1) Netflix reported strong Q2 growth with domestic streaming revenue up 26% and international streaming revenue up 155% over the prior year. Their original shows also received 14 Emmy nominations.
2) Netflix membership and revenue grew steadily in Q2, slightly ahead of expectations. However, competition is also improving and risks of market saturation are growing in the US.
3) Netflix plans to continue growing its content spending significantly to further differentiate its service and drive membership growth, while aiming to expand contribution margin by 400 basis points per year.
The document discusses codes and conventions of television advertisements and documentaries. It analyzes the codes and conventions used in Channel 4 advertisements and how the author developed and challenged some of these conventions in their own print ad and documentary. Some of the key codes and conventions discussed include using a dominant image, landscape orientation, placement of the channel logo, inclusion of air time and date, and minimal text. The author strives to conform their work to many industry standards while also innovating in certain areas like font and logo color.
It’s good to understand Europe’s debt crisis and why it’s affecting
U.S. markets. Here’s an overview of how the European Union
operates, why the euro is in danger, and what the crisis could mean
to American investors.
The document provides condensed consolidated financial statements for LinkedIn Corporation for the periods ending June 30, 2013 and December 31, 2012. It shows that LinkedIn's total assets increased from $1.382 billion in December 2012 to $1.688 billion in June 2013, with growth in cash/investments, property/equipment, and intangible assets. Total revenue increased from $228.2 million in Q2 2012 to $363.7 million in Q2 2013, with rising sales across all product lines and regions. Non-GAAP net income increased from $18.1 million to $44.5 million between the comparable periods.
The document provides 5 questions to ask yourself 5 years before retirement to help envision your retirement lifestyle and needs:
1. Where will you live and how will location impact costs of housing, taxes, proximity to family, and availability of work?
2. What activities will fill your time and how will those impact your budget as some are more expensive than others?
3. How will you want to live in terms of lifestyle - frugally or lavishly?
4. How long do you expect to live and plan finances accordingly rather than just average life expectancy?
5. What unexpected life events like health problems, family issues, economic downturns or disasters might impact your finances? Advanced
1. The document discusses seven key life events that most baby boomers will face as they move through the last third of their lives: their parents getting old and eventually dying, their own health issues and costs of staying healthy, reaching retirement age, managing multiple sources of income in retirement, and eventually dying.
2. It advises preparing for these events now by discussing health status, long-term care plans, powers of attorney, and estate planning with aging parents. It also discusses Social Security, Medicare, taxes in retirement, managing IRA and investment withdrawals.
3. The last event discussed is contemplating one's own mortality and doing legacy planning. The document encourages thinking about these major life transitions ahead of time
This document summarizes the target audience for a magazine as young Christians between ages 16-21. While the magazine would appeal to both males and females, it may attract more female readers due to stories focusing on inspiration. The target socioeconomic group is classified as middle class (B and C1) based on the UK's National Readership Survey grades. Readers would likely enjoy Christian music and events promoted in the magazine.
While it is generally a good idea to draw retirement funds from taxable accounts first, there are some exceptions. Whether pre-tax or tax-free accounts should be tapped first depends on factors like the client's tax situation, risk tolerance, investments, and income needs. For example, if a client has significant stock gains in a taxable account, it may make more sense to draw from retirement accounts instead to avoid capital gains taxes. Additionally, Roth IRAs should be drawn from last since required minimum distributions do not apply. Planning which accounts to use requires considering the client's full financial picture.
The document discusses codes and conventions of television advertisements and documentaries. It analyzes the codes and conventions used in Channel 4 advertisements and how the author developed and challenged some of these conventions in their own print ad and documentary. Some of the key codes and conventions discussed include using a dominant image, landscape orientation, placement of the channel logo, inclusion of air time and date, and minimal text. The author strives to conform their work to many industry standards while also innovating in certain areas like font and logo color.
It’s good to understand Europe’s debt crisis and why it’s affecting
U.S. markets. Here’s an overview of how the European Union
operates, why the euro is in danger, and what the crisis could mean
to American investors.
The document provides condensed consolidated financial statements for LinkedIn Corporation for the periods ending June 30, 2013 and December 31, 2012. It shows that LinkedIn's total assets increased from $1.382 billion in December 2012 to $1.688 billion in June 2013, with growth in cash/investments, property/equipment, and intangible assets. Total revenue increased from $228.2 million in Q2 2012 to $363.7 million in Q2 2013, with rising sales across all product lines and regions. Non-GAAP net income increased from $18.1 million to $44.5 million between the comparable periods.
The document provides 5 questions to ask yourself 5 years before retirement to help envision your retirement lifestyle and needs:
1. Where will you live and how will location impact costs of housing, taxes, proximity to family, and availability of work?
2. What activities will fill your time and how will those impact your budget as some are more expensive than others?
3. How will you want to live in terms of lifestyle - frugally or lavishly?
4. How long do you expect to live and plan finances accordingly rather than just average life expectancy?
5. What unexpected life events like health problems, family issues, economic downturns or disasters might impact your finances? Advanced
1. The document discusses seven key life events that most baby boomers will face as they move through the last third of their lives: their parents getting old and eventually dying, their own health issues and costs of staying healthy, reaching retirement age, managing multiple sources of income in retirement, and eventually dying.
2. It advises preparing for these events now by discussing health status, long-term care plans, powers of attorney, and estate planning with aging parents. It also discusses Social Security, Medicare, taxes in retirement, managing IRA and investment withdrawals.
3. The last event discussed is contemplating one's own mortality and doing legacy planning. The document encourages thinking about these major life transitions ahead of time
This document summarizes the target audience for a magazine as young Christians between ages 16-21. While the magazine would appeal to both males and females, it may attract more female readers due to stories focusing on inspiration. The target socioeconomic group is classified as middle class (B and C1) based on the UK's National Readership Survey grades. Readers would likely enjoy Christian music and events promoted in the magazine.
While it is generally a good idea to draw retirement funds from taxable accounts first, there are some exceptions. Whether pre-tax or tax-free accounts should be tapped first depends on factors like the client's tax situation, risk tolerance, investments, and income needs. For example, if a client has significant stock gains in a taxable account, it may make more sense to draw from retirement accounts instead to avoid capital gains taxes. Additionally, Roth IRAs should be drawn from last since required minimum distributions do not apply. Planning which accounts to use requires considering the client's full financial picture.
SlideShare, a platform for sharing presentations online, was acquired by LinkedIn. LinkedIn announced the purchase of SlideShare to expand its professional network and content offerings. The acquisition will allow LinkedIn members to easily access and share presentations within their network.
The document discusses various technologies the student learned during the process of creating products for their media class, including WordPress, Photoshop, InDesign, SlideShare, Prezi, Photobucket, and Bubbl.us. For each technology, the student explains what it is used for, what skills they learned using it, and how their understanding of the technology improved through the project.
The student learned several important lessons when progressing from creating a school magazine to a music magazine. They learned to design the magazine to better attract their target audience, with an emphasis on improving the masthead, images, layout, model presentation, cover story, and contents page. Specifically, they made the masthead, model, and layout more attention-grabbing for the music magazine audience.
Working just a few more years can significantly reduce the amount baby boomers need saved for retirement. Delaying retirement by 1-4 years allows workers to save more, receive higher social security benefits, pay off debt, and have a shorter retirement to fund. Analysis shows a couple needing $510,000 saved if retiring at 62 could need $465,000 if retiring at 63 or as little as $117,700 if retiring at 70. Working longer provides substantial benefits for funding retirement.
The document discusses the results of a study on the impact of climate change on wheat production. Researchers found that higher temperatures and changing precipitation patterns due to climate change will significantly reduce wheat yields across major wheat-producing regions by the end of the century. Reductions in wheat production are projected to range from 6-27% depending on future greenhouse gas emissions and efforts to adapt farming techniques to new climate conditions.
Este documento presenta un balance general con las cuentas de activo, pasivo y patrimonio. El activo incluye cuentas como caja, bancos, mercadería, clientes, documentos por cobrar e inmovilizado. El pasivo contiene proveedores, cuentas por pagar, documentos por pagar, créditos a corto y largo plazo. El patrimonio está compuesto por el capital social.
This document discusses holistic caregiving planning for aging parents. It recommends assembling all available resources to help parents and minimize costs, which can deplete adult children's finances and retirement savings. Living arrangements like staying home, moving in with children, or assisted living should consider costs and quality of life. Regardless of arrangements, some care like housekeeping, transportation, and bill paying will be needed, which adult children or outside help could provide. Planning ahead allows families to integrate financial and life plans for mutual benefit. Professional advice can help evaluate resources and responsibilities.
