NETFLIX INC, 10-K filed on 1/27/2017
Annual Report
v3.6.0.2
Document And Entity Information - USD ($)
 12 Months Ended
Dec. 31, 2016
Jan. 26, 2017
Jun. 30, 2016
Document And Entity Information [Abstract]      
Entity Registrant Name NETFLIX INC    
Entity Central Index Key 0001065280    
Current Fiscal Year End Date --12-31    
Entity Filer Category Large Accelerated Filer    
Document Type 10-K    
Document Period End Date Dec. 31, 2016    
Document Fiscal Year Focus 2016    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Common Stock, Shares Outstanding   430,411,593  
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 38,059,122,667
v3.6.0.2
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Statement [Abstract]      
Revenues $ 8,830,669 $ 6,779,511 $ 5,504,656
Cost of revenues 6,029,901 4,591,476 3,752,760
Marketing 991,078 824,092 607,186
Technology and development 852,098 650,788 472,321
General and administrative 577,799 407,329 269,741
Operating income 379,793 305,826 402,648
Other income (expense):      
Interest expense (150,114) (132,716) (50,219)
Interest and other income (expense) 30,828 (31,225) (3,060)
Income before income taxes 260,507 141,885 349,369
Provision for income taxes 73,829 19,244 82,570
Net income $ 186,678 $ 122,641 $ 266,799
Earnings per share:      
Basic (in USD per share) $ 0.44 $ 0.29 $ 0.63
Diluted (in USD per share) $ 0.43 $ 0.28 $ 0.62
Weighted-average common shares outstanding:      
Basic (in shares) 428,822 425,889 420,544
Diluted (in shares) 438,652 436,456 431,894
v3.6.0.2
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement of Comprehensive Income [Abstract]      
Net income $ 186,678 $ 122,641 $ 266,799
Other comprehensive loss:      
Foreign currency translation adjustments (5,464) (37,887) (7,768)
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $126, $(598), and $(156), respectively 207 (975) (253)
Total other comprehensive loss (5,257) (38,862) (8,021)
Comprehensive income $ 181,421 $ 83,779 $ 258,778
v3.6.0.2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement of Comprehensive Income [Abstract]      
Other Comprehensive Income (Loss), Available-for-sale Securities, Tax, Portion Attributable to Parent $ 126 $ (598) $ (156)
v3.6.0.2
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash flows from operating activities:      
Net income $ 186,678 $ 122,641 $ 266,799
Adjustments to reconcile net income to net cash (used in) provided by operating activities:      
Additions to streaming content assets (8,653,286) (5,771,652) (3,773,019)
Change in streaming content liabilities 1,772,650 1,162,413 593,125
Amortization of streaming content assets 4,788,498 3,405,382 2,656,279
Amortization of DVD content assets 78,952 79,380 71,491
Depreciation and amortization of property, equipment and intangibles 57,528 62,283 54,028
Stock-based compensation expense 173,675 124,725 115,239
Excess tax benefits from stock-based compensation (65,121) (80,471) (89,341)
Other non-cash items 40,909 31,628 15,282
Deferred taxes (46,847) (58,655) (30,063)
Changes in operating assets and liabilities:      
Other current assets 46,970 18,693 (9,198)
Other current assets 32,247 51,615 83,812
Accrued expenses 68,706 48,810 55,636
Deferred revenue 96,751 72,135 58,819
Other non-current assets and liabilities (52,294) (18,366) (52,406)
Net cash (used in) provided by operating activities (1,473,984) (749,439) 16,483
Cash flows from investing activities:      
Acquisition of DVD content assets (77,177) (77,958) (74,790)
Purchases of property and equipment (107,653) (91,248) (69,726)
Other assets (941) (1,912) 1,334
Purchases of short-term investments (187,193) (371,915) (426,934)
Proceeds from sale of short-term investments 282,484 259,079 385,300
Proceeds from maturities of short-term investments 140,245 104,762 141,950
Net cash provided by (used in) investing activities 49,765 (179,192) (42,866)
Cash flows from financing activities:      
Proceeds from issuance of debt 1,000,000 1,500,000 400,000
Issuance costs (10,700) (17,629) (7,080)
Proceeds from issuance of common stock 36,979 77,980 60,544
Excess tax benefits from stock-based compensation 65,121 80,471 89,341
Other financing activities 230 (545) (1,093)
Net cash provided by financing activities 1,091,630 1,640,277 541,712
Effect of exchange rate changes on cash and cash equivalents (9,165) (15,924) (6,686)
Net (decrease) increase in cash and cash equivalents (341,754) 695,722 508,643
Cash and cash equivalents, beginning of year 1,809,330 1,113,608 604,965
Cash and cash equivalents, end of year 1,467,576 1,809,330 1,113,608
Supplemental disclosure:      
Income taxes paid 26,806 27,658 50,573
Interest paid 138,566 111,761 41,085
Change in investing activities included in liabilities $ 27,504 $ (4,978) $ 12,295
v3.6.0.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2016
Dec. 31, 2015
Current assets:    
Cash and cash equivalents $ 1,467,576 $ 1,809,330
Short-term investments 266,206 501,385
Current content assets, net 3,726,307 2,905,998
Other current assets 260,202 215,127
Total current assets 5,720,291 5,431,840
Non-current content assets, net 7,274,501 4,312,817
Property and equipment, net 250,395 173,412
Other non-current assets 341,423 284,802
Total assets 13,586,610 10,202,871
Current liabilities:    
Current content liabilities 3,632,711 2,789,023
Accounts payable 312,842 253,491
Accrued expenses 197,632 140,389
Deferred revenue 443,472 346,721
Total current liabilities 4,586,657 3,529,624
Non-current content liabilities 2,894,654 2,026,360
Long-term debt 3,364,311 2,371,362
Other non-current liabilities 61,188 52,099
Total liabilities 10,906,810 7,979,445
Commitments and contingencies
Stockholders’ equity:    
Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2016 and 2015; no shares issued and outstanding at December 31, 2016 and 2015 0 0
Common stock, $0.001 par value; 4,990,000,000 shares authorized at December 31, 2016 and December 31, 2015, respectively; 430,054,212 and 427,940,440 issued and outstanding at December 31, 2016 and December 31, 2015, respectively 1,599,762 1,324,809
Accumulated other comprehensive loss (48,565) (43,308)
