Document And Entity Information

3 Months Ended

Mar. 31, 2012

Document And Entity Information [Abstract]

Document Type

10-Q

Amendment Flag

false

Document Period End Date

Mar. 31, 2012

Document Fiscal Year Focus

2012

Document Fiscal Period Focus

Q1

Entity Registrant Name

NETFLIX INC

Entity Central Index Key

0001065280

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Entity Common Stock, Shares Outstanding

55,515,631

Consolidated Statements Of Operations (USD $)

In Thousands, except Per Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Income Statement [Abstract]

Revenues

$ 869,791

$ 718,553

Cost of revenues:

Subscription

564,015

376,992

Fulfillment expenses

59,918

61,159

Total cost of revenues

623,933

438,151

Gross profit

245,858

280,402

Operating expenses:

Marketing

135,900

104,259

Technology and development

82,801

50,905

General and administrative

29,092

22,998

Total operating expenses

247,793

178,162

Operating income (loss)

(1,935)

102,240

Other income (expense):

Interest expense

(4,974)

(4,865)

Interest and other income (expense)

(116)

865

Income (loss) before income taxes

(7,025)

98,240

Provision (benefit) for income taxes

(2,441)

38,007

Net income (loss)

$ (4,584)

$ 60,233

Net income (loss) per share:

Basic

$ (0.08)

$ 1.14

Diluted

$ (0.08)

$ 1.11

Weighted average common shares outstanding:

Basic

55,456

52,759

Diluted

55,456

54,246

Conslidated Statements of Comprehensive Income (Loss) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Statement of Income and Comprehensive Income [Abstract]

Net income (loss)

$ (4,584)

$ 60,233

Other comprehensive income (loss):

Foreign currency translation adjustments

811

0

Unrealized gains (losses) on available-for-sale securities

98

(262)

Other comprehensive income (loss) before tax

909

(262)

Income tax benefit (expense) related to items of other comprehensive income

38

(102)

Other comprehensive income (loss), net of tax

871

(160)

Comprehensive income (loss)

$ (3,713)

$ 60,073

Consolidated Balance Sheets (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2012

Dec. 31, 2011

Current assets:

Cash and cash equivalents

$ 395,992

$ 508,053

Short-term investments

408,534

289,758

Current content library, net

1,155,443

919,709

Prepaid content

53,013

56,007

Other current assets

45,759

57,330

Total current assets

2,058,741

1,830,857

Non-current content library, net

1,226,274

1,046,934

Property and equipment, net

128,197

136,353

Other non-current assets

67,247

55,052

Total assets

3,480,459

3,069,196

Current liabilities:

Content liabilities

1,163,839

935,036

Accounts payable

83,119

86,992

Accrued expenses

49,106

54,231

Deferred revenue

150,602

148,796

Total current liabilities

1,446,666

1,225,055

Long-term debt

200,000

Long-term debt due to related party

200,000

Non-current content liabilities

908,188

739,628

Other non-current liabilities

62,203

61,703

Total liabilities

2,817,057

2,426,386

Commitments and contingencies (Note 8)

Stockholders' equity:

Common stock, $0.001 par value; 160,000,000 shares authorized at March 31, 2012 and December 31, 2011; 55,515,631 and 55,398,615 issued and outstanding at March 31, 2012 and December 31, 2011, respectively

55

Additional paid-in capital

243,424

219,119

Accumulated other comprehensive income, net

1,577

706

Retained earnings

418,346

422,930

Total stockholders' equity

663,402

642,810

Total liabilities and stockholders' equity

$ 3,480,459

$ 3,069,196

Consolidated Balance Sheets (Parenthetical) (USD $)

Mar. 31, 2012

Dec. 31, 2011

Statement of Financial Position [Abstract]

Common stock, par value

$ 0.001

Common stock, shares authorized

160,000,000

Common stock, shares issued

55,515,631

55,398,615

Common stock, shares outstanding

55,515,631

55,398,615

Consolidated Statements Of Cash Flows (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Cash flows from operating activities:

Net income (loss)

$ (4,584)

$ 60,233

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Additions to streaming content library

(764,893)

(192,307)

Change in streaming content liabilities

397,553

84,048

Amortization of streaming content library

339,736

85,937

Amortization of DVD content library

20,046

26,990

Depreciation and amortization of property, equipment and intangibles

11,331

9,826

Stock-based compensation expense

19,332

12,264

Excess tax benefits from stock-based compensation

(3,755)

(15,654)

Other non-cash items

(1,519)

(925)

Deferred taxes

(10,843)

(4,982)

Changes in operating assets and liabilities:

Prepaid content

2,994

(12,380)

Other current assets

11,741

9,498

Accounts payable

(1,756)

15,232

Accrued expenses

1,783

20,293

Deferred revenue

1,806

15,862

Other non-current assets and liabilities

137

2,388

Net cash provided by operating activities

19,109

116,323

Cash flows from investing activities:

Acquisitions of DVD content library

(13,528)

(22,119)

Purchases of short-term investments

(299,467)

(52,266)

Proceeds from sale of short-term investments

172,335

14,961

Proceeds from maturities of short-term investments

8,275

650

Purchases of property and equipment

(4,766)

(16,320)

Other assets

1,334

1,419

Net cash used in investing activities

(135,817)

(73,675)

Cash flows from financing activities:

Proceeds from issuance of common stock upon exercise of options

1,224

6,762

Financing costs

388

0

Repurchases of common stock

0

(108,643)

Excess tax benefits from stock-based compensation

3,755

15,654

Principal payments of lease financing obligations

(559)

(501)

Net cash provided by (used in) financing activities

4,032

(86,728)

Effect of exchange rate changes on cash and cash equivalents

615

0

Net decrease in cash and cash equivalents

(112,061)

(44,080)

Cash and cash equivalents, beginning of period

508,053

194,499

Cash and cash equivalents, end of period

$ 395,992

$ 150,419

Basis Of Presentation And Summary Of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting Policies

The accompanying consolidated interim financial statements of Netflix, Inc. and its wholly owned subsidiaries (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2012. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the amortization policy of the Company’s content library; the valuation of stock-based compensation; and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. The actual results experienced by the Company may differ from management’s estimates.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Interim results are not necessarily indicative of the results for a full year.

The Company is organized into three operating segments: Domestic streaming, International streaming and Domestic DVD. Substantially all of the Company’s revenues are generated in the U.S., and substantially all of the Company’s long-lived tangible assets are held in the U.S. The Company’s revenues are derived from monthly subscription fees.