This document discusses holistic caregiving planning for aging parents. It recommends assembling available resources to help parents and minimize costs to adult children. Living arrangements like staying at home, moving in with children, or assisted living should consider costs and quality of life. Regardless of arrangements, some care like housekeeping, transportation, and bill paying will be needed, which adult children or outside help could provide. Planning ahead allows families to integrate financial and life plans for mutual benefit by evaluating resources and responsibilities.
April 18, 2016
Fellow shareholders,
We are off to a great start in 2016, expanding the Netflix service to 130 new countries in January and
finishing Q1 with over 81 million members on the strength of our fast growing slate of original
content. Since 2010, we have offered unlimited streaming for $7.99 per month in the US, and we
hope to maintain this affordable entryprice for a long time. As we’ve made vast improvements in our
service and content, consumers see even more value and our membership grows. Q1 was no
exception and our summary results are below.
1
Q1 Results
Net additions in Q1 ‘16 amounted to a record 6.74 million, surpassing our prior high water mark of
5.59 million in Q4 ‘15 and against 4.88 million in the yearago period. Of our 81.5 million members,
42% are now outside of the US. Operating income was $49 million vs. $97 million in the year ago
quarter, as we continue to invest in international markets.
Performance in the quarter benefited from the launch of several series, including Making a Murderer
(a late December debut), Fuller House (February), House of Cards Season 4 (March) and Daredevil
Season 2 (March), complemented by a diverse mix of new films, documentaries, series and kids shows
available globally.
In the US, we added 2.23 million members in Q1, against 2.28 million a year ago, and 2.25 two years
ago. Our forecast for the quarter was low (at 1.75 million) because we underestimated the positive
acquisition impact of our major original content debuts.
US revenue rose 18% yearoveryear, reflecting 14% growth in average paid memberships and a 3%
increase in ARPU. US contribution profit totaled $413 million, or a 35.5% margin, compared to 31.7% a
year ago.
International revenue increased 57% yearoveryear, including the negative impact of currency ($82
million on a y/y basis). Excluding F/X, international ARPU rose 7% yearoveryear. Our Q1 international
contribution loss of $104 million came in better than forecast due to the timing of content spend.
Our established markets around the world are all growing, and in early Q1 we added 130 more
countries. By expanding broadly at once, we are learning more quickly about how best to please
consumers across a wide variety of cultures and markets. In most of these markets, so far, Netflix is
offered only in English and payment methods are limited primarily to international credit cards. In the
coming quarters, we will add more local languages, content, payment options and customer support.
We are pleased Netflix is finding acceptance around the world. Consumers worldwide are delighted to
be able to enjoy our original and exclusive series and films instantaneously. We have lots of work to
do to make Netflix more relevant market by market, but the opportunity is amazing.
Q2 Forecast
As a reminder, the guidance we provide is our actual internal forecast at the time we report..
Netflix International Business Strategy PlanIsabelle Smith
Netflix is expanding internationally and has identified South Korea as its next target market for expansion into Asia. South Korea was chosen over China and Japan due to its high broadband penetration, American cultural influence, and lower piracy rates compared to China. Netflix plans to use its experience expanding into Europe to continue its international growth strategy of entering new countries before competitors gain ground. The document provides a strategic analysis of Netflix's business and opportunities for further international expansion.
Netflix proposes adding a downloadable feature that allows customers to choose movies and shows available offline for a specified period of time. This would fulfill the need of travelers who want entertainment without relying on Wi-Fi or internet connection. The objectives are to increase customer satisfaction and gain profit while remaining the leading innovator in the industry. Success will be measured by customer satisfaction and increased profits.
Page 1 of 5Strategy in Practice Assignment #2Chapter 4EV.docxalfred4lewis58146
Page 1 of 5
Strategy in Practice Assignment #2
Chapter 4
EVALUATING A COMPANY’S RESOURCES,
CAPABILITIES, AND COMPETITIVENESS
Please read these excerpts derived from the Netflix corporate Web site; then, fully respond to the questions that follow.
Netflix is the world’s leading Internet television network with over 53 million members in nearly 50 countries enjoying more than two billion hours of TV shows and movies per month, including original series, documentaries and feature films. 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.
Netflix’s Long Term View:
Internet TV is replacing linear TV, Apps are replacing channels, and screens are proliferating.
As Internet TV grows from millions to billions, Netflix is leading the way around the world.
Linear TV is popular, but ripe for replacement.
People love TV content and still watch over a billion hours a day of linear TV.
But people don’t love the linear TV experience, where channels present programs at particular times on non-portable screens with complicated remote controls. Consumers have to navigate through a grid, or use DVRs which add an on-demand layer at the cost of storage and complexity. Finding good things to watch isn't easy or enjoyable. While hugely popular, the linear TV channel model is ripe for replacement.
The evolution to Internet TV apps has begun.
The world’s leading linear TV networks, such as HBO and ESPN, are moving into Internet TV. The ESPN app runs on many Internet platforms and is specifically designed to showcase sports, both real-time and catch up. HBO’s app makes its films and series more accessible than on HBO’s linear channel. The other major linear networks are not far behind.
Internet TV is better than linear TV in ways consumers care about. While Internet TV is only a small percentage of video viewing today, it will grow to replace linear TV because:
1. The Internet is getting faster, more reliable and more available;
2. Smart TV sales are increasing and eventually every TV will have Wi-Fi and apps;
3. Smart TV adapters are getting better and cheaper;
4. Tablet and smartphone viewing is increasing;
5. Internet TV apps get frequent improvement updates;
6. Streaming is the leading source for Ultra HD 4k video;
7. TV Everywhere provides an economic transition for existing networks; and
8. New entrants like Netflix are innovating rapidly and driving improvements.
Eventually, as linear TV is viewed less, the spectrum it now uses on cable, fiber, and over-the-air will be reallocated to expand Internet data transmission. Satellite TV subscribers will be fewer and more rural. The value of high-speed Internet will increase.
This transformation is occurring at different speeds in different nations. In the UK, for example, the BBC is already programming for its iPlayer app as well as its linear channels, .
Netflix is the world's leading streaming entertainment service, offering TV shows, movies, documentaries across 190 countries. It began as a DVD rental service in 1997 and launched streaming in 2007. Netflix now produces its own original content and has over 158 million paid subscribers globally. While it faces competition from Amazon, Hulu, and others, Netflix has maintained its lead through a focus on commercial-free, unlimited streaming and exclusive original productions. The company expects continued growth in subscribers and revenue as streaming video on-demand remains an expanding market.
British Sky Broadcasting reported financial results for the fiscal year ended June 30, 2014. Revenue increased 6.5% to £7.6 billion due to strong demand across all products and services. Adjusted basic earnings per share were flat at 60.0 pence despite investments in connected TV services and higher Premier League costs. The company added 3.1 million new paid products, grew retail customers by 342,000, and saw growth in key areas like TV, broadband, and connected TV services. Looking ahead, the company aims to continue growing by exploiting opportunities in both core and new products and services.
Netflix's original content production is a strength that differentiates it from competitors. However, with more entrants in the streaming market, Netflix must emphasize its original content to retain subscribers and attract new ones. The campaign will promote the upcoming third season of Netflix's popular original series, Orange is the New Black, to stimulate anticipation and highlight Netflix's strength in producing original content. Netflix has over 44 million streaming subscribers globally and has been financially successful, but competition is rising so it needs to capitalize on its original programming to maintain its leading market position.
Netflix started as a DVD rental service in 1997 and introduced streaming in 2007, becoming the leading video streaming service. It faces competition from Hulu, Amazon Prime Video, Apple TV+, and Disney+, in an oligopolistic market structure. Netflix generates over $20 billion annually through subscription fees for its domestic and international streaming services. Factors like consumer income, prices of substitutes, tastes, expectations, and number of buyers affect the demand for Netflix.
Netflix started as a DVD rental service in 1997 and introduced streaming in 2007, becoming the leading video streaming service. It faces competition from Hulu, Amazon Prime Video, Apple TV+, and Disney+, in an oligopolistic market structure. Netflix generates over $20 billion annually from its over 180 million subscribers worldwide through monthly subscription fees for its extensive library of TV shows and movies. Factors like consumer income, tastes, expectations, and competing prices can impact Netflix's demand.
- In 2013, DreamWorks Animation made progress toward becoming a global leader in branded family entertainment through major milestones and acquisitions that expanded their businesses.
- They released successful films like The Croods and acquired companies like AwesomenessTV to grow their presence in television and digital platforms.
- Looking forward, DreamWorks aims to achieve consistent box office success through upcoming releases like How to Train Your Dragon 2 while continuing to diversify their business across consumer products, television, and location-based entertainment.
What’s on the menu for this month's Frisk (Leo Burnett London’s snazzy trend report)? Broadcasting and Content.
Broadcasting and Content has continuously evolved through the decades. Back in the day, you’ll probably remember a world of limited channels and passive media consumption. Today, manufacturers act as broadcasters and viewers have the power of shaping content- a multi-faceted, inclusive and dynamic approach- in the world of broadcasting and content.