Retained earnings 1,128,603 941,925
Total stockholders’ equity 2,679,800 2,223,426
Total liabilities and stockholders’ equity $ 13,586,610 $ 10,202,871
v3.6.0.2
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]    
Preferred stock, par value (in USD per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value (in USD per share) $ 0.001 $ 0.001
Common stock, shares authorized 4,990,000,000 4,990,000,000
Common stock, shares issued 430,054,212 427,940,440
Common stock, shares outstanding 430,054,212 427,940,440
v3.6.0.2
Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Total
Common Stock and Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings [Member]
Beginning Balance (in shares) at Dec. 31, 2013   417,249,007    
Beginning Balance at Dec. 31, 2013 $ 1,333,561 $ 777,501 $ 3,575 $ 552,485
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income 266,799     266,799
Other comprehensive income (loss) $ (8,021)   (8,021)  
Issuance of common stock upon exercise of options (in shares) 5,661,880 5,661,880    
Issuance of common stock upon exercise of options $ 61,190 $ 61,190    
Stock-based compensation expense 115,239 115,239    
Excess stock option income tax benefits 88,940 $ 88,940    
Ending Balance (in shares) at Dec. 31, 2014   422,910,887    
Ending Balance at Dec. 31, 2014 1,857,708 $ 1,042,870 (4,446) 819,284
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income 122,641     122,641
Other comprehensive income (loss) $ (38,862)   (38,862)  
Issuance of common stock upon exercise of options (in shares) 5,029,553 5,029,553    
Issuance of common stock upon exercise of options $ 77,334 $ 77,334    
Stock-based compensation expense 124,725 124,725    
Excess stock option income tax benefits 79,880 $ 79,880    
Ending Balance (in shares) at Dec. 31, 2015   427,940,440    
Ending Balance at Dec. 31, 2015 2,223,426 $ 1,324,809 (43,308) 941,925
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income 186,678     186,678
Other comprehensive income (loss) $ (5,257)   (5,257)  
Issuance of common stock upon exercise of options (in shares) 2,113,772 2,113,772    
Issuance of common stock upon exercise of options $ 36,979 $ 36,979    
Stock-based compensation expense 173,675 173,675    
Excess stock option income tax benefits 64,299 $ 64,299    
Ending Balance (in shares) at Dec. 31, 2016   430,054,212    
Ending Balance at Dec. 31, 2016 $ 2,679,800 $ 1,599,762 $ (48,565) $ 1,128,603
v3.6.0.2
Organization and Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies
Description of Business
Netflix, Inc. (the “Company”) was incorporated on August 29, 1997 and began operations on April 14, 1998. The Company is the world’s leading internet television network with over 93 million streaming members in over 190 countries enjoying more than 125 million hours of hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments. Additionally, in the United States ("U.S."), members can receive DVDs.
The Company has three reportable segments, Domestic streaming, International streaming and Domestic DVD. A majority of the Company’s revenues are generated in the United States, and substantially all of the Company’s long-lived tangible assets are held in the United States. The Company’s revenues are derived from monthly membership fees.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the amortization policy for the streaming content assets; the recognition and measurement of income tax assets and liabilities; and the valuation of stock-based compensation. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates.
Accounting Guidance Not Yet Adopted
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company will adopt ASU 2014-09 in the first quarter of 2018 and apply the full retrospective approach. The Company does not expect the impact on its consolidated financial statements to be material.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. The Company will adopt ASU 2016-02 in the first quarter of 2019 and is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification ("ASC") Topic 718, Compensation – Stock Compensation.  ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company will adopt ASU 2016-09 in the first quarter of 2017. The Company is unable to estimate the impact of adoption as it is dependent upon future stock option exercises which can not be predicted. However, the Company is expecting the adoption of the ASU to have a material impact on net income, basic and diluted earnings per share, deferred tax assets and net cash from operations and the effective tax rate may be reduced.
In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-08 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company does not expect the impact on its consolidated financial statements to be material.
Cash Equivalents and Short-term Investments
The Company considers investments in instruments purchased with an original maturity of 90 days or less to be cash equivalents. The Company also classifies amounts in transit from payment processors for customer credit card and debit card transactions as cash equivalents.
The Company classifies short-term investments, which consist of marketable securities with original maturities in excess of 90 days as available-for-sale. Short-term investments are reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive loss” within Stockholders’ equity in the Consolidated Balance Sheets. The amortization of premiums and discounts on the investments, realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in “Interest and other income (expense)” in the Consolidated Statements of Operations. The Company uses the specific identification method to determine cost in calculating realized gains and losses upon the sale of short-term investments.
Short-term investments are reviewed periodically to identify possible other-than-temporary impairment. When evaluating the investments, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the Company’s intent to sell, or whether it would be more likely than not that the Company would be required to sell the investments before the recovery of their amortized cost basis.