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications did not impact total assets, total liabilities, stockholders’ equity, results of operations or cash flows.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted net income (loss) per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential outstanding shares of common stock during the period. Potential common shares consist of shares issuable upon the assumed conversion of the Company’s Senior Convertible Notes and incremental shares issuable upon the assumed exercise of stock options. The computation of net income (loss) per share is as follows:



	Three Months Ended
	March 31, 2012			March 31, 2011
	(in thousands, except per share data)
Basic earnings per share:
Net income (loss)	$	(4,584	)	$	60,233
Shares used in computation:
Weighted-average common shares outstanding	55,456			52,759
Basic earnings per share	$	(0.08	)	$	1.14

Diluted earnings per share:
Net income (loss)	$	(4,584	)	$	60,233
Shares used in computation:
Weighted-average common shares outstanding	55,456			52,759
Employee stock options	—			1,487
Weighted-average number of shares	55,456			54,246
Diluted earnings per share	$	(0.08	)	$	1.11

For the three months ended March 31, 2012, 2.3 million shares issuable upon the assumed conversion of the Company's Senior Convertible Notes and 1.8 million incremental shares issuable upon the assumed exercise of stock options are not included in the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive.

For the three months ended March 31, 2011, employee stock options with exercise prices greater than the average market price of the common stock during the period were excluded from the diluted calculation of earnings per share, as their inclusion would have been anti-dilutive. The number of options excluded for the three months ended March 31, 2011 was 26,864.

Short-Term Investments And Fair Value Measurement

Short-Term Investments and Fair Value Measurement

The Company’s investment policy is consistent with the definition of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity and return. From time to time, the Company may sell certain securities but the objectives are generally not to generate profits on short-term differences in price. The following table summarizes, by major security type, the Company’s assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:



	As of
	March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Cash	$	394,726	$	—	$	—		$	394,726
Level 1 securities (1):
Money market funds	6,134		—		—			6,134
Level 2 securities (3):
Corporate debt securities	104,998		769		(65		)	105,702
Government and agency securities	253,897		417		(147		)	254,167
Asset and mortgage-backed securities	48,452		228		(15		)	48,665
	$	808,207	$	1,414	$	(227	)	$	809,394
Less: Long-term restricted cash (1)								(4,868		)
Total cash, cash equivalents and short-term investments								$	804,526



	As of
	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Cash	$	388,941	$	—	$	—		$	388,941
Level 1 securities (2):
Money market funds	123,608		—		—			123,608
Level 2 securities (3):
Corporate debt securities	112,264		603		(214		)	112,653
Government and agency securities	175,464		694		(56		)	176,102
Asset and mortgage-backed securities	941		62		—			1,003
	$	801,218	$	1,359	$	(270	)	$	802,307
Less: Long-term restricted cash (2)								(4,496		)
Total cash, cash equivalents and short-term investments								$	797,811


(1)	Includes $1.2 million classified in cash and cash equivalents and $4.9 million classified in other non-current assets.


(2)	Includes $119.1 million classified in cash and cash equivalents and $4.5 million classified in other current assets and non-current assets.


(3)	Included in short-term investments.

Fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. The hierarchy level assigned to each security in the Company’s available-for-sale portfolio and cash equivalents is based on its assessment of the transparency and reliability of the inputs used in the valuation of such instrument at the measurement date. The fair value of available-for-sale securities and cash equivalents included in the Level 1 category is based on quoted prices that are readily and regularly available in an active market. The fair value of available-for-sale securities included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. These values were obtained from an independent pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established independent pricing vendors and broker-dealers. The Company's procedures include controls to ensure that appropriate fair values are recorded, such as comparing prices obtained from multiple independent sources. See Note 5 to the consolidated financial statements for further information regarding the fair value of the Company’s Senior Convertible Notes and Senior Notes.

Because the Company does not intend to sell the investments that are in an unrealized loss position and it is not likely that the Company will be required to sell any investments before recovery of their amortized cost basis, the Company does not consider those investments with an unrealized loss to be other-than-temporarily impaired at March 31, 2012. There were no material other-than-temporary impairments or credit losses related to available-for-sale securities in the three months ended March 31, 2012 and 2011. In addition, there were no material gross realized gains or losses in the three months ended March 31, 2012 and 2011.

The estimated fair value of short-term investments by contractual maturity as of March 31, 2012 is as follows:



	(in thousands)
Due within one year	$	48,650
Due after one year and through 5 years	329,494
Due after 5 years and through 10 years	10,191
Due after 10 years	20,199
Total short-term investments	$	408,534

Balance Sheet Components

Content Library

Content library consisted of the following:



	As of
	March 31, 2012									December 31, 2011
	Streaming			DVD			Total			Streaming			DVD			Total
	(in thousands)
Total content library, gross	$	3,166,320		$	580,507		$	3,746,827		$	2,552,284		$	599,155		$	3,151,439
Accumulated amortization	(821,149		)	(543,961		)	(1,365,110		)	(632,270		)	(552,526		)	(1,184,796		)
Total content library, net	2,345,171			36,546			2,381,717			1,920,014			46,629			1,966,643
Current content library, net	1,155,443			—			1,155,443			919,709			—			919,709
Non-current content library, net	$	1,189,728		$	36,546		$	1,226,274		$	1,000,305		$	46,629		$	1,046,934

Content Liabilities

Content liabilities consisted of the following:



	As of
	March 31, 2012						December 31, 2011
	Streaming		DVD		Total		Streaming		DVD		Total
	(in thousands)
Content liabilities	$	1,144,789	$	19,050	$	1,163,839	$	915,796	$	19,240	$	935,036
Non-current content liabilities	908,188		—		908,188		739,628		—		739,628
Total content liabilities	$	2,052,977	$	19,050	$	2,072,027	$	1,655,424	$	19,240	$	1,674,664

The Company typically enters into multi-year licenses with studios and other distributors that may result in an increase in the content library and a corresponding increase in current and non-current content liabilities. The payment terms for these license fees may extend over the term of the license agreement, which typically ranges from six months to five years. As of March 31, 2012, total content liabilities increased $397.4 million, over December 31, 2011, as compared to an increase in total content library, net, of $415.1 million.