Within this round-up, you’ll find examples of how things are constantly changing. From viewpoints provided by Jonathan Fraser, Global Head of Strategy & Ideas on the future of content and life after the golden age of TV, to how the GoPro camera can capture a mesmerizing story and turn it into great content, the possibilities of broadcasting and content are endless.
Take a break, make a fresh batch of coffee (or tea, if that’s your thing) and get in tune with the latest in broadcasting and content.
Within this round-up, you’ll find examples of how things are constantly changing. From viewpoints provided by Jonathan Fraser, Global Head of Strategy & Ideas on the future of content and life after the golden age of TV, to how the GoPro camera can capture a mesmerizing story and turn it into great content, the possibilities of broadcasting and content are endless.
Take a break, make a fresh batch of coffee (or tea, if that’s your thing) and get in tune with the latest in broadcasting and content.
Running Head INTEGRATIVE LEARNING PROJECTINTEGRATEIVE LEARNI.docxwlynn1
Running Head: INTEGRATIVE LEARNING PROJECT
INTEGRATEIVE LEARNING PROJECT2
Integrative Learning Project: Netflix Valuation
Julie Mather
Liberty University
Understanding with the Client and Scope of Work
We at XYZ have established an understanding the ABC Company hereafter referred to as “the client” to include the nature purpose and objectives of the valuation agreement as is according to the USPAP. Any limitations or assumptions must be disclosed to the valuation analyst and included in the valuation report. We have established an understanding with the client and have there were no scope restrictions or limitations for analysis. In accordance with the Scope of Work Rule is USPAP, we must:
1. Identify the problem to be solved
2. Determine and perform the scope of work necessary to develop credible results
3. Disclose the scope of work in the report
The purpose of this report is to gain and understanding of Netflix, Incorporated by reviewing their financial statements as provided by management and work environment surrounding the business. Economic considerations have been made as well and the impact on Netflix, Inc. We considered all valuation approaches and selected the most applicable method to evaluate the financial position of the company. The evaluation is in the attached report.
· The History and Nature of the Business
· General Economic and Industry Outlook
· Book Value and Financial Position
· Approaches to Value
· Income Approach
· Discounted Cash Flow Method
· Cost of Capital
· Cost of Equity
· Cost of Debt
· Market Approach
· Reconciliation of Valuation Methods
· Conclusion of Value
· Appendix A – Assumptions and Limiting Conditions
· Appendix B – Valuation Representation/Certification
· Appendix C – Other Sources Consulted
· Appendix D – ExhibitsExecutive Summary
Purpose of Valuation
To assist ABC in determining the fair market value for internal and purchase planning purposes of a 100% equity interest in Netflix, Incorporated as of July 10, 2018.
Standard of Value
Fair market value
Premise of Value
Going concern
Conclusion
Based on our analysis as described in this valuation report, the estimated value as of July 10, 2018 of a 100% equity interest in Netflix, Incorporated on a marketable basis is $55.4 million.
Table of Contents
Understanding with the Client and Scope of Work2
Executive Summary3
The History and Nature of the Business5
Market Area and Customers5
Competition5
Management and Key Persons6
Stock and Stockholders6
General Economic and Industry Outlook6
Economic Indicators6
Historical Business Cycle7
Summary and Outlook7
Book Value and Financial Position8
Income Statement Analysis8
Balance Sheet Analysis9
Working Capital.9
Total Assets9
Interest-Bearing Debt.9
Total Liabilities9
Stockholder’s Equity9
Projections9
Approaches to Value10
Income Approach11
Present Value of Cash Flows11
Discounted Cash Flow Method11
Cost of Capital12
Cost of Equity13
Cost of Debt14
Market Approach15
Guideline Compani.
Netflix's marketing plan focuses on continuing to add newer content and movies. A SWOT analysis identifies strengths such as brand recognition worldwide and competitive pricing, weaknesses like declining DVD membership, opportunities like expanding internationally, and threats from competition. The plan targets young to middle-aged adults by offering more newly released movies and TV shows on Friday nights, along with incentives like a free month for referrals. Metrics will evaluate the effectiveness of increasing viewership demographics.
Netflix was founded in 1997 as a DVD rental company and later expanded into streaming services. It is now a multi-billion dollar company and the leading subscription video on demand service, though it faces competition from Amazon Prime Video, Hulu, HBO Now, cable and satellite providers, DVDs, YouTube, movie theaters, and other streaming options. The video streaming market has low barriers to entry but high competitive intensity as customers are not strongly brand loyal and easily switch between similar services.
SlideShare, a platform for sharing presentations online, was acquired by LinkedIn. LinkedIn announced the purchase of SlideShare to expand its professional network and content offerings. The acquisition will allow LinkedIn members to easily access and share presentations within their network.
The document discusses various technologies the student learned during the process of creating products for their media class, including WordPress, Photoshop, InDesign, SlideShare, Prezi, Photobucket, and Bubbl.us. For each technology, the student explains what it is used for, what skills they learned using it, and how their understanding of the technology improved through the project.
The student learned several important lessons when progressing from creating a school magazine to a music magazine. They learned to design the magazine to better attract their target audience, with an emphasis on improving the masthead, images, layout, model presentation, cover story, and contents page. Specifically, they made the masthead, model, and layout more attention-grabbing for the music magazine audience.
Working just a few more years can significantly reduce the amount baby boomers need saved for retirement. Delaying retirement by 1-4 years allows workers to save more, receive higher social security benefits, pay off debt, and have a shorter retirement to fund. Analysis shows a couple needing $510,000 saved if retiring at 62 could need $465,000 if retiring at 63 or as little as $117,700 if retiring at 70. Working longer provides substantial benefits for funding retirement.
The document discusses the results of a study on the impact of climate change on wheat production. Researchers found that higher temperatures and changing precipitation patterns due to climate change will significantly reduce wheat yields across major wheat-producing regions by the end of the century. Reductions in wheat production are projected to range from 6-27% depending on future greenhouse gas emissions and efforts to adapt farming techniques to new climate conditions.
Este documento presenta un balance general con las cuentas de activo, pasivo y patrimonio. El activo incluye cuentas como caja, bancos, mercadería, clientes, documentos por cobrar e inmovilizado. El pasivo contiene proveedores, cuentas por pagar, documentos por pagar, créditos a corto y largo plazo. El patrimonio está compuesto por el capital social.
This document discusses holistic caregiving planning for aging parents. It recommends assembling all available resources to help parents and minimize costs, which can deplete adult children's finances and retirement savings. Living arrangements like staying home, moving in with children, or assisted living should consider costs and quality of life. Regardless of arrangements, some care like housekeeping, transportation, and bill paying will be needed, which adult children or outside help could provide. Planning ahead allows families to integrate financial and life plans for mutual benefit. Professional advice can help evaluate resources and responsibilities.
This document discusses holistic caregiving planning for aging parents. It recommends assembling available resources to help parents and minimize costs to adult children. Living arrangements like staying at home, moving in with children, or assisted living should consider costs and quality of life. Regardless of arrangements, some care like housekeeping, transportation, and bill paying will be needed, which adult children or outside help could provide. Planning ahead allows families to integrate financial and life plans for mutual benefit by evaluating resources and responsibilities.
April 18, 2016
Fellow shareholders,
We are off to a great start in 2016, expanding the Netflix service to 130 new countries in January and
finishing Q1 with over 81 million members on the strength of our fast growing slate of original
content. Since 2010, we have offered unlimited streaming for $7.99 per month in the US, and we
hope to maintain this affordable entryprice for a long time. As we’ve made vast improvements in our
service and content, consumers see even more value and our membership grows. Q1 was no
exception and our summary results are below.
1
Q1 Results
Net additions in Q1 ‘16 amounted to a record 6.74 million, surpassing our prior high water mark of
5.59 million in Q4 ‘15 and against 4.88 million in the yearago period. Of our 81.5 million members,
42% are now outside of the US. Operating income was $49 million vs. $97 million in the year ago
quarter, as we continue to invest in international markets.
Performance in the quarter benefited from the launch of several series, including Making a Murderer
(a late December debut), Fuller House (February), House of Cards Season 4 (March) and Daredevil
Season 2 (March), complemented by a diverse mix of new films, documentaries, series and kids shows
available globally.
In the US, we added 2.23 million members in Q1, against 2.28 million a year ago, and 2.25 two years
ago. Our forecast for the quarter was low (at 1.75 million) because we underestimated the positive
acquisition impact of our major original content debuts.
US revenue rose 18% yearoveryear, reflecting 14% growth in average paid memberships and a 3%
increase in ARPU. US contribution profit totaled $413 million, or a 35.5% margin, compared to 31.7% a
year ago.