Streaming Content
The Company acquires, licenses and produces content, including original programming, in order to offer members unlimited viewing of TV shows and films. The content licenses are for a fixed fee and specific windows of availability. Payment terms for certain content licenses and the production of content require more upfront cash payments relative to the amortization expense. Payments for content, including additions to streaming assets and the changes in related liabilities, are classified within "Net cash (used in) provided by operating activities" on the Consolidated Statements of Cash Flows.
For licenses, the Company capitalizes the fee per title and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. The portion available for streaming within one year is recognized as “Current content assets, net” and the remaining portion as “Non-current content assets, net” on the Consolidated Balance Sheets.
For productions, the Company capitalizes costs associated with the production, including development costs and direct costs. These amounts are included in "Non-current content assets, net" on the Consolidated Balance Sheets. Participations and residuals are expensed in line with the amortization of production costs.
Based on factors including historical and estimated viewing patterns, the Company amortizes the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use, beginning with the month of first availability. The amortization period typically ranges from six months to five years. For content where the Company expects more upfront viewing, for instance due to additional merchandising and marketing efforts, the amortization is on an accelerated basis. The Company reviews factors impacting the amortization of the content assets on a regular basis. The Company's estimates related to these factors require considerable management judgment.  In the third quarter of 2016, the Company changed the amortization method of certain content given changes in estimated viewing patterns of this content. The effect of this change in estimate was a $19.8 million decrease in operating income and a $12.3 million decrease in net income for the year ended December 31, 2016. The effect on both basic earnings per share and diluted earnings per share was a decrease of $0.03 for the year ended December 31, 2016. Changes in estimates could have a significant impact on the Company's future results of operations.
The Company's business model is subscription based as opposed to a model generating revenues at a specific title level. Therefore, content assets, both licensed and produced are reviewed in aggregate at the operating segment level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than amortized cost. To date, we have not identified any such event or changes in circumstances. If such changes are identified in the future, these aggregated content assets will be stated at the lower of unamortized cost, net realizable value or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. No material write-down from unamortized cost was recorded in any of the periods presented.
The Company has entered into certain licenses with collective management organizations, and are currently involved in negotiations with others who hold certain rights to music and other entertainment works "publicly performed" in connection with streaming content into various territories. Accruals for estimated license fees are recorded and then adjusted based on any changes in estimates. These amounts are included in the streaming content obligations. The results of these negotiations are uncertain and may be materially different from management's estimates.