Property and Equipment, Net

Property and equipment and accumulated depreciation consisted of the following:



		As of
		March 31, 2012			December 31, 2011
		(in thousands)
Computer equipment	3 years	$	65,771		$	67,090
Operations and other equipment	5 years	100,307			100,306
Software, including internal-use software	3 years	36,313			35,356
Furniture and fixtures	3 years	17,509			17,310
Buildings	30 years	40,681			40,681
Leasehold improvements	Over life of lease	45,237			44,473
Capital work-in-progress		466			822
Property and equipment, gross		306,284			306,038
Less: Accumulated depreciation		(178,087		)	(169,685		)
Property and equipment, net		$	128,197		$	136,353

Long-Term Debt

Long-term Debt

Senior Convertible Notes

As of March 31, 2012, the Company had outstanding $200.0 million aggregate principal amount of zero coupon senior convertible notes due on December 1, 2018 (the “Convertible Notes”). The Convertible Notes were issued in a private placement offering to TCV VII, L.P., TCV VII(A), L.P. and TCV Member Fund, L.P. A general partner of these funds also serves on the Company’s board of directors, and as such, the issuance of the notes was considered a related party transaction. At any time following May 28, 2012, the Company may elect to cause the conversion of the Convertible Notes into shares of the Company’s common stock when specified conditions are satisfied, including that the daily volume weighted average price of the Company’s common stock is equal or greater than $111.54 for at least 50 trading days during a 65 trading day period prior to the conversion date. The Convertible Notes include, among other terms and conditions, limitations on the Company’s ability to pay cash dividends or to repurchase shares of its common stock, subject to specified exceptions. At March 31, 2012 and December 31, 2011, the Company was in compliance with these covenants.

Based on quoted market prices of the Company’s publicly traded debt, the fair value of the Convertible Notes as of March 31, 2012 and December 31, 2011 was approximately $218.0 million and $206.5 million, respectively.

Senior Notes

As of March 31, 2012, the Company also had outstanding $200.0 million aggregate principal amount of 8.50% senior notes due November 15, 2017 (the “8.50% Notes”). Interest on the 8.50% Notes is payable semi-annually at a rate of 8.50% per annum on May 15 and November 15 of each year.

The 8.50% Notes include, among other terms and conditions, limitations on the Company’s ability to create, incur, assume or be liable for indebtedness (other than specified types of permitted indebtedness); dispose of assets outside the ordinary course (subject to specified exceptions); acquire, merge or consolidate with or into another person or entity (other than specified types of permitted acquisitions); create, incur or allow any lien on any of its property or assign any right to receive income (except for specified permitted liens); make investments (other than specified types of investments); or pay dividends, make distributions, or purchase or redeem the Company’s equity interests (each subject to specified exceptions). At March 31, 2012 and December 31, 2011, the Company was in compliance with these covenants.

Based on quoted market prices, the fair value of the 8.50% Notes as of March 31, 2012 and December 31, 2011 was approximately $218.0 million and $206.5 million, respectively.

Stockholders' Equity

Stockholders’ Equity

Stock Option Plan

In June 2011, the Company adopted the 2011 Stock Plan. The 2011 Stock Plan provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants. As of March 31, 2012, 5.5 million shares were reserved for future grants under the 2011 Stock Plan.

In February 2002, the Company adopted the 2002 Stock Plan, which was amended and restated in May 2006. The 2002 Stock Plan provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options and stock purchase rights to employees, directors and consultants. In the first quarter of 2012, 1.2 million shares reserved for future grants under the 2002 Stock Plan expired.

A summary of the activity related to the Company’s stock option plans during the three months ended March 31, 2012 is as follows:



			Options Outstanding
	Shares Available for Grant		Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)
Balances as of December 31, 2011	7,013,508		2,957,754		$	66.59
Granted	(347,367	)	347,367		97.75
Exercised	—		(117,016	)	10.47
Canceled	48		(48	)	35.95
Expired	(1,160,721	)	—		—
Balances as of March 31, 2012	5,505,468		3,188,057		72.04		6.61	$	183,361
Vested and exercisable at March 31, 2012			3,188,057		72.04		6.61	$	183,361

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the first quarter of 2012 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2012. This amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised for the three months ended March 31, 2012 and 2011 was $11.7 million and $44.1 million, respectively.

Cash received from option exercises for the three months ended March 31, 2012 and 2011 was $1.2 million and $6.8 million, respectively.

Stock Option Expense

Vested stock options granted before June 30, 2004 can be exercised up to three months following termination of employment. Vested stock options granted after June 30, 2004 and before January 1, 2007 can be exercised up to one year following termination of employment. Vested stock options granted after January 2007 will remain exercisable for the full ten year contractual term regardless of employment status. The following table summarizes the assumptions used to value stock option grants using the lattice-binomial model:



	Three Months Ended
	March 31, 2012		March 31, 2011
Dividend yield	—	%	—	%
Expected volatility	65	%	52	%
Risk-free interest rate	1.97	%	3.42	%
Suboptimal exercise factor	2.26 - 3.65		2.17 – 3.39

The Company bifurcates its option grants into two employee groupings (executive and non-executive) based on exercise behavior and considers several factors in determining the estimate of expected term for each group, including the historical option exercise behavior, the terms and vesting periods of the options granted.

The weighted-average fair value of employee stock options granted during the three months ended March 31, 2012 and 2011 was $55.65 and $109.21 per share, respectively.

The following table summarizes stock-based compensation expense, net of tax, related to stock option plans which was allocated as follows:



	Three Months Ended
	March 31, 2012			March 31, 2011
	(in thousands)
Fulfillment expenses	$	67		$	560
Marketing	1,404			1,249
Technology and development	10,600			5,292
General and administrative	7,261			5,163
Stock-based compensation expense before income taxes	19,332			12,264
Income tax benefit	(6,708		)	(4,744		)
Stock-based compensation after income taxes	$	12,624		$	7,520

Stock Repurchases

Under the Company’s current stock repurchase plan, announced on June 11, 2010, the Company is authorized to repurchase up to $300.0 million of its common stock through the end of 2012. During the three months ended March 31, 2012, the Company did not repurchase stock. As of March 31, 2012, $41.0 million of this authorization remained. The timing and actual number of shares repurchased is at management’s discretion and will depend on various factors including price, corporate and regulatory requirements, debt covenant requirements, alternative investment opportunities and other market conditions.

Income Taxes

The effective tax (benefit) rates for the three months ended March 31, 2012 and 2011 were (34.7)% and 38.7%, respectively. As of December 31, 2011, the Company had $28.1 million of gross unrecognized tax benefits. During the three months ended March 31, 2012, the Company had an increase in gross unrecognized tax benefits of approximately $1.4 million. The gross unrecognized tax benefits, if recognized by the Company, will result in a reduction of approximately $23.3 million to the provision for income taxes thereby favorably impacting the Company’s effective tax rate. The Company’s unrecognized tax benefits are classified as “Other non-current liabilities” on the Consolidated Balance Sheets.

The Company includes interest and penalties related to unrecognized tax benefits within the "Provision (benefit) for income taxes" on the Consolidated Statements of Operations. As of March 31, 2012, the total amount of gross interest and penalties accrued was $2.6 million, and is classified as “Other non-current liabilities” on the Consolidated Balance Sheet.