International revenue increased 57% yearoveryear, including the negative impact of currency ($82
million on a y/y basis). Excluding F/X, international ARPU rose 7% yearoveryear. Our Q1 international
contribution loss of $104 million came in better than forecast due to the timing of content spend.
Our established markets around the world are all growing, and in early Q1 we added 130 more
countries. By expanding broadly at once, we are learning more quickly about how best to please
consumers across a wide variety of cultures and markets. In most of these markets, so far, Netflix is
offered only in English and payment methods are limited primarily to international credit cards. In the
coming quarters, we will add more local languages, content, payment options and customer support.
We are pleased Netflix is finding acceptance around the world. Consumers worldwide are delighted to
be able to enjoy our original and exclusive series and films instantaneously. We have lots of work to
do to make Netflix more relevant market by market, but the opportunity is amazing.
Q2 Forecast
As a reminder, the guidance we provide is our actual internal forecast at the time we report..
Netflix International Business Strategy PlanIsabelle Smith
Netflix is expanding internationally and has identified South Korea as its next target market for expansion into Asia. South Korea was chosen over China and Japan due to its high broadband penetration, American cultural influence, and lower piracy rates compared to China. Netflix plans to use its experience expanding into Europe to continue its international growth strategy of entering new countries before competitors gain ground. The document provides a strategic analysis of Netflix's business and opportunities for further international expansion.
Netflix proposes adding a downloadable feature that allows customers to choose movies and shows available offline for a specified period of time. This would fulfill the need of travelers who want entertainment without relying on Wi-Fi or internet connection. The objectives are to increase customer satisfaction and gain profit while remaining the leading innovator in the industry. Success will be measured by customer satisfaction and increased profits.
Page 1 of 5Strategy in Practice Assignment #2Chapter 4EV.docxalfred4lewis58146
Page 1 of 5
Strategy in Practice Assignment #2
Chapter 4
EVALUATING A COMPANY’S RESOURCES,
CAPABILITIES, AND COMPETITIVENESS
Please read these excerpts derived from the Netflix corporate Web site; then, fully respond to the questions that follow.
Netflix is the world’s leading Internet television network with over 53 million members in nearly 50 countries enjoying more than two billion hours of TV shows and movies per month, including original series, documentaries and feature films. 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.
Netflix’s Long Term View:
Internet TV is replacing linear TV, Apps are replacing channels, and screens are proliferating.
As Internet TV grows from millions to billions, Netflix is leading the way around the world.
Linear TV is popular, but ripe for replacement.
People love TV content and still watch over a billion hours a day of linear TV.
But people don’t love the linear TV experience, where channels present programs at particular times on non-portable screens with complicated remote controls. Consumers have to navigate through a grid, or use DVRs which add an on-demand layer at the cost of storage and complexity. Finding good things to watch isn't easy or enjoyable. While hugely popular, the linear TV channel model is ripe for replacement.
The evolution to Internet TV apps has begun.
The world’s leading linear TV networks, such as HBO and ESPN, are moving into Internet TV. The ESPN app runs on many Internet platforms and is specifically designed to showcase sports, both real-time and catch up. HBO’s app makes its films and series more accessible than on HBO’s linear channel. The other major linear networks are not far behind.
Internet TV is better than linear TV in ways consumers care about. While Internet TV is only a small percentage of video viewing today, it will grow to replace linear TV because:
1. The Internet is getting faster, more reliable and more available;
2. Smart TV sales are increasing and eventually every TV will have Wi-Fi and apps;
3. Smart TV adapters are getting better and cheaper;
4. Tablet and smartphone viewing is increasing;
5. Internet TV apps get frequent improvement updates;
6. Streaming is the leading source for Ultra HD 4k video;
7. TV Everywhere provides an economic transition for existing networks; and
8. New entrants like Netflix are innovating rapidly and driving improvements.
Eventually, as linear TV is viewed less, the spectrum it now uses on cable, fiber, and over-the-air will be reallocated to expand Internet data transmission. Satellite TV subscribers will be fewer and more rural. The value of high-speed Internet will increase.
This transformation is occurring at different speeds in different nations. In the UK, for example, the BBC is already programming for its iPlayer app as well as its linear channels, .
Netflix is the world's leading streaming entertainment service, offering TV shows, movies, documentaries across 190 countries. It began as a DVD rental service in 1997 and launched streaming in 2007. Netflix now produces its own original content and has over 158 million paid subscribers globally. While it faces competition from Amazon, Hulu, and others, Netflix has maintained its lead through a focus on commercial-free, unlimited streaming and exclusive original productions. The company expects continued growth in subscribers and revenue as streaming video on-demand remains an expanding market.
British Sky Broadcasting reported financial results for the fiscal year ended June 30, 2014. Revenue increased 6.5% to £7.6 billion due to strong demand across all products and services. Adjusted basic earnings per share were flat at 60.0 pence despite investments in connected TV services and higher Premier League costs. The company added 3.1 million new paid products, grew retail customers by 342,000, and saw growth in key areas like TV, broadband, and connected TV services. Looking ahead, the company aims to continue growing by exploiting opportunities in both core and new products and services.
Netflix's original content production is a strength that differentiates it from competitors. However, with more entrants in the streaming market, Netflix must emphasize its original content to retain subscribers and attract new ones. The campaign will promote the upcoming third season of Netflix's popular original series, Orange is the New Black, to stimulate anticipation and highlight Netflix's strength in producing original content. Netflix has over 44 million streaming subscribers globally and has been financially successful, but competition is rising so it needs to capitalize on its original programming to maintain its leading market position.
Netflix started as a DVD rental service in 1997 and introduced streaming in 2007, becoming the leading video streaming service. It faces competition from Hulu, Amazon Prime Video, Apple TV+, and Disney+, in an oligopolistic market structure. Netflix generates over $20 billion annually through subscription fees for its domestic and international streaming services. Factors like consumer income, prices of substitutes, tastes, expectations, and number of buyers affect the demand for Netflix.
Netflix started as a DVD rental service in 1997 and introduced streaming in 2007, becoming the leading video streaming service. It faces competition from Hulu, Amazon Prime Video, Apple TV+, and Disney+, in an oligopolistic market structure. Netflix generates over $20 billion annually from its over 180 million subscribers worldwide through monthly subscription fees for its extensive library of TV shows and movies. Factors like consumer income, tastes, expectations, and competing prices can impact Netflix's demand.
- In 2013, DreamWorks Animation made progress toward becoming a global leader in branded family entertainment through major milestones and acquisitions that expanded their businesses.
- They released successful films like The Croods and acquired companies like AwesomenessTV to grow their presence in television and digital platforms.
- Looking forward, DreamWorks aims to achieve consistent box office success through upcoming releases like How to Train Your Dragon 2 while continuing to diversify their business across consumer products, television, and location-based entertainment.
What’s on the menu for this month's Frisk (Leo Burnett London’s snazzy trend report)? Broadcasting and Content.
Broadcasting and Content has continuously evolved through the decades. Back in the day, you’ll probably remember a world of limited channels and passive media consumption. Today, manufacturers act as broadcasters and viewers have the power of shaping content- a multi-faceted, inclusive and dynamic approach- in the world of broadcasting and content.
Within this round-up, you’ll find examples of how things are constantly changing. From viewpoints provided by Jonathan Fraser, Global Head of Strategy & Ideas on the future of content and life after the golden age of TV, to how the GoPro camera can capture a mesmerizing story and turn it into great content, the possibilities of broadcasting and content are endless.
Take a break, make a fresh batch of coffee (or tea, if that’s your thing) and get in tune with the latest in broadcasting and content.
Within this round-up, you’ll find examples of how things are constantly changing. From viewpoints provided by Jonathan Fraser, Global Head of Strategy & Ideas on the future of content and life after the golden age of TV, to how the GoPro camera can capture a mesmerizing story and turn it into great content, the possibilities of broadcasting and content are endless.
Take a break, make a fresh batch of coffee (or tea, if that’s your thing) and get in tune with the latest in broadcasting and content.
Running Head INTEGRATIVE LEARNING PROJECTINTEGRATEIVE LEARNI.docxwlynn1
Running Head: INTEGRATIVE LEARNING PROJECT
INTEGRATEIVE LEARNING PROJECT2
Integrative Learning Project: Netflix Valuation
Julie Mather
Liberty University
Understanding with the Client and Scope of Work
We at XYZ have established an understanding the ABC Company hereafter referred to as “the client” to include the nature purpose and objectives of the valuation agreement as is according to the USPAP. Any limitations or assumptions must be disclosed to the valuation analyst and included in the valuation report. We have established an understanding with the client and have there were no scope restrictions or limitations for analysis. In accordance with the Scope of Work Rule is USPAP, we must:
1. Identify the problem to be solved
2. Determine and perform the scope of work necessary to develop credible results
3. Disclose the scope of work in the report
The purpose of this report is to gain and understanding of Netflix, Incorporated by reviewing their financial statements as provided by management and work environment surrounding the business. Economic considerations have been made as well and the impact on Netflix, Inc. We considered all valuation approaches and selected the most applicable method to evaluate the financial position of the company. The evaluation is in the attached report.
