This report analyzes Netflix's business performance from May to July 2012 using data from 8,000 anonymized Netflix emails. It finds that while Netflix was once dominant in DVD rentals and growing rapidly, the company struggled after a 2011 price hike and plan changes upset customers. The report details metrics like new subscriber numbers and trends, free trial conversions, popular rentals and social media performance to understand Netflix's challenges after its missteps and as streaming becomes increasingly important.

1. Netflix Insight Report
May - July 2012

2. Contents
Summary ............................................................................................................................................................ 3
Methodology ...................................................................................................................................................... 4
About eDataSource ............................................................................................................................................ 4
Disclaimer ........................................................................................................................................................... 5
Netflix Subscriber Acquisition: One Year Weekly Trend ................................................................................. 6
Netflix Joins and Cancels Performance ............................................................................................................. 7
Netflix Free Trial Subscribers Performance ...................................................................................................... 8
- Free Trial Subscribers Index................................................................................................................... 8
- Percentage of Free Trial Subscribers Converting to Paying Subscribers ............................................... 8
Plan Chosen by New Subscribers ...................................................................................................................... 9
- Type of Plan New Subscribers Choose .................................................................................................. 9
- Monthly Percentage of Type of Plan Chosen by New Subscribers........................................................ 9
Plan Switching by Existing Subscribers ........................................................................................................... 10
- Monthly Plan Switched Index .............................................................................................................. 10
- Type of Plan Existing Subscribers Switched To from May-July............................................................ 11
- Monthly Percentage of Type of Plan Switched To by Existing Subscribers ........................................ 11
Netflix Top 20 DVD Rentals ................................................................................................................... 12
Netflix Facebook Performance .............................................................................................................. 13
Netflix Twitter Performance ................................................................................................................. 14
Appendix: Netflix Plan Types Defined...................................................................................................... 15
eDataSource Proprietary & Confidential 2

3. Summary
Once the up-and-coming contender of the DVD rental business, Netflix has changed the home movie
market forever. Their once ubiquitous red envelopes were a secret weapon in knocking out the reigning
movie rental champion, Blockbuster, and they aggressively pursued flat-rate online streaming for the mass
market. Their early gambles paid off, and in early-2012, the company boasted over 24 million U.S.
subscribers, and their online streaming service represented over 30% of all U.S. Internet downstream
bandwidth traffic during peak periods (October 2011, Sandvine).
Despite their enormous success, Netflix has struggled in the past year.
In July 2011, Netflix announced a price hike and the split of their online streaming and DVD subscription
services. Additionally, they announced they would establish an entirely new brand, Qwikster, to handle the
DVD subscription service. Customers were outraged and took to social media to vocalize their discontent.
Netflix backtracked, but the damage was done. In the quarter following, Netflix lost over 800,000
subscribers, and, even more dramatically, the stock lost 80% of its value from July 2011 to August 2012.
What is happening today?
As the world’s largest paid Internet subscription service, it’s worth following closely.
This eDataSource report focuses on the details and intricacies of the Netflix business. Through an innovative
panel-based process, eDataSource has estimated a wide variety of business indicators, including:
- Number of joins and cancels trended over the past year
- Overall growth by month (index)
- Free trial subscriber acquisition performance and conversion rate to paid
- Type of plan chosen by new subscribers
- Trend of subscribers switching subscription plans
- Top DVD rentals in the past six and three months
- Social media performance of Netflix on Facebook and Twitter
Please note: this report focuses on the U.S. business only.
For more information on eDataSource’s products and services, including
customized eCommerce monitoring reports and data, please contact us at
sales@edatasource.com, or via phone at 800-761-6580.
Visit our website at www.edatasource.com
eDataSource Proprietary & Confidential 3

