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Erik's Spin


Netflix Facts

3 Feb, 2014 By: Erik Gruenwedel

Netflix is one of the most recognized brands in America, if not the world. The company, which began operations April 14, 1998, released its annual report Feb. 3, which gives a snapshot of the top producing publicly traded company in 2013, according to Standard & Poor’s.

Its stock price Feb. 3 opened at $411 a share with a market valuation around $24 billion. Notably, there were just 215 stockholders of record of Netflix common stock (as of Jan. 30, 2014), although that doesn’t include all shareholders working through investment groups.

And still the subscription streaming pioneer prefers to rent — not own — its 250,000 square-foot corporate headquarters in Los Gatos, Calif. Interestingly, Netflix is doubling the headquarters to 510,000 square feet, with construction slated to finish by 2015.

Netflix rents all of its business facilities, including the 57,000 square-foot packaged-media corporate headquarters in Fremont, Calif., and 79,000 square-foot office in Beverly Hills, Calif. (where chief content officer Ted Sarandos works).

It also operates a 23,000 square-foot global streaming customer service center in Santa Clara, 90,000 square-foot domestic disc processing, shipping and storage center in Columbus, Ohio; and 49,000 square-foot domestic streaming and disc customer service center in Hillsboro, Ore.

Netflix employs 2,020 full-time employees, and another 400+ part-time. It uses Amazon Web Services for its cloud-based computing, and prefers a proprietary Open Connect CDN, while still using third-party services such as Akamai and Level 3.

The company added 6.2 million domestic streaming subscribers in 2013, to end the year with 33.4 million, which was up 15% from 2012. Domestic streaming generated a contribution profit of $622 million, up 69% from 2012, on revenue of $2.7 billion. The revenue increase was largely due to a 26% increase in the average number of paid memberships.

Netflix added 4.8 million international subscribers, up 13% from 2012, to end the year with 9.7 million. It generated a contribution loss of $274 million, which was down from a contribution loss of $389 million in 2012.

The rental company lost almost 1.3 million disc subscribers in 2013, which was a 57% improvement from the 3 million disc subs lost in 2012. The segment generated a contribution profit of $439 million, which was down 18% from 2012, on revenue of $910 million (down 20% from 2012).

The $132.1 million decrease in domestic DVD cost of revenue was primarily due to a $63.2 million decrease in content acquisition expense and a $47.7 million decrease in content delivery expenses resulting from a 21% decrease in the number of DVDs mailed to paying members. All of which helped packaged media up contribution margin 1% to 48%.

Notably, Netflix generated $5.8 million selling previously viewed discs to third parties.

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