Deferred tax assets include $9.8 million and $10.0 million classified as “Other current assets” and $39.3 million and $28.3 million classified as “Other non-current assets” on the Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011, respectively. In evaluating its ability to realize the net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of March 31, 2012 and December 31, 2011, it was considered more likely than not that substantially all deferred tax assets would be realized, and no significant valuation allowance was recorded.

Income tax benefits attributable to the exercise of employee stock options of $3.7 million and $15.1 million, during the three months ended March 31, 2012 and 2011, respectively, were recorded directly to "Additional paid-in capital" on the Consolidated Balance Sheets.

The Company files U.S. federal, state and foreign tax returns. The Company is currently under examination by the IRS for the years 2008 and 2009, and the year 2010 remains subject to examination by the IRS. The Company is currently under examination by the state of California for the years 2006 and 2007. The years 1997 through 2005, as well as 2008 through 2010, remain subject to examination by the state of California.

Given the potential outcome of the current examinations, as well as the impact of the current examination on the potential expiration of the statute of limitations, it is reasonably possible that the balance of unrecognized tax benefits could significantly change within the next twelve months. However, at this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be made.

Commitments And Contingencies

Commitments and Contingencies

Streaming Content

The Company had $3.68 billion and $3.91 billion of obligations at March 31, 2012 and December 31, 2011, respectively, including agreements to acquire and license streaming content that represent long-term liabilities or that are not reflected on the Consolidated Balance Sheets because they do not meet content library asset recognition criteria. The license agreements do not meet content library asset recognition criteria because either the fee is not known or reasonably determinable for a specific title or it is known but the title is not yet available for streaming to subscribers. For those agreements with variable terms, the Company does not estimate what the total obligation may be beyond any minimum quantities and/or pricing as of the reporting date. For those agreements that include renewal provisions that are solely at the option of the content provider, the Company includes the commitments associated with the renewal period to the extent such commitments are fixed or a minimum amount is specified.

The expected timing of payments as of March 31, 2012 for these obligations is as follows:



	(in thousands)
Less than one year	$	729,628
Due after one year and through 3 years	2,374,734
Due after 3 years and through 5 years	505,553
Due after 5 years	74,155
Total streaming content obligations	$	3,684,070

The Company has entered into certain license agreements that include an unspecified or a maximum number of titles that the Company may or may not receive in the future and/or that include pricing contingent upon certain variables, such as theatrical exhibition receipts for the title. As of the reporting date, it is unknown whether the Company will receive access to these titles or what the ultimate price per title will be. Accordingly, such amounts are not reflected in the commitments described above. However such amounts are expected to be significant and the expected timing of payments could range from less than one year to more than five years.

In addition to the streaming content obligations above, the Company has licenses with certain performing rights organizations (“PRO”), and is currently involved in negotiations with other PROs, that hold certain rights to musical compositions used in connection with streaming content. For the latter, the Company accrues for estimated royalties that are due to PROs and adjusts these accruals based on any changes in estimates. While the Company anticipates finalizing these negotiations, the outcome of these negotiations is uncertain. The results of any negotiation may be materially different from management’s estimates.

Litigation

From time to time, in the normal course of its operations, the Company is a party to litigation matters and claims, including claims relating to employee relations, business practices and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.

On January 13, 2012, the first of three purported shareholder class action lawsuits was filed in the United States District Court for the Northern District of California against the Company and certain of its officers and directors. Two additional purported shareholder class action lawsuits were filed in the same court on January 27, 2012 and February 29, 2012, respectively, alleging substantially similar claims. Two of the three purported shareholder class action lawsuits have since been consolidated, and the Company anticipates consolidation of the third as well as the selection of a lead plaintiff. The purported class action lawsuits allege, among other things, that the Company issued materially false and misleading statements regarding the Company’s business practices and its contracts with content providers, which led to artificially inflated stock prices. The purported class action lawsuits also allege violations of the federal securities laws, and seek unspecified compensatory damages and other relief. Management has determined a potential loss is reasonably possible however, based on its current knowledge, management does not believe that the amount of such possible loss or a range of potential loss is reasonably estimable.

On November 23, 2011, the first of five purported shareholder derivative suits was filed in the Superior Court of California, Santa Clara County, against the Company and certain of its officers and directors. Four additional purported shareholder derivative suits have subsequently been filed: one on February 9, 2012 in the Superior Court of California, Santa Clara County; and three in the United States District Court for the Northern District of California on February 13, 2012, February 24, 2012 and April 2, 2012. The purported shareholder derivative lawsuits allege, among other things, that the Company’s officers and directors breached their fiduciary duties, wasted valuable corporate assets, and were unjustly enriched as a result of causing the Company to buy back stock at artificially inflated prices to the detriment of the Company and its shareholders. Additionally, certain of the purported shareholder derivative lawsuits contain allegations similar to those set forth in the purported shareholder class action suits regarding false and misleading statements surrounding the Company’s business practices and its contracts with content providers. The purported shareholder derivative lawsuits seek unspecified compensatory damages and other relief. Management has determined a potential loss is reasonably possible however, based on its current knowledge, management does not believe that the amount of such possible loss or a range of potential loss is reasonably estimable.

The Company is involved in other litigation matters not listed above but does not consider the matters to be material either individually or in the aggregate at this time. The Company’s view of the matters not listed may change in the future as the litigation and events related thereto unfold.

Indemnification

In the ordinary course of business, the Company has entered into contractual arrangements under which it has agreed to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract.

The Company’s obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third-parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary.

It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. No amount has been accrued in the accompanying financial statements with respect to these indemnification obligations.

Segment Information

Effective in the fourth quarter of 2011, the Company has three operating segments: Domestic streaming, International streaming and Domestic DVD. Segment information is presented along the same lines that the Company’s chief operating decision maker reviews the operating results in assessing performance and allocating resources. The Company’s chief operating decision maker reviews revenue and contribution profit (loss) for each of the reportable segments. Contribution profit (loss) is defined as revenues less cost of revenues and marketing expenses. There are no internal revenue transactions between the Company’s reporting segments. The Company's chief operating decision maker does not review an allocation of assets by reportable segment. The Domestic and International streaming segments derive revenue from monthly subscription services consisting solely of streaming content. The Domestic DVD segment derives revenue from monthly subscription services consisting solely of DVDs-by-mail.

Between the fourth quarter of 2010 and the third quarter of 2011, the Company had two operating segments: Domestic and International. During this time, the Company’s domestic streaming service and DVDs-by-mail operations were combined. Subscribers in the U.S. were able to receive both streaming services and DVDs under a single hybrid plan. Accordingly, revenues were generated and marketing expenses were incurred in connection with the subscription offerings as a whole. Therefore, it is impracticable to allocate revenues or marketing expenses or present discrete segment information for the Domestic streaming and Domestic DVD segments for periods prior to the fourth quarter of 2011.