DVD Content
The Company acquires DVD content for the purpose of renting such content to its domestic DVD members and earning membership rental revenues, and, as such, the Company considers its direct purchase DVD assets to be a productive asset. Accordingly, the Company classifies its DVD assets in “Non-current content assets, net” on the Consolidated Balance Sheets. The acquisition of DVD content assets, net of changes in related liabilities, is classified within "Net cash provided by (used in) investing activities" on the Consolidated Statements of Cash Flows because the DVD content assets are considered a productive asset. Other companies in the in-home entertainment video industry classify these cash flows as operating activities. The Company amortizes its direct purchase DVDs on an accelerated basis over their estimated useful lives, which range from one year to two years. The Company also obtains DVD content through revenue sharing agreements with studios and other content providers. Revenue sharing obligations are expensed as incurred based on shipments.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally up to 30 years, or the lease term for leasehold improvements, if applicable. Leased buildings are capitalized and included in property and equipment when the Company was involved in the construction funding and did not meet the “sale-leaseback” criteria.
Revenue Recognition
Revenues are recognized ratably over each monthly membership period. Revenues are presented net of the taxes that are collected from members and remitted to governmental authorities. Deferred revenue consists of membership fees billed that have not been recognized and gift and other prepaid memberships that have not been redeemed.
Marketing
Marketing expenses consist primarily of advertising expenses and payments made to the Company’s partners, including device partners, MVPD's, mobile platforms and ISP's. Advertising expenses include promotional activities such as digital and television advertising. Advertising costs are expensed as incurred. Advertising expenses were $842.4 million, $714.3 million and $533.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Research and Development
Research and development expenses are included within "Technology and Development" on the Company's Consolidated Statements of Operations and primarily consist of payroll and related costs incurred in making improvements to our service offerings. Research and development expenses were $768.3 million, $570.0 million and $398.2 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Income Taxes
The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. There was no significant valuation allowance as of December 31, 2016 or 2015.
The Company did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. The Company may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. See Note 9 to the consolidated financial statements for further information regarding income taxes.
Foreign Currency
The functional currency for the Company's subsidiaries is determined based on the primary economic environment in which the subsidiary operates. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in cumulative translation adjustment included in "Accumulated other comprehensive loss" in Stockholders’ equity on the Consolidated Balance Sheets.
Prior to January 1, 2015, the functional currency of certain of the Company's European entities was the British pound. The Company changed the functional currency of these entities to the euro effective January 1, 2015 following the redomiciliation of the European headquarters and the launch of the Netflix service in several significant European countries. The change in functional currency was applied prospectively from January 1, 2015. Monetary assets and liabilities have been remeasured to the euro at current exchange rates. Non-monetary assets and liabilities have been remeasured to the euro using the exchange rate effective for the period in which the balance arose. As a result of this change of functional currency, the Company recorded a $21.8 million cumulative translation adjustment included in other comprehensive loss for year ended December 31, 2015.
The Company remeasures monetary assets and liabilities that are not denominated in the functional currency at exchange rates in effect at the end of each period. Gains and losses from these remeasurements are recognized in interest and other income (expense). Foreign currency transactions resulted in a gain of $22.8 million for the year ended December 31, 2016 and losses of $37.3 million and $8.2 million for the years ended December 31, 2015 and 2014 respectively.
Earnings Per Share
In June 2015, the Company's Board of Directors declared a seven-for-one stock split in the form of a stock dividend that was paid on July 14, 2015 to all shareholders of record as of July 2, 2015 ("Stock Split").
Outstanding share and per-share amounts disclosed for all periods provided have been retroactively adjusted to reflect the effects of the Stock Split. 
Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential common shares outstanding during the period. Potential common shares consist of incremental shares issuable upon the assumed exercise of stock options. The computation of earnings per share is as follows:
 