4. Methodology
eDataSource utilizes its proprietary email analytics capability and a panel of ~800,000 consumers to provide
unique insights into consumer purchasing trends by examining online purchase confirmations delivered by
email.
eDataSource has conducted detailed analyses of the sales and subscription rates at Amazon.com,
Walmart.com, iTunes, Barnes & Noble, Netflix, Staples, Office Depot, Gilt, Ideeli, PayPal, OpenTable and
others using anonymized data from more than half a million online purchase and subscription
confirmations over the past six months.
The following Netflix report is based on the analysis of nearly 8,000 anonymized Netflix Join, Cancellation
and Account Update emails from eDataSource’s proprietary panel during the May through July 2012 time
period.
The primary analyses contained in this report include a whole year weekly trend of Netflix joins and cancels,
monthly joins and cancel performance, free trial subscription performance, type of plan chosen by new and
existing subscribers, top rented movies, as well as Netflix performance on Facebook and Twitter.
In order to obtain the conversion rate of free trial subscribers to paid subscribers, we monitored over 1,000
free trial subscribers who joined between April through June and tracked their cancellation date through
July.
In order to obtain Netflix’s performance on Facebook and Twitter, we utilized our proprietary tool, EDS
Analyst, to monitor Netflix’s Facebook and Twitter accounts from May through July 2012.
About eDataSource
Founded in 2003, eDataSource (www.edatasource.com) is the worldwide leader in competitive intelligence
for email, social media and ecommerce activity, based on active monitoring of more than 800,000
consumer inboxes and 9,000 brands. The company provides strategic analytics products and services for
online marketers, publishers and their service providers.
For more information on eDataSource’s products and services, including customized eCommerce
monitoring reports and data, please contact us at sales@edatasource.com, or via phone at 800-761-6580.
eDataSource Proprietary & Confidential 4

5. Disclaimer
All material contained in this report is property of eDataSource, Inc. (“eDataSource”) unless otherwise
indicated. This report is proprietary, confidential and provided for the exclusive use of the recipient. No
portion may be directly or indirectly copied, published, reproduced, modified, displayed, sold, transmitted,
or redistributed in any medium without the express prior written consent of eDataSource. Any
unauthorized use of the content of this report is strictly prohibited.
This report is intended for informational purposes only. eDataSource provides the information and data
presented herein on an “as is,” “as available” basis, without representations or warranties of any kind
whatsoever, expressed or implied. All statements and figures in this report are eDataSource estimates. The
information in this report may be incomplete and may not contain all material information relating to the
subject matter of the report. eDataSource does not provide any information or make any representation or
warranty on behalf of the companies that are the subject of this report and this report has not been
authorized or approved by said companies.
This report reflects the results of our research as of the date of this report. Our research results are subject
to change at any time as new or additional data and information is received and analyzed. eDataSource
undertakes no duty to update this report, or to provide supplemental information to any client receiving
this report, absent a specific arrangement to the contrary between eDataSource and individual clients,
which arrangement may specify different frequency and depth of analysis and update commitments based
on levels of service and fees selected by clients.
This report is provided solely to clients of eDataSource, each of whom assume all risk and liability with
regard to any use or application of the data included herein. In no event shall eDataSource or its officers,
directors, affiliates, shareholders or employees be liable for any damages that are directly or indirectly
related to this report.
eDataSource Proprietary & Confidential 5

6. Netflix Subscriber Acquisition (Weekly Trend)
Joins and Cancels Index
Price Increase Joins Cancels
2.00 Announcement Directly Sign up for a DVD only plan
Redbox price increase Feb, 16 2012
July 12, 2011
1.80 announced and put into effect
Oct 31, 2011 Netflix reaches 24MM
1.60
domestic streaming
1.40 members
1.20
1.00
0.80
0.60 Price increase goes into effect for
existing customers. Sept 1 "Apology"
0.40
and Qwikster announcement Have an extra DVD on us
0.20 broadcast to customers. and Give the Gift to Netflix campaigns
Sept 18, 2011 Dec 13 & Dec 15 2011
0.00
* Index Baseline: Average number of cancellations for the entire year.
Key Announcements
July 12, 2011 – “Netflix Raises Price of DVD and Online Movies Package by 60%” (The New York Times).
Sep 18, 2011 – “Netflix Apologizes, Renames By-Mail Business 'Qwikster' -- But Keeps Price Hike” (Reuters).
Oct 31, 2011 – “Redbox Price Hike Could Dodge Nexflix Outrage” (TheStreet.com).
Feb 16, 2012 – “Now You Can Sign Up Directly for a DVD Only Plan” (Netflix US & Canada Blog).
July 24, 2012 – Netflix announces “24 million domestic streaming members”
eDataSource Proprietary & Confidential 6

