third-party content delivery networks to
help us stream TV shows and movies in high volume to Netflix members over the Internet. Problems faced by us
or our third-party Web hosting, “cloud” computing, or other network providers, including technological or
business-related disruptions, as well as cybersecurity threats, could adversely impact the experience of our
members.
We rely upon Amazon Web Services to operate certain aspects of our service and any disruption of or
interference with our use of the Amazon Web Services operation would impact our operations and our
business would be adversely impacted.
Amazon Web Services (“AWS”) provides a distributed computing infrastructure platform for business
operations, or what is commonly referred to as a “cloud” computing service. We have architected our software
and computer systems so as to utilize data processing, storage capabilities and other services provided by AWS.
Currently, we run the vast majority of our computing on AWS. Given this, along with the fact that we cannot
easily switch our AWS operations to another cloud provider, any disruption of or interference with our use of
AWS would impact our operations and our business would be adversely impacted. While the retail side of
Amazon competes with us, we do not believe that Amazon will use the AWS operation in such a manner as to
gain competitive advantage against our service.
If the technology we use in operating our business fails, is unavailable, or does not operate to expectations,
our business and results of operation could be adversely impacted.
We utilize a combination of proprietary and third party technology to operate our business. This includes the
technology that we have developed to recommend and merchandise content to our consumers as well as enable
fast and efficient delivery of content to our members and their various consumer electronic devices. For example,
we have built and deployed our own content-delivery network (“CDN”). To the extent Internet Service Providers
(“ISPs”) do not interconnect with our CDN, or if we experience difficulties in its operation, our ability to
efficiently and effectively deliver our streaming content to our members could be adversely impacted and our
business and results of operation could be adversely affected. Likewise, if our recommendation and
merchandising technology does not enable us to predict and recommend titles that our members will enjoy, our
ability to attract and retain members may be adversely affected. We also utilize third party technology to help
market our service, process payments, and otherwise manage the daily operations of our business. If our
technology or that of third parties we utilize in our operations fails or otherwise operates improperly, our ability
to operate our service, retain existing members and add new members may be impaired. Also, any harm to our
members’ personal computers or other devices caused by software used in our operations could have an adverse
effect on our business, results of operations and financial condition.
9