 
Year ended December 31,
 
2016
 
2015
 
2014
 
(in thousands, except per share data)
Basic earnings per share:
 
 
 
 
 
Net income
$
186,678

 
$
122,641

 
$
266,799

Shares used in computation:
 
 
 
 
 
Weighted-average common shares outstanding
428,822

 
425,889

 
420,544

Basic earnings per share
$
0.44

 
$
0.29

 
$
0.63

Diluted earnings per share:
 
 
 
 
 
Net income
$
186,678

 
$
122,641

 
$
266,799

Shares used in computation:
 
 
 
 
 
Weighted-average common shares outstanding
428,822

 
425,889

 
420,544

Employee stock options
9,830

 
10,567

 
11,350

Weighted-average number of shares
438,652

 
436,456

 
431,894

Diluted earnings per share
$
0.43

 
$
0.28

 
$
0.62


Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The following table summarizes the potential common shares excluded from the diluted calculation:
 
 
Year ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Employee stock options
1,545

 
517

 
917


Stock-Based Compensation
The Company grants fully vested non-qualified stock options to its employees on a monthly basis. As a result of immediate vesting, stock-based compensation expense is fully recognized on the grant date, and no estimate is required for post-vesting option forfeitures. See Note 7 to the consolidated financial statements for further information regarding stock-based compensation.
v3.6.0.2
Short-term Investments
 12 Months Ended
Dec. 31, 2016
Short-term Investments [Abstract]  
Short-term Investments
Short-term Investments
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 tables summarize, 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 and where they are classified on the Consolidated Balance Sheets.
 
As of December 31, 2016
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Cash and cash equivalents
 
Short-term investments
 
Non-current assets (1)
 
(in thousands)
Cash
$
1,267,523

 
$
—

 
$
—

 
$
1,267,523

 
$
1,264,126

 
$
—

 
$
3,397

Level 1 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
204,967

 
—

 
—

 
204,967

 
203,450

 
—

 
1,517

Level 2 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
199,843

 
110

 
(731
)
 
199,222

 
—

 
199,222

 
—

Government securities
35,944

 
—

 
(128
)
 
35,816

 
—

 
35,816

 
—

Certificate of deposit
9,833

 
—

 
—

 
9,833

 
—

 
9,833

 
—

Agency securities
21,563

 
—

 
(228
)
 
21,335

 
—

 
21,335

 
—

Total
$
1,739,673

 
$
110

 
$
(1,087
)
 
$
1,738,696

 
$
1,467,576

 
$
266,206

 
$
4,914


 
 
As of December 31, 2015
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Cash and cash equivalents
 
Short-term investments
 
Non-current assets (1)
 
(in thousands)
Cash
$
1,708,220

 
$
—

 
$
—

 
$
1,708,220

 
$
1,706,592

 
$
—

 
$
1,628

Level 1 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
107,199

 
—

 
—

 
107,199

 
102,738

 
—

 
4,461

Level 2 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
240,867

 
154

 
(409
)
 
240,612

 
—

 
240,612

 
—

Government securities
235,252

 
—

 
(1,046
)
 
234,206

 
—

 
234,206

 
—

Agency securities
26,576

 
—

 
(9
)
 
26,567

 
—

 
26,567

 
—

Total
$
2,318,114

 
$
154

 
$
(1,464
)
 
$
2,316,804

 
$
1,809,330

 
$
501,385

 
$
6,089


(1) Primarily restricted cash that is related to workers compensation deposits and letter of credit agreements.
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 4 to the consolidated financial statements for further information regarding the fair value of the Company’s 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 December 31, 2016. There were no material other-than-temporary impairments or credit losses related to available-for-sale securities in the years ended December 31, 2016, 2015 or 2014.
There were no material gross realized gains or losses from the sale of available-for-sale investments in the years ended December 31, 2016, 2015 and 2014. Realized gains and losses and interest income are included in "Interest and other income (expense)" on the Consolidated Statements of Operations.
The estimated fair value of short-term investments by contractual maturity as of December 31, 2016 is as follows:
 