· The History and Nature of the Business
· General Economic and Industry Outlook
· Book Value and Financial Position
· Approaches to Value
· Income Approach
· Discounted Cash Flow Method
· Cost of Capital
· Cost of Equity
· Cost of Debt
· Market Approach
· Reconciliation of Valuation Methods
· Conclusion of Value
· Appendix A – Assumptions and Limiting Conditions
· Appendix B – Valuation Representation/Certification
· Appendix C – Other Sources Consulted
· Appendix D – ExhibitsExecutive Summary
Purpose of Valuation
To assist ABC in determining the fair market value for internal and purchase planning purposes of a 100% equity interest in Netflix, Incorporated as of July 10, 2018.
Standard of Value
Fair market value
Premise of Value
Going concern
Conclusion
Based on our analysis as described in this valuation report, the estimated value as of July 10, 2018 of a 100% equity interest in Netflix, Incorporated on a marketable basis is $55.4 million.
Table of Contents
Understanding with the Client and Scope of Work2
Executive Summary3
The History and Nature of the Business5
Market Area and Customers5
Competition5
Management and Key Persons6
Stock and Stockholders6
General Economic and Industry Outlook6
Economic Indicators6
Historical Business Cycle7
Summary and Outlook7
Book Value and Financial Position8
Income Statement Analysis8
Balance Sheet Analysis9
Working Capital.9
Total Assets9
Interest-Bearing Debt.9
Total Liabilities9
Stockholder’s Equity9
Projections9
Approaches to Value10
Income Approach11
Present Value of Cash Flows11
Discounted Cash Flow Method11
Cost of Capital12
Cost of Equity13
Cost of Debt14
Market Approach15
Guideline Compani.
Netflix's marketing plan focuses on continuing to add newer content and movies. A SWOT analysis identifies strengths such as brand recognition worldwide and competitive pricing, weaknesses like declining DVD membership, opportunities like expanding internationally, and threats from competition. The plan targets young to middle-aged adults by offering more newly released movies and TV shows on Friday nights, along with incentives like a free month for referrals. Metrics will evaluate the effectiveness of increasing viewership demographics.
Netflix was founded in 1997 as a DVD rental company and later expanded into streaming services. It is now a multi-billion dollar company and the leading subscription video on demand service, though it faces competition from Amazon Prime Video, Hulu, HBO Now, cable and satellite providers, DVDs, YouTube, movie theaters, and other streaming options. The video streaming market has low barriers to entry but high competitive intensity as customers are not strongly brand loyal and easily switch between similar services.
Comparision between digital platforms.pdfasphunk999
The document compares content on Netflix, Disney+, and Amazon Prime. It analyzes insights like genres, target audiences, and yearly/monthly releases. The analysis found that Amazon has the most overall content while Netflix has more TV shows. Drama and comedy are the most popular genres across all platforms. Amazon is best for children. The US produces the most content. 2019 saw a content boom as the platforms raced to attract subscribers.
The team performed valuation analyses on HBO to estimate its stand-alone enterprise value and equity value. Using discounted cash flow analysis, comparable companies analysis, and precedent transactions analysis, the team estimated HBO's enterprise value to be between $32,189.0 million and $38,630.5 million, and its equity value to be between $22,797.8 million and $29,239.3 million. The team based their final valuation conclusion solely on the discounted cash flow analysis results due to limitations in comparable the comparable companies and precedent transactions analyses for valuing the private company.
This document provides an equity research report on Netflix from the QUMMIF Investment Club. It summarizes Netflix's business operations, financial performance, strengths, weaknesses, opportunities, threats, and industry outlook. The report finds that Netflix has positioned itself as the leading online video streaming service and sees future growth prospects as favorable due to expanding internationally and increasing original content production. However, it also faces threats from growing competition in the online streaming market and potential loss of subscribers to free content downloading.
Increasing Netflix's Revenue, Issue, Analysis, and RecommendationsEmilyAnneFletcher
In this final paper, my group and I use SWOT analysis to understand the problems that Netflix is facing in its business strategy and uncover how to combat these issues. We propose solutions based on our analysis to give Netflix a competitive advantage.
Increasing Netflix's Revenue, Issue, Analysis, and RecommendationEmilyAnneFletcher
In this final paper, my group and I use SWOT analysis to understand the problems that Netflix is facing in its business strategy and uncover how to combat these issues. We propose solutions based on our analysis to give Netflix a competitive advantage.
The document provides an overview and analysis of the digital upfront presentations held by major online portals such as YouTube, Yahoo!, and Hulu in 2012. It discusses the growth of digital video advertising opportunities and original online content. Key points covered include the range of content formats, growing audience for online video, challenges in measuring viewership and success, and questions around supporting new content properties. Concerns are raised around portals' ability to properly support all new content properties to ensure success.
Barbie Movie Review - The Astras.pdffffftheastras43
Barbie Movie Review has gotten brilliant surveys for its fun and creative story. Coordinated by Greta Gerwig, it stars Margot Robbie as Barbie and Ryan Gosling as Insight. Critics adore its perky humor, dynamic visuals, and intelligent take on the notorious doll's world. It's lauded for being engaging for both kids and grown-ups. The Astras profoundly prescribes observing the Barbie Review for a delightful and colorful cinematic involvement.https://theastras.com/hca-member-gradebooks/hca-gradebook-barbie/
Orpah Winfrey Dwayne Johnson: Titans of Influence and Inspirationgreendigital
Introduction
In the realm of entertainment, few names resonate as Orpah Winfrey Dwayne Johnson. Both figures have carved unique paths in the industry. achieving unparalleled success and becoming iconic symbols of perseverance, resilience, and inspiration. This article delves into the lives, careers. and enduring legacies of Orpah Winfrey Dwayne Johnson. exploring how their journeys intersect and what we can learn from their remarkable stories.
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Early Life and Backgrounds
Orpah Winfrey: From Humble Beginnings to Media Mogul
Orpah Winfrey, often known as Oprah due to a misspelling on her birth certificate. was born on January 29, 1954, in Kosciusko, Mississippi. Raised in poverty by her grandmother, Winfrey's early life was marked by hardship and adversity. Despite these challenges. she demonstrated a keen intellect and an early talent for public speaking.
Winfrey's journey to success began with a scholarship to Tennessee State University. where she studied communication. Her first job in media was as a co-anchor for the local evening news in Nashville. This role paved the way for her eventual transition to talk show hosting. where she found her true calling.
Dwayne Johnson: From Wrestling Royalty to Hollywood Superstar
Dwayne Johnson, also known by his ring name "The Rock," was born on May 2, 1972, in Hayward, California. He comes from a family of professional wrestlers, with both his father, Rocky Johnson. and his grandfather, Peter Maivia, being notable figures in the wrestling world. Johnson's early life was spent moving between New Zealand and the United States. experiencing a variety of cultural influences.
Before entering the world of professional wrestling. Johnson had aspirations of becoming a professional football player. He played college football at the University of Miami. where he was part of a national championship team. But, injuries curtailed his football career, leading him to follow in his family's footsteps and enter the wrestling ring.
Career Milestones
Orpah Winfrey: The Queen of All Media
Winfrey's career breakthrough came in 1986 when she launched "The Oprah Winfrey Show." The show became a cultural phenomenon. drawing millions of viewers daily and earning many awards. Winfrey's empathetic and candid interviewing style resonated with audiences. helping her tackle diverse and often challenging topics.
Beyond her talk show, Winfrey expanded her empire to include the creation of Harpo Productions. a multimedia production company. She also launched "O, The Oprah Magazine" and OWN: Oprah Winfrey Network, further solidifying her status as a media mogul.
Dwayne Johnson: From The Ring to The Big Screen
Dwayne Johnson's wrestling career took off in the late 1990s. when he became one of the most charismatic and popular figures in WWE. His larger-than-life persona and catchphrases endeared him to fans. making him a household name. But, Johnson had ambitions beyond the wrestling ring.
In the early 20
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Top IPTV UK Providers of A Comprehensive Review.pdfXtreame HDTV
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Unveiling Paul Haggis Shaping Cinema Through Diversity. .pdfkenid14983
Paul Haggis is undoubtedly a visionary filmmaker whose work has not only shaped cinema but has also pushed boundaries when it comes to diversity and representation within the industry. From his thought-provoking scripts to his engaging directorial style, Haggis has become a prominent figure in the world of film.
