This spreadsheet supports STUDENT analysis of the case Netflix, Inc.: DVD Wars (UVA-M-0763).

This spreadsheet was prepared by Rajkumar Venkatesan, Bank of America Research Associate Professor of Business Administration. Copyright 2008 by the University
of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. For customer service inquiries, send an e-mail tosales@dardenbusinesspublishing.com.
No part of this publication may be reproduced, stored in a retrieval system, posted to the Internet, or transmitted in any form or by any meanselectronic, mechanical,
photocopying, recording, or otherwisewithout the permission of the Darden School Foundation.

Rev. Sept. 19, 2011

 Mar-01 Jun-01
Revenues 17,057 18,359
Cost of subscription 9,476 10,776
Gross profit 5,352 7,137

Fulfillment expenses 2,886 3,589

Technology and development 3,857 4,896
Marketing 4,665 4,090
Total variable costs 11,409 12,575

Net income (6,056) (5,438)

Number of paid subscribers

Gross subscriber additions 303 306
186 88
Retention (no. of subscribers)
Retention %

Margin per subscriber (monthly) $ 5.89 $ 7.77

Subscriber acquisition cost $ 25.15 $ 46.48

Share price
Outstanding shares (in thousands)

Retention Rate 38.78% 71.24%

Margin Profit 838 (902)
Discount Rate 5% 5.00% 5.00%
CLV 1328.814961916 -2805.5430784124
CE
Market cap(in thousands)

3500000000.00

3000000000.00
3500000000.00

3000000000.00

2500000000.00

2000000000.00

1500000000.00

1000000000.00

500000000.00

0.00
1 2 3
 Sep-01 Dec-01
18,878 21,618
9,667 14,811
9,035 7,591

3,283 3,785
4,463 4,802
3,444 6,167
11,190 14,753

(2,155) (7,162)

315 456
107 186

$ 9.56 $ 5.55
$ 32.19 $ 33.24

66.03% 59.32%
1,465 (1,780)
5.00% 5.00%
3947.4439918534 -4091.0974245053

Correlation
3500000000.00

3000000000.00
 Correlation
3500000000.00

3000000000.00

2500000000.00

2000000000.00

1500000000.00

1000000000.00

500000000.00

Row 34 Row 35
0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
 NETFLIX, INC.: DVD WARS
Data for Calculating Customer Lifetime Value

All values in thousands except margin per subscriber and subscriber acquisition cost (shaded).

Mar-02 Jun-02 Sep-02

30,527 36,360 40,731
14,872 17,779 21,147
15,369 18,268 19,235

4,155 4,854 4,908

3,181 3,518 3,966
7,938 8,054 9,299
15,274 16,426 18,173

95 1,842 1,062

562 598 671

312 236 277

$ 9.12 $ 10.18 $ 9.56

$ 25.44 $ 34.13 $ 33.57

$ 13.99 $ 9.70
21,588 22,069

44.48% 60.54% 58.72%

8,319 10,209 10,710
5.00% 5.00% 5.00%
14434.1132019994 24107.6761940579 24297.9568507487
14416390.36 16303929.05
$ 302,016.12 $ 214,069.30

relation
$2,000,000.00

$1,800,000.00

$1,600,000.00
relation
$2,000,000.00

$1,800,000.00

$1,600,000.00

$1,400,000.00

$1,200,000.00

$1,000,000.00

$800,000.00

$600,000.00

$400,000.00

$200,000.00

Row 35
$-
13 14 15 16 17 18 19 20 21 22
 Dec-02 Mar-03 Jun-03
45,188 55,669 63,187
23,246 29,928 35,148
21,798 25,662 27,946

5,449 6,383 7,221

3,960 4,183 4,123
10,492 13,207 9,957
19,901 23,773 21,301

1,897 1,889 6,645

857 1,009 1,055

315 417 327

$ 8.48 $ 8.48 $ 8.83

$ 33.31 $ 31.67 $ 30.45

$ 11.01 $ 20.35 $ 25.55

22,446 22,977 23,959

63.24% 58.67% 69.00%

12,533 15,175 16,695
5.00% 5.00% 5.00%
31515.4954589912 34393.3121189432 48700.1612903226
27008779.61 34702851.93 51378670.16
$ 247,130.46 $ 467,581.95 $ 612,152.45
 Sep-03 Dec-03 Mar-04 Jun-04
72,202 81,185 100,370 120,321
38,326 44,334 56,444 69,604
33,554 36,721 43,743 50,533

