Strategic & Performance Analysis

1998 Offered DVD rentals

2000 Revenue sharing with Warner Bros. and Columbia

2002 Publicly Listed

2003 Subscribers top 1M

2007 Billionth DVD delivery

2010 Surpassed 20M subscribers & named #1 eComm company for customer satisfaction

The Evolution

Streaming

DiscsMobile & Tablets

Game Consoles

Technology Channels

...what 3 movies would you stream over and over again?

Product Life Cycle and Key Competitors

Introduction Growth Maturity Decline

Subscribers by Provider

20 mln

10 mln

5 mln VCR

DVD

VOD

Streaming Video

Blu-Ray

Competitive Landscape

Financial Summary

-$13 bln Market Cap., $230 per share - P/E Ratio= 85x vs. Peer group = 50x

- $2.2 bln Sales (11’ growth 30%)

- $160 mln Net Income

- Return on Equity= 26%

- BB + S&P rating

0%

10.0%

20.0%

30.0%

40.0%

Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Sep-11

Chart 7

Gross Profit %Operating Income % of Sales

Margins remain healthy despite significant growth

Netflix actively managing operating costs relative to sales while maintaining aggressive growth

User Growth

• Subscriber average growth at 40%

• Customer churn rates remain flat at 4%

• Impact to be seen following streaming cost increase in September 2011

• Potential offset with international expansion

0

7,500

15,000

22,500

30,000

Mar-09Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10Mar-11

Sep-11

No. Subscribers

Financial Summary

Ability to monetize subscriber growthAverage subscriber growth 40%Manage churn rate below market averageFocus on internal cost managementMaintain healthy gross margins

Fit for Purpose Balance Sheet40% of assets are content relatedHigh cash balances / Bank revolver capacityInvestment in TechnologyLow / moderate Debt to Equity- 40%Strong cash flow to service debt

Other ConsiderationsCost pressure (competition, streaming video and international expansion)Investors have significant expectations

Healthy Financial Condition &

Positioned fo

r Growth

• Innovation

• Strong Alliances

• Quality . Brand . Size

• Cost Management

Keys To Success