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Today's fast-paced environment worries companies of all sizes about efficiency and security. Businesses are constantly looking for new and better solutions to solve their problems, whether it's data security or facility access. RFID for access control technologies have revolutionized this.
The Evolution of the Leonardo DiCaprio Haircut: A Journey Through Style and C...greendigital
Leonardo DiCaprio, a name synonymous with Hollywood stardom and acting excellence. has captivated audiences for decades with his talent and charisma. But, the Leonardo DiCaprio haircut is one aspect of his public persona that has garnered attention. From his early days as a teenage heartthrob to his current status as a seasoned actor and environmental activist. DiCaprio's hairstyles have evolved. reflecting both his personal growth and the changing trends in fashion. This article delves into the many phases of the Leonardo DiCaprio haircut. exploring its significance and impact on pop culture.
The Unbelievable Tale of Dwayne Johnson Kidnapping: A Riveting Sagagreendigital
Introduction
The notion of Dwayne Johnson kidnapping seems straight out of a Hollywood thriller. Dwayne "The Rock" Johnson, known for his larger-than-life persona, immense popularity. and action-packed filmography, is the last person anyone would envision being a victim of kidnapping. Yet, the bizarre and riveting tale of such an incident, filled with twists and turns. has captured the imagination of many. In this article, we delve into the intricate details of this astonishing event. exploring every aspect, from the dramatic rescue operation to the aftermath and the lessons learned.
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The Origins of the Dwayne Johnson Kidnapping Saga
Dwayne Johnson: A Brief Background
Before discussing the specifics of the kidnapping. it is crucial to understand who Dwayne Johnson is and why his kidnapping would be so significant. Born May 2, 1972, Dwayne Douglas Johnson is an American actor, producer, businessman. and former professional wrestler. Known by his ring name, "The Rock," he gained fame in the World Wrestling Federation (WWF, now WWE) before transitioning to a successful career in Hollywood.
Johnson's filmography includes blockbuster hits such as "The Fast and the Furious" series, "Jumanji," "Moana," and "San Andreas." His charismatic personality, impressive physique. and action-star status have made him a beloved figure worldwide. Thus, the news of his kidnapping would send shockwaves across the globe.
Setting the Scene: The Day of the Kidnapping
The incident of Dwayne Johnson's kidnapping began on an ordinary day. Johnson was filming his latest high-octane action film set to break box office records. The location was a remote yet scenic area. chosen for its rugged terrain and breathtaking vistas. perfect for the film's climactic scenes.
But, beneath the veneer of normalcy, a sinister plot was unfolding. Unbeknownst to Johnson and his team, a group of criminals had planned his abduction. hoping to leverage his celebrity status for a hefty ransom. The stage was set for an event that would soon dominate worldwide headlines and social media feeds.
The Abduction: Unfolding the Dwayne Johnson Kidnapping
The Moment of Capture
On the day of the kidnapping, everything seemed to be proceeding as usual on set. Johnson and his co-stars and crew were engrossed in shooting a particularly demanding scene. As the day wore on, the production team took a short break. providing the kidnappers with the perfect opportunity to strike.
The abduction was executed with military precision. A group of masked men, armed and organized, infiltrated the set. They created chaos, taking advantage of the confusion to isolate Johnson. Johnson was outnumbered and caught off guard despite his formidable strength and fighting skills. The kidnappers overpowered him, bundled him into a waiting vehicle. and sped away, leaving everyone on set in a state of shock and disbelief.
The Immediate Aftermath
The immediate aftermath of the Dwayne Johnson kidnappin
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Q213 investor letter
1. 1
July 22, 2013
Dear Fellow Shareholders,
We have grown to nearly 30 million domestic members and 8 million international members. Q2
streaming revenue was up 26% domestically and 155% internationally over prior year.
Our first set of Netflix Originals earned 14 Emmy Award nominations, including “House of Cards” for
Outstanding Drama Series. This is the first time an Internet TV show has been nominated for top Emmy
awards.
We invite you to watch our live video interview at youtube.com/netflixir at 3pm Pacific today.
Summary Q2 Results & Q3 Guidance Midpoints
2. 2
Domestic Streaming
As the table above shows, we are generating steady growth in members, revenue, and contribution
profit. Our content mix, streaming and user experiences are all getting better and devices and
bandwidth are improving. Countering this, competitors for consumer attention are also all improving,
and the risk of U.S. market saturation only grows as we do. Given these competing forces, we are very
happy this year to be tracking slightly ahead of prior year in terms of net additions.
We generally expect net additions in Q2 to be lower than prior year Q2 due to increased net-add
seasonality as we grow. This Q2, however, was an exception, we believe due to the launch of Arrested
Development. This show already had a strong brand and fan base, generating a small but noticeable
bump in membership when we released it. Other great shows don’t have that noticeable effect in their
first season because they are less established.
Our contribution margin has now grown faster than our target for several quarters (up 610 basis points
from Q2 2012 on a target of 400). In addition to growing members at a faster rate than expected, our
outperformance is due to timing shifts on content deals and to a lesser degree just spending less on
content than expected. We are growing domestic content spend significantly and plan to continue to do
so. We’ve generally talked about how we’re focused on 100 bps of sequential quarterly expansion, and
how the lumpiness of content deals can make the q/q pattern somewhat irregular. Going forward, we’ll
slightly modify the articulation of our target from “an average of 100 bps per quarter” to “400 bps per
year.”
In Q3, our guidance midpoint implies 130 bps of further margin expansion as we continue to run above
our target. For Q4, we anticipate stepping up content spending even more, getting us closer to our 400
bps per year target. We’ll keep targeting about 400 basis points of annual improvement into 2014 if we
keep growing net additions at 2012/2013 levels.
In the quarter, we allowed our broad content deal with MTV Networks to expire. As we have said in the
past, it is our preference to license specific shows that our members love in an exclusive manner. While
the shows from Nickelodeon and Comedy Central came off our service, we introduced several new
shows from Disney Jr., The Cartoon Network and the HUB for kids, and great comedies like “The New
Girl” from Fox on July 1. Viewing and retention remain strong.
TV Everywhere continues to steadily improve, with, for example, the HBO Go app now available on
AppleTV.
Hulu and Amazon Prime Instant Video continue to license some exclusive content and develop their own
Originals. We have House of Cards and many others; Hulu has Battleground; and Amazon Prime Instant
Video will have Alpha House; all are quite good and quite different. All three services are becoming
more distinct from one another, like HBO, Showtime and Starz are distinct from one another on linear
TV. Of our “top 200” titles, Hulu is now at 36 titles and Amazon Prime Instant Video is at 68. Now that
Hulu has more money to spend, content prices may rise further, but we have many multi-year deals in
3. 3
place to mitigate this. Hulu and Amazon appear to have about the same amount of viewing, and Hulu
recently reported 4 million paying members.
International Streaming
Our International streaming segment saw membership growth in all markets. Net additions a year ago
were boosted by our UK/Ireland launch, so we are very happy to match in Q2 the net additions of a year
ago given we had no new territory launch in the first half of this year. As our guidance implies, we
expect Q3 net additions to be above Q3 of last year, bolstered in part by the launch of Netflix
Netherlands within the quarter.
In Latin America, we continued to see strong growth of new members in Brazil after our April price
change from 15 BRL to 17 BRL. Prices update in August for grandfathered members but we expect a
relatively small impact. Most prices in Brazil are rising due to substantial inflation.
Q2 international contribution loss was lower than expected due to slightly higher member growth and
lower than anticipated growth in content spending across multiple markets. We plan to grow our
international content investments in Q3 slightly ahead of revenues. This growth combined with the
losses associated with the launch of the Netherlands results in our guidance reflecting a q/q increase in
our combined international contribution loss.
Netherlands is about half the size of Canada, and is a good opportunity for us as we prepare for entry
into more markets. We’ll continue to expand in 2014 based upon the progression of our existing
markets and on confidence in the expansion opportunities.
Originals
For years we have featured a broad selection of movies and TV series licensed from others, and we
continue to improve the quality of this offering while seeking to differentiate Netflix by licensing that
content exclusively. This licensed content accounts for the bulk of viewing and leads to a lot of member
enjoyment.
Over the last six months, our move into Original programming has begun to redefine Netflix in the eyes
of consumers. Our first five series -- Lilyhammer, House of Cards, Hemlock Grove, Arrested Development
Season 4, and Orange is the New Black -- have engaged large audiences across our markets and are very
different, allowing us to broaden our overall reach with each new Original.
We assess the success of each Original by looking at viewing-to-date and estimated future viewing,
relative to cost. So far, we’ve ordered second seasons of all first season projects, which is quite unusual
and exciting for the fans of these shows. We’d be delighted to produce a fifth season of Arrested
Development, if possible, given fan reaction.