In the third quarter of 2011, the Company made certain changes to its domestic pricing and plan structure which require subscribers who wish to receive both streaming services and DVDs-by-mail to have two separate subscription plans. Following this change, beginning in the fourth quarter of 2011, the Company was able to generate discrete financial information for its Domestic streaming and Domestic DVD operations and began reporting this information to the chief operating decision maker for review.

The following table represents segment information for the first quarter of 2012:



	As of/Three Months ended March 31, 2012
	Domestic Streaming		International Streaming			Domestic DVD		Consolidated
	(in thousands)
Total subscriptions at end of period	23,410		3,065			10,089		—
Revenues	$	506,665	$	43,425		$	319,701	$	869,791
Cost of revenues and marketing expense	440,157		146,108			173,568		759,833
Contribution profit (loss)	$	66,508	$	(102,683	)	$	146,133	$	109,958
Other operating expenses								111,893
Operating loss								(1,935		)
Other income (expense)								(5,090		)
Benefit for income taxes								(2,441		)
Net loss								$	(4,584	)

The following tables represent the Company’s segment information for the first quarter ended March 31, 2011 based on the Company’s segment reporting prior to the fourth quarter of 2011:



	As of/Three Months ended March 31, 2011
	Domestic		International			Consolidated
	(in thousands)
Total unique subscribers at end of period (1)	22,797		803			23,600
Revenues	$	706,274	$	12,279		$	718,553
Cost of revenues and marketing expense	519,389		23,021			542,410
Contribution profit (loss)	$	186,885	$	(10,742	)	$	176,143
Other operating expenses						73,903
Operating income						102,240
Other income (expense)						(4,000		)
Provision for income taxes						38,007
Net income						$	60,233

(1) For purposes of determining the number of unique subscribers, domestic subscribers who have elected both a DVD and a streaming subscription plan are considered a single unique subscriber.

Basis Of Presentation And Summary Of Significant Accounting Policies Organization And Summary Of Significant Accounting Policies (Policies)

Use of Estimates, Policy [Policy Text Block]

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the amortization policy of the Company’s content library; the valuation of stock-based compensation; and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. The actual results experienced by the Company may differ from management’s estimates.

Segment Reporting, Policy [Policy Text Block]

The Company is organized into three operating segments: Domestic streaming, International streaming and Domestic DVD. Substantially all of the Company’s revenues are generated in the U.S., and substantially all of the Company’s long-lived tangible assets are held in the U.S. The Company’s revenues are derived from monthly subscription fees.

Reclassifications [Text Block]

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications did not impact total assets, total liabilities, stockholders’ equity, results of operations or cash flows.

Net Income (Loss) Per Share (Tables)

Computation Of Net Income (Loss) Per Share

The computation of net income (loss) per share is as follows:



	Three Months Ended
	March 31, 2012			March 31, 2011
	(in thousands, except per share data)
Basic earnings per share:
Net income (loss)	$	(4,584	)	$	60,233
Shares used in computation:
Weighted-average common shares outstanding	55,456			52,759
Basic earnings per share	$	(0.08	)	$	1.14

Diluted earnings per share:
Net income (loss)	$	(4,584	)	$	60,233
Shares used in computation:
Weighted-average common shares outstanding	55,456			52,759
Employee stock options	—			1,487
Weighted-average number of shares	55,456			54,246
Diluted earnings per share	$	(0.08	)	$	1.11

Short-Term Investments And Fair Value Measurement (Tables)

Available-For-Sale Securities Reported At Fair Value

The following table summarizes, by major security type, the Company’s assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:



	As of
	March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Cash	$	394,726	$	—	$	—		$	394,726
Level 1 securities (1):
Money market funds	6,134		—		—			6,134
Level 2 securities (3):
Corporate debt securities	104,998		769		(65		)	105,702
Government and agency securities	253,897		417		(147		)	254,167
Asset and mortgage-backed securities	48,452		228		(15		)	48,665
	$	808,207	$	1,414	$	(227	)	$	809,394
Less: Long-term restricted cash (1)								(4,868		)
Total cash, cash equivalents and short-term investments								$	804,526



	As of
	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Cash	$	388,941	$	—	$	—		$	388,941
Level 1 securities (2):
Money market funds	123,608		—		—			123,608
Level 2 securities (3):
Corporate debt securities	112,264		603		(214		)	112,653
Government and agency securities	175,464		694		(56		)	176,102
Asset and mortgage-backed securities	941		62		—			1,003
	$	801,218	$	1,359	$	(270	)	$	802,307
Less: Long-term restricted cash (2)								(4,496		)
Total cash, cash equivalents and short-term investments								$	797,811


(1)	Includes $1.2 million classified in cash and cash equivalents and $4.9 million classified in other non-current assets.


(2)	Includes $119.1 million classified in cash and cash equivalents and $4.5 million classified in other current assets and non-current assets.


(3)	Included in short-term investments.

Estimated Fair Value Of Short-Term Investments By Contractual Maturity

The estimated fair value of short-term investments by contractual maturity as of March 31, 2012 is as follows:



	(in thousands)
Due within one year	$	48,650
Due after one year and through 5 years	329,494
Due after 5 years and through 10 years	10,191
Due after 10 years	20,199
Total short-term investments	$	408,534

Balance Sheet Components (Tables)

Components Of Content Library

Content library consisted of the following:



	As of
	March 31, 2012									December 31, 2011
	Streaming			DVD			Total			Streaming			DVD			Total
	(in thousands)
Total content library, gross	$	3,166,320		$	580,507		$	3,746,827		$	2,552,284		$	599,155		$	3,151,439
Accumulated amortization	(821,149		)	(543,961		)	(1,365,110		)	(632,270		)	(552,526		)	(1,184,796		)
Total content library, net	2,345,171			36,546			2,381,717			1,920,014			46,629			1,966,643
Current content library, net	1,155,443			—			1,155,443			919,709			—			919,709
Non-current content library, net	$	1,189,728		$	36,546		$	1,226,274		$	1,000,305		$	46,629		$	1,046,934

Components of Content Liabilities

Content liabilities consisted of the following:



	As of
	March 31, 2012						December 31, 2011
	Streaming		DVD		Total		Streaming		DVD		Total
	(in thousands)
Content liabilities	$	1,144,789	$	19,050	$	1,163,839	$	915,796	$	19,240	$	935,036
Non-current content liabilities	908,188		—		908,188		739,628		—		739,628
Total content liabilities	$	2,052,977	$	19,050	$	2,072,027	$	1,655,424	$	19,240	$	1,674,664