7. Netflix Monthly Joins and Cancels Performance
Monthly Joins and Cancels Index Net Growth Index
Joins Cancels
1.40 2.50
1.30 2.23
2.00
1.20
1.10 1.50
1.00
0.90 1.00
0.80 0.69
0.70 0.50
0.60 0.07
0.00
May June July
May June July
% Change from % Change from Net Growth
Joins Index Cancels Index
Month Previous Month Previous Month Index
May 1.03 -5.8% 1.02 24.8% 0.07
June 1.16 13.1% 0.96 -6.3% 2.23
July 1.08 -6.9% 1.02 6.4% 0.69
Percentage of Joins vs. Cancels
% of Joins % of Cancels
100.0%
80.0% 45.2%
47.8% 49.8% 48.5%
60.0%
40.0%
52.2% 50.2% 54.8% 51.5%
20.0%
0.0%
May-July May June July
For the entire period, Netflix is adding 2.2% more new subscriptions than cancelations. With both
higher join rates and lower cancelations, June was the strongest acquisition month of the previous
three.
eDataSource Proprietary & Confidential 7

8. Netflix Free Trial Subscribers Performance
Free Trial Subscriber Index and Conversion Rate
1.20 100.0%
1.15 90.0%
80.0%
1.10
Conversion Rate (%)
70.0%
1.05 60.0%
Index
1.00 50.0%
0.95 40.0%
30.0%
0.90
20.0%
0.85 10.0%
0.80 0.0%
April May June July
Conversion Rate Index
Join Month Free Trial Subscriber Index Conversion Rate (%)
April 1.04 89.7%
May 0.97 86.0%
June 1.05 90.4%
July 0.94 -
Over the previous three months, Netflix has maintained the number of free trials in a relatively
tight range of ~+/- 5%, and has maintained a high conversion rate to paying subscribers of
between ~85-90%.
eDataSource Proprietary & Confidential 8

9. Plan Chosen by New Subscribers
Percentage of Plan Chosen by New Subscribers in May-July
6.04%
Unlimited Streaming plan
OR 1 DVD out at-a-time
(Unlimited) plan
Unlimited Streaming + 1
DVD out at-a-time
(Unlimited) plan
93.96%
Unlimited Streaming plan OR 1 DVD out Unlimited Streaming + 1 DVD out at-a-
at-a-time (Unlimited) plan time (Unlimited) plan
100.0% 10.0%
98.0% 8.0%
96.0% 6.0%
94.0% 4.0%
92.0% 2.0%
90.0% 0.0%
May June July May June July
Value ($) Plan May June July May-July
Unlimited Streaming plan OR 1 DVD out at-a-
$7.99 92.6% 94.8% 94.4% 94.0%
time (Unlimited) plan
Unlimited Streaming + 1 DVD out at-a-time
$15.98 7.4% 5.2% 5.6% 6.0%
(Unlimited) plan
New subscribers start out with the basic offered plan--either unlimited streaming or 1 DVD out at-
a-time—94% of the time.
eDataSource Proprietary & Confidential 9

10. Monthly Plan Switched Index
Plan Switched Index
1.20
1.15
1.10
1.05
1.00
0.95
0.90
0.85
0.80
May June July
Month Index Growth from Previous Month
May 1.08 9.17%
June 1.00 -6.87%
July 0.92 -8.20%
Over the period, the number of subscribers switching their plan has steadily decreased. This is further
evidence that Netflix is making headway toward a single, simplified service offering of unlimited online
streaming.
eDataSource Proprietary & Confidential 10

