Alex Blatt, Vanessa Boys Smith, Drew Fann, Brie Hunt-Augustine, Chris Mullican

Why Netflix?

Integrated Customer Experience

Good Cultural Fit

Increased Market Share

Streaming & Content Synergies

Apple TV – Not your typical TV“I’d like to create an integrated television set that is completely easy to use. It would be seamlessly synced with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it.” – Steve Jobs

Apple TV is Our New iOS Platform

Leveraging our Next Portfolio Product

• integrated with iTunes and App Store = new monetization opportunities through capture of streaming market share

• New User Experience• Fully integrated living room experience• Deeper content relationship• Leveraged synergies with a combined user

base

In House: MacOSxiPhone,

iPad, iPods

Solid State Flash

Storage

Acquisition 2011

TV as PlatformIntegrated

User Experience

*Apple TV*

Streaming Contracts

Acquisition Need Vertical Integration

Outcome

Design Efficiency

Production Cost Savings

Distribution Efficiency

Design Efficiency(Apple TV Integration)

Production Cost Savings (Contracts)

Distribution Efficiency(Streaming & Market Share)

Com

peti

tive E

dg

e

Movie Streaming on Apple TV:

Capturing Market Share

• 23.8 million subscribers• 22 million streaming

70%

30%

The DVD Streaming Market

Other

Netflix

Pricing Model

Basic Membership - $7.99 per month

Premium Membership - $14.99 per month

Conservative Year 1 2 3 4 5

Total 782$ 978$ 1,131$ 1,250$ 1,355$

Total 808$ 1,091$ 1,363$ 1,636$ 1,881$

Expected

Millions

Millions

Comparative Value with sensitivity analysis

DCF Earnings Multiple$17B$16B$15B$14B$13B$12B$11B$10B$9B$8B$7B$6B$5B

Added Value

$17B$16B$15B$14B$13B$12B$11B$10B$9B$8B$7B$6B$5B

Netflix Value Mem. Rev. iTunes Etc. Outside Mem.Total Rev.

Netflix current valueOur OFFER

$ 12.5 Billion

Divested owners Joining 50%cash/ 50% 100% cash in Apple Stock

Current Value Chain

Content & Services• MobileMe• iCloud

Content Aggregation• iTunes• iBooks• App Store

Hardware & Software Platforms• MacOSx• iWorks

Appliances

• Mac• iPhone• iPad• iPod• Apple TV

Retail & Distribution

Value Add: Vertical Integration

Content & Services• MobileMe• iCloud

Content Aggregation

• Netflix Streaming Technology

• iTunes • iBooks• App Store

Hardware & Software Platforms• MacOSx• iWorks

Appliances

• Mac• iPhone• iPad• iPod• Apple TV

Retail & Distribution

Apple’s Innovative Culture

Do Everything Important Internally

Make a Dent in the Universe

Control the MessageGet MarketingLove & Cherish the CreativesValues, not RulesDo What is ImportantFreedom & Flexibility

Think Different

Empower Employees to Make

a Difference

Do Everything Important Internally

Make a Dent in the Universe

Control the MessageGet MarketingLove & Cherish the Creatives

Values, not RulesDo What is ImportantFreedom & Flexibility

Think Different

Empower Employees to Make

a Difference

Apple-Netflix Integration Team

Integration Change Management

COMMUNICATIONCOMMUNICATION ORGANIZATIONORGANIZATION CULTURECULTURE

Head of iTunes

HR, Apple

COO, NFLX

HR NFLX

Responsible for vision, direction and prioritization of all integration efforts

CEO, NFLX R&D Apple TV

Apple CEO

Integration

Team

Integration Initiative Communication Organization Culture

Facilitate integration effectiveness

Align Apple and Netflix to increase efficiencies and realize synergies

Minimize integration risks due to cultural differences

Organize all stakeholders

Establish 2-way feedback

Launch internal communication campaign

External PR Campaign

Maximize stakeholder buy-in and involvement

Set cross-organizational hierarchy

Monitor retention rates

Develop cultural transition strategy

Deploy cultural progress surveys

Put extra emphasis on gathering informal feedback

Goals

Actions

February | March |October | September

Begin integration

due diligenceFeb 1

Integration Team

formedFeb 8

Netflix is acquired

Feb 1

Integration Completed

September 1

Acquisition Timeline

Communication Initiative launched

Feb 8

Set cross organizationa

l hierarchyFeb 8

Monitor retention

ratesMarch 1

Integration Timeline Year One

Maximize stakeholder buy-

in and involvement

March 1

Deploy Cultural

Progress SurveysMarch 1

Gather informal feedback

March - October

Netflix Will Benefit from the Acquisition

Fiscal Incentives Cultural Fit

Competitive Positioning: Streaming Advantage & User Base

Strategic Leveraging: AppleTV as a Platform

Summary• Digital streaming experience unlike any other

• Netflix Digital Library & Subscribers• Seamlessly Synced Apple Platforms & iCloud

Service

• Now:• #1 Digital Video Streaming Market Share

• Future: Streaming Content with Untapped Market Entry