Property And Equipment And Accumulated Depreciation

Property and equipment and accumulated depreciation consisted of the following:



		As of
		March 31, 2012			December 31, 2011
		(in thousands)
Computer equipment	3 years	$	65,771		$	67,090
Operations and other equipment	5 years	100,307			100,306
Software, including internal-use software	3 years	36,313			35,356
Furniture and fixtures	3 years	17,509			17,310
Buildings	30 years	40,681			40,681
Leasehold improvements	Over life of lease	45,237			44,473
Capital work-in-progress		466			822
Property and equipment, gross		306,284			306,038
Less: Accumulated depreciation		(178,087		)	(169,685		)
Property and equipment, net		$	128,197		$	136,353

Stockholders' Equity (Tables)

Summary Of Activity Related To Stock Option Plans

A summary of the activity related to the Company’s stock option plans during the three months ended March 31, 2012 is as follows:



			Options Outstanding
	Shares Available for Grant		Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)
Balances as of December 31, 2011	7,013,508		2,957,754		$	66.59
Granted	(347,367	)	347,367		97.75
Exercised	—		(117,016	)	10.47
Canceled	48		(48	)	35.95
Expired	(1,160,721	)	—		—
Balances as of March 31, 2012	5,505,468		3,188,057		72.04		6.61	$	183,361
Vested and exercisable at March 31, 2012			3,188,057		72.04		6.61	$	183,361

Summary Of Assumptions Used To Value Stock Option Grants Using Lattice-Binomial Model

The following table summarizes the assumptions used to value stock option grants using the lattice-binomial model:



	Three Months Ended
	March 31, 2012		March 31, 2011
Dividend yield	—	%	—	%
Expected volatility	65	%	52	%
Risk-free interest rate	1.97	%	3.42	%
Suboptimal exercise factor	2.26 - 3.65		2.17 – 3.39

Summary Of Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense, net of tax, related to stock option plans which was allocated as follows:



	Three Months Ended
	March 31, 2012			March 31, 2011
	(in thousands)
Fulfillment expenses	$	67		$	560
Marketing	1,404			1,249
Technology and development	10,600			5,292
General and administrative	7,261			5,163
Stock-based compensation expense before income taxes	19,332			12,264
Income tax benefit	(6,708		)	(4,744		)
Stock-based compensation after income taxes	$	12,624		$	7,520

Commitments And Contingencies (Tables)

Expected Timing Of Payments For Commitments

The expected timing of payments as of March 31, 2012 for these obligations is as follows:



	(in thousands)
Less than one year	$	729,628
Due after one year and through 3 years	2,374,734
Due after 3 years and through 5 years	505,553
Due after 5 years	74,155
Total streaming content obligations	$	3,684,070

Segment Information (Tables)

Information On Reportable Segments And Reconciliation To Consolidated Net Income

The following table represents segment information for the first quarter of 2012:



	As of/Three Months ended March 31, 2012
	Domestic Streaming		International Streaming			Domestic DVD		Consolidated
	(in thousands)
Total subscriptions at end of period	23,410		3,065			10,089		—
Revenues	$	506,665	$	43,425		$	319,701	$	869,791
Cost of revenues and marketing expense	440,157		146,108			173,568		759,833
Contribution profit (loss)	$	66,508	$	(102,683	)	$	146,133	$	109,958
Other operating expenses								111,893
Operating loss								(1,935		)
Other income (expense)								(5,090		)
Benefit for income taxes								(2,441		)
Net loss								$	(4,584	)

The following tables represent the Company’s segment information for the first quarter ended March 31, 2011 based on the Company’s segment reporting prior to the fourth quarter of 2011:



	As of/Three Months ended March 31, 2011
	Domestic		International			Consolidated
	(in thousands)
Total unique subscribers at end of period (1)	22,797		803			23,600
Revenues	$	706,274	$	12,279		$	718,553
Cost of revenues and marketing expense	519,389		23,021			542,410
Contribution profit (loss)	$	186,885	$	(10,742	)	$	176,143
Other operating expenses						73,903
Operating income						102,240
Other income (expense)						(4,000		)
Provision for income taxes						38,007
Net income						$	60,233

(1) For purposes of determining the number of unique subscribers, domestic subscribers who have elected both a DVD and a streaming subscription plan are considered a single unique subscriber.

Net Income (Loss) Per Share (Narrative) (Details)

3 Months Ended

Mar. 31, 2011

Mar. 31, 2012

Convertible Debt Securities [Member]

Mar. 31, 2012

Stock Options [Member]

Earnings Per Shared Basic and Diluted [Line Items]

Antidilutive shares excluded from calculation of diluted earnings per share

26,864

2,300,000

1,800,000

Net Income (Loss) Per Share (Computation Of Net Income (Loss) Per Share) (Details) (USD $)

In Thousands, except Per Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Earnings Per Share [Abstract]

Net income (loss)

$ (4,584)

$ 60,233

Weighted-average common shares outstanding

55,456

52,759

Basic earnings per share

$ (0.08)

$ 1.14

Employee stock options

0

1,487

Weighted-average number of shares

55,456

54,246

Diluted earnings per share

$ (0.08)

$ 1.11

Short-Term Investments And Fair Value Measurement (Narrative) (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Short-Term Investments And Fair Value Measurement [Abstract]

Material other-than-temporary impairments or credit losses related to available-for-sale securities

$ 0

Material gross realized gains or losses

$ 0

Short-Term Investments And Fair Value Measurement (Available-For-Sale Securities Reported At Fair Value) (Details) (USD $)

Mar. 31, 2012

Dec. 31, 2011

Mar. 31, 2011

Dec. 31, 2010

Schedule of Available-for-sale Securities [Line Items]

Amortized Cost

$ 808,207,000

$ 801,218,000

Gross Unrealized Gains

1,414,000

1,359,000

Gross Unrealized Losses

(227,000)

(270,000)

Estimated Fair Value

809,394,000

802,307,000

Less: Long-term restricted cash

(4,868,000)¹

(4,496,000)²

Total cash, cash equivalents and short-term investments

804,526,000

797,811,000

Cash and cash equivalents

395,992,000

508,053,000

150,419,000

194,499,000

Long-term restricted cash

4,900,000

Cash [Member]

Schedule of Available-for-sale Securities [Line Items]

Amortized Cost

394,726,000

388,941,000

Gross Unrealized Gains

0

Gross Unrealized Losses

0

Estimated Fair Value

394,726,000

388,941,000

Cash And Cash Equivalent [Member]

Schedule of Available-for-sale Securities [Line Items]

Cash and cash equivalents

1,200,000

119,100,000

Level 1 Securities [Member] |
Money Market Funds [Member]