11. Type of Plan Switched To by Existing Subscribers
Percentage of Plan Switched To in May-July
Unlimited Streaming plan
3.0% 11.8%
Unlimited Streaming + 1 DVD
out at-a-time (Unlimited) plan
6.0% 1 DVD out at-a-time (Unlimited)
plan
47.9% Unlimited Streaming + 2 DVDs
6.8%
out at-a-time (Unlimited) plan
2 DVDs out at-a-time
9.3% (Unlimited) plan
1 DVD out at-a-time (2 a month)
plan
15.1%
Other Plans
Value ($) Plan May June July May-July
$7.99 Unlimited Streaming plan 47.3% 53.3% 42.9% 47.9%
$15.98 Unlimited Streaming + 1 DVD out at-a-time (Unlimited) plan 13.0% 15.6% 17.0% 15.1%
$7.99 1 DVD out at-a-time (Unlimited) plan 9.9% 9.0% 8.9% 9.3%
$19.98 Unlimited Streaming + 2 DVDs out at-a-time (Unlimited) plan 6.1% 5.7% 8.9% 6.8%
$11.99 2 DVDs out at-a-time (Unlimited) plan 6.1% 4.1% 8.0% 6.0%
$4.99 1 DVD out at-a-time (2 a month) plan 1.5% 1.6% 6.3% 3.0%
- Other Plans 16.0% 10.7% 8.0% 11.8%
When subscribers switch their plans, nearly 48% opt for unlimited streaming without a DVD
component.
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12. Top 20 DVD Rentals
Feb-July 2012 May-July 2012
Rank Movie Rank Movie
1 Mission: Impossible - Ghost Protocol 1 Mission: Impossible - Ghost Protocol
2 Contagion 2 We Bought a Zoo
3 Tower Heist 3 Tower Heist
4 Real Steel 4 Immortals
5 Hugo 5 The Iron Lady
6 Bridesmaids 6 Abduction
7 We Bought a Zoo 7 Red Tails
8 Immortals 8 Contraband
9 Abduction 9 J. Edgar
10 The Iron Lady 10 Real Steel
11 Drive 11 The Whistleblower
12 Cowboys & Aliens 12 Sherlock Holmes
13 Water for Elephants 13 Hugo
14 50/50 14 Tinker, Tailor, Soldier, Spy
15 The Help 15 Jack and Jill
16 Sherlock Holmes 16 Gone
17 The Ides of March 17 In Time
18 The Descendants 18 Extremely Loud and Incredibly Close
19 Midnight in Paris 19 My Week with Marilyn
20 Friends with Benefits 20 The Smurfs
DVD customers gravitated toward big-budget Hollywood action and adventure titles over the past
six months with Mission Impossible – Ghost Protocol, Tower Heist, Real Steel, Immortals and
Abduction all residing in the top ten for the past three and six months.
eDataSource Proprietary & Confidential 12

13. Netflix Performance on Facebook
Netflix Facebook Performance
1.40 2000.00
1827.91
Average Number of Likes/Comments
1800.00
1.20
1458.20 1600.00
1.00 1400.00
FB Post Index
0.80 1047.26 1200.00
1000.00
0.60 800.00
0.40 600.00
226.70 400.00
0.20 176.48
120.85 200.00
0.00 0.00
May June July
Average Like per Post Average Comment per Post FB Post Index
Average Like Average Comment
FB Post Index
Month per Post per Post
May 0.86 1458.20 226.70
June 1.16 1047.26 120.85
July 0.99 1827.91 176.48
Netflix maintains an active Facebook presence. In June, though the number of posts was the
highest, the average likes and comments per post fell to their lowest point over the three month
period.
eDataSource Proprietary & Confidential 13

14. Netflix Performance on Twitter
Netflix Twitter Follower Trend
195
Number of Followers (Thousands)
190
185
180
175
170
165
160
155
150
145
Netflix Twitter Performance
1.40 10.00%
Monthly Follower Growth (%)
1.20
8.00%
1.00
Tweet Index
0.80 6.00%
0.60 4.00%
0.40
2.00%
0.20
0.00 0.00%
May June July
Monthly Growth of Twitter Followers (%) Tweet Index
Monthly Growth of
Tweet Index
Month Twitter Followers (%)
May 0.90 3.39%
June 0.90 4.87%
July 1.20 7.32%
On Twitter, Netflix showed an accelerated growth of followers, with sequential gains of 3.4% to
4.9% to 7.3% on a monthly basis.
eDataSource Proprietary & Confidential 14

15. Appendix
Netflix Plans Defined
Monthly
Subscription
Fee ($) Plan
$29.98 Unlimited Streaming + 4 DVDs out at-a-time (Unlimited) plan
$15.99 3 DVDs out at-a-time (Unlimited) plan
$23.98 Unlimited Streaming + 3 DVDs out at-a-time (Unlimited) plan
$17.98 Unlimited Streaming + 1 DVD out at-a-time (Unlimited) (including $2.00 for Blu-ray) plan
$51.98 Unlimited Streaming + 8 DVDs out at-a-time (Unlimited) plan
$22.98 Unlimited Streaming + 2 DVDs out at-a-time (Unlimited) (including $3.00 for Blu-ray) plan
$40.98 Unlimited Streaming + 6 DVDs out at-a-time (Unlimited) plan
$21.99 4 DVDs out at-a-time (Unlimited) plan
$45.98 Unlimited Streaming + 7 DVDs out at-a-time (Unlimited) plan
$32.99 6 DVDs out at-a-time (Unlimited) plan
$5.99 1 DVD out at-a-time (2 a month) (including $1.00 for Blu-ray) plan
$37.99 7 DVDs out at-a-time (Unlimited) plan
$52.99 8 DVDs out at-a-time (Unlimited) (including $9.00 for Blu-ray) plan
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