NetFlix 2015 Annual Report Download - page 6

BUSINESS SEGMENTS
The Company has three reportable segments: Domestic streaming, International streaming and Domestic
DVD. The Domestic streaming segment derives revenues from monthly membership fees for services consisting
solely of streaming content to our members in the United States. The International streaming segment derives
revenues from monthly membership fees for services consisting solely of streaming content to our members
outside the United States. The Domestic DVD segment derives revenues from monthly membership fees for
services consisting solely of DVD-by-mail. For additional information regarding our segments, including
information about our financial results by geography, see Note 12 of Item 8, Financial Statements and
Supplementary Data.
COMPETITION
The market for entertainment video is intensely competitive and subject to rapid change. We compete
against other entertainment video providers, such as multichannel video programming distributors (“MVPDs”),
Internet-based movie and TV content providers (including those that provide pirated content), video gaming
providers and DVD rental outlets and more broadly against other sources of entertainment that our members
could choose in their moments of free time. We also compete against entertainment video providers in obtaining
content that our members love, both for licensed streaming content and for original content projects.
While consumers may maintain simultaneous relationships with multiple entertainment sources, we strive
for consumers to choose us in their moments of free time. We have often referred to this choice as our objective
of “winning moments of truth.” In attempting to win these moments of truth with our members, we are
continually improving our service, including both our technology and our content, which is increasingly
exclusive and curated, and includes our own original programming.
SEASONALITY
Our membership growth exhibits a seasonal pattern that reflects variations when consumers buy Internet-
connected screens and when they tend to increase their viewing. Historically, the first and fourth quarters
(October through March)represent our greatest membership growth across our Domestic and International
streaming segments and the fewest membership losses in our Domestic DVD segment. Our membership growth
may be impacted by the release of certain high profile original content. Internationally, we expect each market to
demonstrate more predictable seasonal patterns as our service offering in each market becomes more established
and we have a longer history to assess such patterns.
INTELLECTUAL PROPERTY
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets,
proprietary technologies and similar intellectual property as important to our success. We use a combination of
patent, trademark, copyright and trade secret laws and confidentiality agreements to protect our proprietary
intellectual property. Our ability to protect and enforce our intellectual property rights is subject to certain risks
and from time to time we encounter disputes over rights and obligations concerning intellectual property. We
cannot provide assurance that we will prevail in any intellectual property disputes.
EMPLOYEES
As of December 31, 2015, we had approximately 3,700 total employees. Of these employees, approximately
3,500 were full-time, including approximately 400 categorized as temporary.
OTHER INFORMATION
We were incorporated in Delaware in August 1997 and completed our initial public offering in May 2002.
Our principal executive offices are located at 100 Winchester Circle, Los Gatos, California 95032, and our
telephone number is [phone].
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