Schedule of Available-for-sale Securities [Line Items]

Amortized Cost

6,134,000 ¹

123,608,000 ²

Gross Unrealized Gains

0 ¹

0 ²

Gross Unrealized Losses

0 ¹

0 ²

Estimated Fair Value

6,134,000 ¹

123,608,000 ²

Level 2 Securities [Member] |
Corporate Debt Securities [Member]

Schedule of Available-for-sale Securities [Line Items]

Amortized Cost

104,998,000 ³

112,264,000 ³

Gross Unrealized Gains

769,000 ³

603,000 ³

Gross Unrealized Losses

(65,000)³

(214,000)³

Estimated Fair Value

105,702,000 ³

112,653,000 ³

Level 2 Securities [Member] |
US Treasury and Government [Member]

Schedule of Available-for-sale Securities [Line Items]

Amortized Cost

253,897,000 ³

175,464,000 ³

Gross Unrealized Gains

417,000 ³

694,000 ³

Gross Unrealized Losses

(147,000)³

(56,000)³

Estimated Fair Value

254,167,000 ³

176,102,000 ³

Level 2 Securities [Member] |
Asset And Mortgage-Backed Securities [Member]

Schedule of Available-for-sale Securities [Line Items]

Amortized Cost

48,452,000 ³

941,000 ³

Gross Unrealized Gains

228,000 ³

62,000 ³

Gross Unrealized Losses

(15,000)³

0 ³

Estimated Fair Value

48,665,000 ³

1,003,000 ³

Workers Compensation Deposits [Member]

Schedule of Available-for-sale Securities [Line Items]

Long-term restricted cash

4,500,000

Restricted cash other current assets

$ 0

[1] Includes $1.2 million classified in cash and cash equivalents and $4.9 million classified in other non-current assets.

[2] Includes $119.1 million classified in cash and cash equivalents and $4.5 million classified in other current assets and non-current assets.

[3] Included in short-term investments.

Short-Term Investments And Fair Value Measurement (Estimated Fair Value Of Short-Term Investments By Contractual Maturity) (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2012

Dec. 31, 2011

Short-Term Investments And Fair Value Measurement [Abstract]

Due within one year

$ 48,650

Due after one year and through 5 years

329,494

Due after 5 years and through 10 years

10,191

Due after 10 years

20,199

Total short-term investments

$ 408,534

$ 289,758

Balance Sheet Components (Narrative) (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Y

M

Balance Sheet Related Disclosures [Abstract]

License agreement, payment terms minimum (months)

6

License agreement, payment terms maximum (years)

5

Increase in non-current streaming content liabilities

$ 397.4

Increase Decrease In Content Library

$ 415.1

Balance Sheet Components (Components of Content Library ) (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2012

Dec. 31, 2011

Schedule of Balance Sheet Components [Line Items]

Total content library, gross

$ 3,746,827

$ 3,151,439

Accumulated amortization

(1,365,110)

(1,184,796)

Total content library, net

2,381,717

1,966,643

Current content library, net

1,155,443

919,709

Non-current content library, net

1,226,274

1,046,934

Streaming [Member]

Schedule of Balance Sheet Components [Line Items]

Total content library, gross

3,166,320

2,552,284

Accumulated amortization

(821,149)

(632,270)

Total content library, net

2,345,171

1,920,014

Current content library, net

1,155,443

919,709

Non-current content library, net

1,189,728

1,000,305

DVD [Member]

Schedule of Balance Sheet Components [Line Items]

Total content library, gross

580,507

599,155

Accumulated amortization

(543,961)

(552,526)

Total content library, net

36,546

46,629

Current content library, net

0

Non-current content library, net

$ 36,546

$ 46,629

Balance Sheet Components (Components of Content Liabilites) (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2012

Dec. 31, 2011

Schedule of Balance Sheet Components [Line Items]

Content liabilities

$ 1,163,839

$ 935,036

Non-current content liabilities

908,188

739,628

Total content liabilities

2,072,027

1,674,664

Streaming [Member]

Schedule of Balance Sheet Components [Line Items]

Content liabilities

1,144,789

915,796

Non-current content liabilities

908,188

739,628

Total content liabilities

2,052,977

1,655,424

DVD [Member]

Schedule of Balance Sheet Components [Line Items]

Content liabilities

19,050

19,240

Non-current content liabilities

0

Total content liabilities

$ 19,050

$ 19,240

Balance Sheet Components (Property And Equipment And Accumulated Depreciation) (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Y

Dec. 31, 2011

Property, Plant and Equipment [Line Items]

Property and equipment, gross

$ 306,284

$ 306,038

Less: accumulated depreciation

(178,087)

(169,685)

Property and equipment, net

128,197

136,353

Computer Equipment [Member]

Property, Plant and Equipment [Line Items]

Property and equipment, gross

65,771

67,090

Property and equipment, useful life (years)

3

Operations And Other Equipment [Member]

Property, Plant and Equipment [Line Items]

Property and equipment, gross

100,307

100,306

Property and equipment, useful life (years)

5

Software, including internal-use software [Member]

Property, Plant and Equipment [Line Items]

Property and equipment, gross

36,313

35,356

Property and equipment, useful life (years)

3

Furniture And Fixtures [Member]

Property, Plant and Equipment [Line Items]

Property and equipment, gross

17,509

17,310

Property and equipment, useful life (years)

3

Building [Member]

Property, Plant and Equipment [Line Items]

Property and equipment, gross

40,681

Property and equipment, useful life (years)

30

Leasehold Improvements [Member]

Property, Plant and Equipment [Line Items]

Property and equipment, gross

45,237

44,473

Property and equipment useful life over life of lease (years)

Over life of lease

Capital work-in-progress [Member]

Property, Plant and Equipment [Line Items]

Property and equipment, gross

$ 466

$ 822

Long-Term Debt (Details) (USD $)

3 Months Ended

Mar. 31, 2012

Dec. 31, 2011

Debt Instrument [Line Items]

Long-term debt outstanding

$ 200,000,000

Senior Convertible Note [Member]

Debt Instrument [Line Items]

Long-term debt outstanding

200,000,000

Senior notes, maturity date

Dec. 01, 2018

Debt Instrument, Convertible, Earliest Date

May 28, 2012

Weighted Average Price Of Common Stock

$ 111.54

Senior notes, fair value

218,000,000

206,500,000

Senior Convertible Note [Member] |
Minimum [Member]

Debt Instrument [Line Items]

Trading Days Prior To Conversion Date Required For Conversion

50

Senior Convertible Note [Member] |
Maximum [Member]

Debt Instrument [Line Items]

Trading Days Prior To Conversion Date Required For Conversion

65

Eight Point Five Zero Percentage Senior Notes [Member]