8,322 9,348 10,790 14,373

4,738 4,840 5,039 5,652
12,183 14,602 26,693 20,477
25,243 28,790 42,522 40,502

8,311 7,931 1,221 10,031

1,172 1,224 1,631 1,933

383 444 760 583

$ 9.54 $ 10.00 $ 8.94 $ 8.71

$ 31.81 $ 32.89 $ 35.12 $ 35.12

$ 33.56 $ 54.69 $ 34.12 $ 36.00

24,228 24,767 51,546 52,121

67.32% 63.73% 53.40% 69.84%

20,816 22,663 28,097 30,692
5.00% 5.00% 5.00% 5.00%
58007.6304347826 57653.3800475059 57177.2531043907 91656.0256014125
67984942.87 70567737.18 93256099.81 177171097.49
$ 813,091.68 $ 1,354,507.23 $ 1,758,749.52 $ 1,876,356.00
 Sep-04 Dec-04 Mar-05
141,644 138,276 152,446
71,130 76,223 93,986
70,043 65,451 59,155

8,322 23,124 16,694

4,738 7,477 7,155
22,525 38,674 35,803
35,585 69,275 59,652

34,458 (3,824) (497)

2,080 2,308 2,687

590 783 945

$ 11.22 $ 9.45 $ 7.34

$ 38.18 $ 49.39 $ 37.89

$ 15.42 $ 12.33 $ 10.85

52,303 52,732 52,965

71.63% 66.07% 64.83%

57,454 31,452 34,611
5.00% 5.00% 5%
180806.247838617 84840.5796972395 90470.88
376076995.50 195812057.94 243095255.86
$ 806,512.26 $ 650,185.56 $ 574,670.25
 Jun-05 Sep-05 Dec-05
164,027 172,740 193,000
99,957 97,878 101,967
64,186 75,250 19,072

17,560 15,013 21,495

7,513 6,325 9,949
26,338 33,463 57,331
51,411 54,801 88,775

12,775 20,449 (69,703)

2,998 3,266 3,725

707 921 1,156

$ 7.14 $ 7.68 $ 1.71

$ 37.25 $ 35.69 $ 49.59

$ 16.41 $ 25.99 $ 27.06

53,426 53,962 54,756

76.42% 71.80% 68.97%

38,997 53,524 59,589
5% 5% 5%
143259.02 169279.58 173639.39
429490549.17 552867122.15 646806741.69
$ 876,720.66 $ 1,402,472.38 $ 1,481,697.36
 Mar-06 Jun-06 Sep-06
224,126 239,351 255,950
126,220 128,605 135,210
75,861 88,772 97,157

22,045 21,974 23,583

11,206 12,043 8,955
52,968 47,031 59,367
86,219 81,048 91,905

(10,358) 7,724 5,252

4,380 4,876 5,253

1,377 1,070 1,310

$ 5.77 $ 6.07 $ 6.17

$ 38.47 $ 43.95 $ 45.32

$ 28.99 $ 27.21 $ 22.78

55,510 67,937 68,154

68.56% 78.06% 75.06%

64,655 76,729 88,202
5% 5% 5%
186308.49 299008.32 309344.97
816031172.37 1457964580.88 1624989108.14
$ 1,609,234.90 $ 1,848,565.77 $ 1,552,548.12
 Dec-06 Mar-07 Jun-07
277,233 305,320 303,693
142,586 165,189 166,838
107,885 110,348 217,348

26,762 29,783 29,855

16,175 15,715 18,907
92,062 72,138 45,255
134,999 117,636 94,017

(27,114) (7,288) 123,331

5,823 6,415 6,643

1,493 1,520 1,028

$ 6.18 $ 5.73 $ 10.91

$ 61.66 $ 47.46 $ 44.02

$ 25.86 $ 23.19 $ 19.39

68,612 68,762 67,638

74.36% 76.31% 84.53%

91,710 94,633 88,093
5% 5% 5%
314283.38 346285.06 451760.39
1830072135.03 2221418679.26 3001044243.87
$ 1,774,306.32 $ 1,594,590.78 $ 1,311,500.82
 Sep-07
293,972
163,707
99,519

23,583
18,216
49,166
90,965

8,554

6,727
1,297

$ 4.93
$ 37.91

$ 26.62
64,913

80.72%
88,466
5%
382567.31
2573530316.25
$ 1,727,984.06