4. 4
We are thrilled to have the Netflix Originals nominated for 14 Emmys, with House of Cards earning nine
nominations including Outstanding Drama, Arrested Development garnering three, and Hemlock Grove
two. We couldn’t be more proud and pleased for the series creators, actors, composers, designers and
others who are being recognized by their peers for the excellence of their storytelling on Netflix.
Later this month, we will premiere Mako Mermaids, a series aimed at teen audiences, while for the
remainder of 2013 we will launch the Ricky Gervais series Derek and season two of Lilyhammer,
followed by Turbo: F.A.S.T.(Fast Action Stunt Team), our first animated Original from DreamWorks
Animation. We’re excited about our plans for 2014 and beyond as we premiere season two of House of
Cards, Hemlock Grove, and Orange is the New Black, and debut Sense 8, and multiple kids Originals from
DreamWorks Animation.
Beyond series, we will be expanding our Originals initiative to include broadly appealing feature
documentaries and stand-up comedy specials. Netflix has become a big destination for fans of these
much loved and often under-distributed genres.
We’ll continue to build on our initial success with Originals as we gain confidence in our ability to use
our judgment and data to find projects that our members will enjoy.
Based on the viewing trends we see with other similar television series, we are amortizing Originals on a
straight-line basis over the shorter of 4 years or the license period1
. We are in the early stages of
Originals and continue to monitor whether the viewing pattern is enough higher in the first few months
to have us amortize at a faster initial rate, and then to continue on a straight-line basis for the
remainder of the amortization period. In terms of relative size, of the approximately $3 billion in
content library net book value we are amortizing, currently around 5% is for Originals.
Streaming Service Getting Better
Our Product Innovation teams greatly enhanced the features and delivery of our service during the
quarter, as well as improved discovery and merchandising of our content library.
During Q2, we rolled out a new streaming player platform to all partners and began work towards a
single UI to run across multiple devices that will be optimized for various input devices (voice
interactions, pointer, and left/right/up/down controllers). The new platform and UI are optimized for
better performance and faster starts and allow us to increase the number of platforms on which we can
conduct AB testing for even more rapid innovation.
In Q2, we also continued to focus efforts on improving our recommendation algorithms to help our
members discover great content. Our recommendation algorithms create a highly personalized
1
If a subsequent season is added, we extend the remaining amortization period by a year.
5. 5
experience for each of our streaming members, allowing them to easily find content they’ll love and
allowing us to optimize the utility of the content library. Constant innovation in this important area
(more than ¾ of the hours streamed on Netflix come from personalized suggestions generated by our
recommendation algorithms) continues across a variety of dimensions.
We continue improving features which will facilitate social interaction among members by allowing
them to provide direct recommendations to one another, provide feedback about those
recommendations and to share them with mutual friends.
In Q3, we’ll be rolling out our profiles features which will allow households to have distinct “profiles” for
different members or viewing tastes within their home, enabling us to provide a much more
personalized experience for our members.
Our default $7.99 plan includes two simultaneous streams. We added an additional plan, at $11.99, that
includes 4 simultaneous streams for the few large families that would otherwise need two separate
accounts and partition their TVs between the two accounts. As expected, the take rate on this large
family plan is minimal. Our default limit of two simultaneous streams keeps password sharing with non-
household members to a minimum because it risks the account owner not being able to watch when
they want.
Marketing
With our new Watch Responsibly ads, we’ve sought to tell a fun and emotional story that ties
consumers to the Netflix brand and highlight attributes of our service that drive certain consumer
behaviors - like watching ahead, spoiling it for others, and marathon viewing. We didn’t invent these
behaviors, but they’ve become associated with Netflix and highlight the fundamental changes in the way
consumers are enjoying TV series and movies.
We’ve also begun to shine an even more effective light on the great content available on Netflix,
particularly our Originals. Each Original has been backed by distinctive marketing and promotional
campaigns that have served to increase awareness of our service and to trigger engagement among
both members and non-members. The publicity surrounding Originals has been very substantial and
generally very positive, leading in turn to improved perception of the quality of content on our service
and on the value we offer to members.
6. 6
DVD
The huge selection we offer on DVD continues to be a draw for over 7 million households.
DVD contribution profit declined 19% y/y, in line with the decline in member/revenues, as most of the
costs scale with member/shipment levels.
We continue to anticipate being able to maintain approximately the margins we’ve posted in the first
half of 2013 throughout the full year. Consistent with our view in prior quarters, we don’t foresee USPS
service changes that will have a material negative impact upon us or our members over the next few
quarters.
Free Cash Flow & Capital
Free cash flow was +$13 million in Q2, a swing to positive reflecting the relatively fewer content
payments in the quarter and strong global profit growth. Our investments in content, including
Originals, will continue to weigh on FCF relative to net income and thus our FCF trends.
In April, we converted the 2011 TCV $200 million convertible notes to the corresponding 2.3 million
shares as discussed in our Q1 letter. Our sole remaining long-term debt is the $500 million notes we
raised in February, which is due in 2021.
We continue to have just over a $1 billion in cash and equivalents.
7. 7
Business Outlook
For investor convenience we placed the midpoints of our guidance ranges in the table at the beginning
of this letter. This does not make the midpoint the “goal”. Our best estimate is we will be within the
ranges below. The ranges below are our guidance.
Summary
We are thrilled to be pleasing more members than ever.
The world is moving from linear TV to Internet TV and Netflix is leading that evolution.
Sincerely,
8. 8
Reed Hastings, CEO David Wells, CFO
Second Quarter 2013 Earnings Interview
Netflix Chief Executive Officer Reed Hastings, Chief Financial Officer David Wells and Chief Content
Officer Ted Sarandos will participate in a live video interview about the Company’s financial results and
business outlook at 3:00 p.m. Pacific Time. The interview will be conducted by Rich Greenfield, BTIG
Research and Julia Boorstin, CNBC, with questions submitted via email or twitter. Questions from
investors should be submitted to rgreenfield@btig.com /@RichBTIG or Julia.boorstin@nbcuni.com /
@JBoorstin.
The live broadcast will be at www.youtube.com/netflixir.
IR Contact:
Erin Kasenchak
Director, Investor Relations
408 540-3691
PR Contact:
Jonathan Friedland
Chief Communications Officer
310 734-2958
9. 9
Use of Non-GAAP Measures
This shareholder letter and its attachments include reference to the non-GAAP financial measures of
free cash flow. Management believes that free cash flow is an important liquidity metric because it
measures, during a given period, the amount of cash generated that is available to repay debt
obligations, make investments and for certain other activities. However, this non-GAAP measure should
be considered in addition to, not as a substitute for or superior to, net income, operating income,
diluted earnings per share and net cash provided by operating activities, or other financial measures
prepared in accordance with GAAP. Reconciliation to the GAAP equivalent of this non-GAAP measure is
contained in tabular form on the attached unaudited financial statements.
Forward-Looking Statements
This shareholder letter contains certain forward-looking statements within the meaning of the federal
securities laws, including statements regarding meeting domestic contribution margin targets;
investments in content, particularly exclusive and original content; subscriber acquisition seasonality;
potential effects of competition and market saturation; international contribution margin and impacts
arising from expansion to the Netherlands; improvements to our service, including the rollout of profiles
and social features; content accounting for originals; business outlook for our DVD segment, including
contribution margins and the impact of USPS service changes; free cash flow and usage of cash; member
growth, including total and paid; revenue and contribution profit (loss) for both domestic (streaming
and DVD) and international operations as well as net income and earnings per share for the third
quarter of 2013. The forward-looking statements in this letter are subject to risks and uncertainties that
could cause actual results and events to differ, including, without limitation: our ability to attract new
members and retain existing members; our ability to compete effectively; maintenance and expansion
of device platforms for instant streaming; fluctuations in consumer usage of our service; disruption in
service on our website and systems or with third-party computer systems that help us operate our
service; competition; and, widespread consumer adoption of different modes of viewing in-home filmed
entertainment. 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 in our filings
with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 1, 2013. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after the date of this
shareholder letter.
10. 10
Netflix, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30,
2013
March 31,
2013
June 30,
2012 (1)
June 30,
2013
June 30,
2012 (1)
Revenues $ 1,069,372 $ 1,023,961 $ 889,163 $ 2,093,333 $ 1,758,954
Cost of revenues 753,525 726,863 643,428 1,480,388 1,267,361
Marketing 121,760 129,175 113,964 250,935 243,892
Technology and development 93,126 91,975 81,547 185,101 164,348
General and administrative 43,844 44,126 34,070 87,970 69,134
Operating income 57,117 31,822 16,154 88,939 14,219
Other income (expense):
Interest expense (7,528) (6,740) (5,006) (14,268) (9,980)
Interest and other income (expense) (2,940) 977 (493) (1,963) (609)
Loss on extinguishment of debt — (25,129) — (25,129) —
Income before income taxes 46,649 930 10,655 47,579 3,630
Provision (benefit) for income taxes 17,178 (1,759) 4,491 15,419 2,050
Net income $ 29,471 $ 2,689 $ 6,164 $ 32,160 $ 1,580
Earnings per share:
Basic $ 0.51 $ 0.05 $ 0.11 $ 0.56 $ 0.03
Diluted $ 0.49 $ 0.05 $ 0.11 $ 0.53 $ 0.03
Weighted average common shares
outstanding:
Basic 58,192 55,972 55,526 57,089 55,491
Diluted 60,590 60,146 58,809 60,369 58,878
(1) Certain prior period amounts have been reclassified from "Marketing" to "General and administrative" to conform to current
period presentation.