Debt Instrument [Line Items]

Long-term debt outstanding

200,000,000

Senior notes, maturity date

Nov. 15, 2017

Senior notes, fair value

$ 218,000,000

$ 206,500,000

Senior notes interest rate

8.50%

Stockholders' Equity (Narrative) (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

0 Months Ended

3 Months Ended

Jun. 11, 2010

Mar. 31, 2012

Mar. 31, 2011

Components of Stockholders' Equity [Line Items]

Total intrinsic value of options exercised

$ 11.7

$ 44.1

Cash received from option exercised

1.2

6.8

Weighted-average fair value of employee stock options granted per share

$ 55.65

$ 109.21

Stock repurchase plan, authorized amount

300.0

Stock repurchase program, remaining authorized repurchase amount

$ 41.0

Two Thousand And Eleven Stock Plan [Member]

Components of Stockholders' Equity [Line Items]

Common Stock, Capital Shares Reserved for Future Issuance

5.5

Two Thousand And Two Stock Plan [Member]

Components of Stockholders' Equity [Line Items]

Common Stock, Capital Shares Reserved for Future Issuance

1.2

Stockholders' Equity (Summary Of Activity Related To Stock Option Plans) (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Y

Stockholders' Equity Note [Abstract]

Shares Available for Grant, Beginning Balances

7,013,508

Shares Available for Grant, Granted

(347,367)

Shares Available for Grant, Exercised

0

Shares Available for Grant, Canceled

48

Shares Available for Grant, Expired

(1,160,721)

Shares Available for Grant, Ending Balances

5,505,468

Options Outstanding, Number of Shares, Beginning Balances

2,957,754

Options Outstanding, Number of Shares, Granted

347,367

Options Outstanding, Number of Shares, Exercised

(117,016)

Options Outstanding, Number of Shares, Canceled

(48)

Options Outstanding, Number of Shares, Ending Balances

3,188,057

Options Outstanding, Number of Shares, Vested and exercisable

3,188,057

Options Outstanding, Weighted-Average Exercise Price, Beginning Balances

$ 66.59

Options Outstanding, Weighted-Average Exercise Price, Granted

$ 97.75

Options Outstanding, Weighted-Average Exercise Price, Exercised

$ 10.47

Options Outstanding, Weighted-Average Exercise Price, Canceled

$ 35.95

Options Outstanding, Weighted-Average Exercise Price, Ending Balances

$ 72.04

Options Outstanding, Weighted-Average Exercise Price, Vested and exercisable

$ 72.04

Weighted-Average Remaining Contractual Term, Ending Balances (in Years)

6.61

Weighted-Average Remaining Contractual Term, Vested and exercisable (in Years)

6.61

Aggregate Intrinsic Value, Ending Balances

$ 183,361

Aggregate Intrinsic Value, Vested and exercisable

$ 183,361

Stockholders' Equity (Summary Of Assumptions Used To Value Stock Option Grants Using Lattice-Binomial Model) (Details)

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Stockholders' Equity Note [Abstract]

Dividend yield

0.00%

Expected volatility

65.00%

52.00%

Risk-free interest rate

1.97%

3.42%

Suboptimal exercise factor, minimum

2.26

2.17

Suboptimal exercise factor, maximum

3.65

3.39

Stockholders' Equity (Summary Of Stock-Based Compensation Expense) (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense before income taxes

$ 19,332

$ 12,264

Income tax benefit

(6,708)

(4,744)

Total stock-based compensation after income taxes

12,624

7,520

Fulfillment Expense [Member]

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense before income taxes

67

560

Marketing [Member]

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense before income taxes

1,404

1,249

Technology And Development [Member]

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense before income taxes

10,600

5,292

General And Administrative [Member]

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Stock-based compensation expense before income taxes

$ 7,261

$ 5,163

Income Taxes (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Effective tax rates

(34.70%)

38.70%

Unrecognized tax benefits

$ 28.1

Increase in gross unrecognized tax benefits

1.4

Reduction in provision for income taxes due to impact of effective tax rate

23.3

Gross interest and penalties accrued

2.6

Deferred Tax Assets, Net, Current

9.8

10.0

Deferred Tax Assets, Net, Noncurrent

39.3

28.3

Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation

$ 3.7

$ 15.1

Commitments And Contingencies (Narrative) (Details) (USD $)

In Billions, unless otherwise specified

3 Months Ended

12 Months Ended

Mar. 31, 2012

Dec. 31, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments related to streaming content license agreements

$ 3.68

$ 3.91

Commitments And Contingencies (Expected Timing Of Payments For Commitments) (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Less than one year

$ 729,628

Due after one year and through 3 years

2,374,734

Due after 3 years and through 5 years

505,553

Due after 5 years

74,155

Total streaming content obligations

$ 3,684,070

Segment Information (Information On Reportable Segments And Reconciliation To Consolidated Net Income) (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2012

Mar. 31, 2011

Segment Reporting Information [Line Items]

Total unique subscribers at end of period

0

23,600,000

Revenues

$ 869,791

$ 718,553

Cost of revenues and marketing expenses

759,833

542,410

Contribution profit (loss)

109,958

176,143

Other operating expenses

111,893

73,903

Operating income (loss)

(1,935)

102,240

Other income (expense)

(5,090)

(4,000)

Benefit for income taxes

(2,441)

38,007

Net income (loss)

(4,584)

60,233

Domestic [Member]

Segment Reporting Information [Line Items]

Total unique subscribers at end of period

22,797,000 ¹

Revenues

706,274

Cost of revenues and marketing expenses

519,389

Contribution profit (loss)

186,885

International [Member]

Segment Reporting Information [Line Items]

Total unique subscribers at end of period

803,000

Revenues

12,279

Cost of revenues and marketing expenses

23,021

Contribution profit (loss)

(10,742)

Domestic Streaming [Member]

Segment Reporting Information [Line Items]

Number Of Subscriptions At End Of Period

23,410,000

Revenues

506,665

Cost of revenues and marketing expenses

440,157

Contribution profit (loss)

66,508

International Streaming [Member]

Segment Reporting Information [Line Items]

Number Of Subscriptions At End Of Period

3,065,000

Revenues

43,425

Cost of revenues and marketing expenses

146,108

Contribution profit (loss)

(102,683)

Domestic Dvd [Member]

Segment Reporting Information [Line Items]

Number Of Subscriptions At End Of Period

10,089,000

Revenues

319,701

Cost of revenues and marketing expenses

173,568

Contribution profit (loss)

$ 146,133

[1] For purposes of determining the number of unique subscribers, domestic subscribers who have elected both a DVD and a streaming subscription plan are considered a single unique subscriber.