11. 11
Netflix, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and par value data)
As of
June 30,
2013
December 31,
2012
Assets
Current assets:
Cash and cash equivalents $ 370,678 $ 290,291
Short-term investments 709,432 457,787
Current content library, net 1,363,609 1,368,162
Prepaid content 32,064 59,929
Other current assets 94,539 64,622
Total current assets 2,570,322 2,240,791
Non-current content library, net 1,682,202 1,506,008
Property and equipment, net 127,931 131,681
Other non-current assets 100,296 89,410
Total assets $ 4,480,751 $ 3,967,890
Liabilities and Stockholders' Equity
Current liabilities:
Current content liabilities $ 1,321,217 $ 1,366,847
Accounts payable 103,441 86,468
Accrued expenses 59,035 53,139
Deferred revenue 186,571 169,472
Total current liabilities 1,670,264 1,675,926
Non-current content liabilities 1,124,249 1,076,622
Long-term debt 500,000 200,000
Long-term debt due to related party — 200,000
Other non-current liabilities 80,616 70,669
Total liabilities 3,375,129 3,223,217
Stockholders' equity:
Common stock, $0.001 par value; 160,000,000 shares authorized at June 30, 2013
and December 31, 2012; 58,922,493 and 55,587,167 issued and outstanding at
June 30, 2013 and December 31, 2012, respectively 59 56
Additional paid-in capital 634,985 301,616
Accumulated other comprehensive (loss) income (1,664) 2,919
Retained earnings 472,242 440,082
Total stockholders' equity 1,105,622 744,673
Total liabilities and stockholders' equity $ 4,480,751 $ 3,967,890
12. 12
Netflix, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30,
2013
March 31,
2013
June 30,
2012
June 30,
2013
June 30,
2012
Cash flows from operating activities:
Net income $ 29,471 $ 2,689 $ 6,164 $ 32,160 $ 1,580
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Additions to streaming content library (593,454) (591,941) (374,252) (1,185,395) (1,139,145)
Change in streaming content liabilities 7,284 9,700 (39,947) 16,984 357,606
Amortization of streaming content library 510,250 485,740 375,997 995,990 715,733
Amortization of DVD content library 17,709 18,237 16,304 35,946 36,350
Depreciation and amortization of property, equipment and intangibles 12,026 12,051 11,047 24,077 22,378
Stock-based compensation expense 17,955 17,746 18,450 35,701 37,782
Excess tax benefits from stock-based compensation (20,368) (11,615) (307) (31,983) (4,062)
Other non-cash items 1,188 1,750 (1,579) 2,938 (3,098)
Loss on extinguishment of debt — 25,129 — 25,129 —
Deferred taxes (2,040) (6,748) — (8,788) (10,843)
Changes in operating assets and liabilities:
Prepaid content 25,190 2,675 4,503 27,865 7,497
Other current assets 8,572 (8,402) (8,077) 170 3,664
Accounts payable (5,138) 17,019 316 11,881 (1,440)
Accrued expenses 10,494 (4,132) 6,854 6,362 8,637
Deferred revenue 7,693 9,406 2,188 17,099 3,994
Other non-current assets and liabilities 7,111 8,446 1,746 15,557 1,883
Net cash provided by (used in) operating activities 33,943 (12,250) 19,407 21,693 38,516
Cash flows from investing activities:
Acquisitions of DVD content library (14,023) (21,193) (8,012) (35,216) (21,540)
Purchases of property and equipment (8,088) (12,118) (3,359) (20,206) (8,125)
Other assets 1,087 4,050 3,132 5,137 4,466
Purchases of short-term investments (146,050) (235,623) (63,303) (381,673) (362,770)
Proceeds from sale of short-term investments 33,979 81,228 48,173 115,207 220,508
Proceeds from maturities of short-term investments 5,410 4,420 12,715 9,830 20,990
Net cash used in investing activities (127,685) (179,236) (10,654) (306,921) (146,471)
Cash flows from financing activities:
Proceeds from issuance of common stock 28,846 39,146 524 67,992 1,748
Issuance costs — (9,414) (371) (9,414) (759)
Redemption of debt — (219,362) — (219,362) —
Proceeds from issuance of debt — 500,000 — 500,000 —
Excess tax benefits from stock-based compensation 20,368 11,615 307 31,983 4,062
Principal payments of lease financing obligations (255) (403) (577) (658) (1,136)
Net cash provided by (used in) financing activities 48,959 321,582 (117) 370,541 3,915
Effect of exchange rate changes on cash and cash equivalents (2,590) (2,336) (2,377) (4,926) (1,762)
Net (decrease) increase in cash and cash equivalents (47,373) 127,760 6,259 80,387 (105,802)
Cash and cash equivalents, beginning of period 418,051 290,291 395,992 290,291 508,053
Cash and cash equivalents, end of period $370,678 $418,051 $402,251 $ 370,678 $ 402,251
Three Months Ended Six Months Ended
June 30,
2013
March 31,
2013
June 30,
2012
June 30,
2013
June 30,
2012
Non-GAAP free cash flow reconciliation:
Net cash provided by (used in) operating activities $ 33,943 $ (12,250) $ 19,407 $ 21,693 $ 38,516
Acquisitions of DVD content library (14,023) (21,193) (8,012) (35,216) (21,540)
Purchases of property and equipment (8,088) (12,118) (3,359) (20,206) (8,125)
Other assets 1,087 4,050 3,132 5,137 4,466
Non-GAAP free cash flow $ 12,919 $ (41,511) $ 11,168 $ (28,592) $ 13,317
13. 13
Netflix, Inc.
Segment Information
(unaudited)
(in thousands)
As of / Three Months Ended As of/ Six Months Ended
June 30,
2013
March 31,
2013
June 30,
2012 (1)
June 30,
2013
June 30,
2012 (1)
Domestic Streaming
Total members at end of period 29,807 29,174 23,938 29,807 23,938
Paid members at end of period 28,624 27,913 22,686 28,624 22,686
Revenue $ 671,089 $ 638,649 $ 532,705 $1,309,738 $ 1,039,370
Cost of revenues 449,473 436,506 378,574 885,979 739,350
Marketing 70,302 70,793 66,732 141,095 140,137
Contribution profit 151,314 131,350 87,399 282,664 159,883
International Streaming
Total members at end of period 7,747 7,142 3,624 7,747 3,624
Paid members at end of period 7,014 6,331 3,024 7,014 3,024
Revenue $ 165,902 $ 142,019 $ 64,973 $ 307,921 $ 108,398
Cost of revenues 182,885 165,024 108,542 347,909 199,953
Marketing 48,850 53,915 45,858 102,765 100,555
Contribution profit (loss) (65,833) (76,920) (89,427) (142,753) (192,110)
Domestic DVD
Total members at end of period 7,508 7,983 9,240 7,508 9,240
Paid members at end of period 7,369 7,827 9,145 7,369 9,145
Revenue $ 232,381 $ 243,293 $ 291,485 $ 475,674 $ 611,186
Cost of revenues 121,167 125,333 156,312 246,500 328,058
Marketing 2,608 4,467 1,374 7,075 3,200
Contribution profit 108,606 113,493 133,799 222,099 279,928
Consolidated
Revenue $ 1,069,372 $ 1,023,961 $ 889,163 $2,093,333 $ 1,758,954
Cost of revenues 753,525 726,863 643,428 1,480,388 1,267,361
Marketing 121,760 129,175 113,964 250,935 243,892
Contribution profit 194,087 167,923 131,771 362,010 247,701
Other operating expenses 136,970 136,101 115,617 273,071 233,482
Operating income 57,117 31,822 16,154 88,939 14,219
Other income (expense) (10,468) (5,763) (5,499) (16,231) (10,589)
Loss on extinguishment of debt — (25,129) — (25,129) —
Provision (benefit) for income taxes 17,178 (1,759) 4,491 15,419 2,050
Net income $ 29,471 $ 2,689 $ 6,164 $ 32,160 $ 1,580
(1) Certain prior period amounts have been reclassified from "Marketing" to "General and administrative" to conform to current
period presentation.