 
 
(in thousands)
Due within one year
 
$
61,833

Due after one year and through 5 years
 
204,373

Total short-term investments
 
$
266,206
v3.6.0.2
Balance Sheet Components
 12 Months Ended
Dec. 31, 2016
Balance Sheet Components Disclosure [Abstract]  
Balance Sheet Components
Balance Sheet Components
Content Assets
Content assets consisted of the following:
 
 
As of December 31,
 
2016
 
2015
 
(in thousands)
 
 
 
 
Licensed content, net
$
9,595,315

 
$
6,827,119

 
 
 
 
Produced content, net
 
 
 
Released, less amortization
335,400

 
61,515

In production
1,010,463

 
279,013

In development
34,215

 
24,651

 
1,380,078

 
365,179

DVD, net
25,415

 
26,517

Total
$
11,000,808

 
$
7,218,815

 
 
 
 
Current content assets, net
$
3,726,307

 
$
2,905,998

Non-current content assets, net
$
7,274,501

 
$
4,312,817



Produced content is included in "Non-current content assets, net" on the Consolidated Balance Sheets. Certain original content, such as House of Cards, is licensed and therefore not included in produced content. Of the produced content that has been released, approximately 28% and 81%, is expected to be amortized over the next twelve and thirty-six months, respectively. The amount of accrued participations and residuals to be paid during the next twelve months is not material.

 Property and Equipment, Net
Property and equipment and accumulated depreciation consisted of the following:
 
 
 
As of December 31,
 
Estimated Useful Lives (in Years)
 
 
2016
 
2015
 
 
 
(in thousands)
 
 
Information technology assets
 
$
185,345

 
$
194,054

 
3 years
Furniture and fixtures
 
32,185

 
30,914

 
3 years
Building
 
40,681

 
40,681

 
30 years
Leasehold improvements
 
107,945

 
107,793

 
Over life of lease
DVD operations equipment
 
70,152

 
88,471

 
5 years
Capital work-in-progress
 
108,296

 
8,845

 
 
Property and equipment, gross
 
544,604

 
470,758

 
 
Less: Accumulated depreciation
 
(294,209
)
 
(297,346
)
 
 
Property and equipment, net
 
$
250,395

 
$
173,412

 
 

    
The increase in capital work-in-progress is primarily due to leasehold improvements for the Company's expanded Los Gatos, California headquarters and the Company's new Los Angeles, California facility, both of which will be placed into operation in the first half of 2017.
v3.6.0.2
Long-term Debt
 12 Months Ended
Dec. 31, 2016
Debt Disclosure [Abstract]  
Long-term Debt
Long-term Debt

As of December 31, 2016, the Company had aggregate outstanding $3,364.3 million, net of $35.7 million of issuance costs, in long-term notes with varying maturities (the "Notes"). Each of the Notes were issued at par and are senior unsecured obligations of the Company. Interest is payable semi-annually at fixed rates.

The following table provides a summary of the Company's outstanding long-term debt and the fair values based on quoted market prices in less active markets as of December 31, 2016 and December 31, 2015:

 
 
 
 
 
 
 
 
 
Level 2 Fair Value as of
 
Principal Amount at Par
 
Issuance Date
 
Maturity
 
Interest Due Dates
 
December 31,
2016
 
December 31,
2015
 
(in millions)
 
 
 
 
 
 
 
(in millions)
4.375% Senior Notes
1,000

 
October 2016
 
2026

 
May 15 and November 15
 
$
975

 
$
—

5.50% Senior Notes
700

 
February 2015
 
2022

 
April 15 and October 15
 
758

 
718

5.875% Senior Notes
800

 
February 2015
 
2025

 
April 15 and October 15
 
868

 
820

5.750% Senior Notes
400

 
February 2014
 
2024

 
March 1 and September 1
 
431

 
411

5.375% Senior Notes
500

 
February 2013
 
2021

 
February 1 and August 1
 
539

 
525


Each of the Notes are repayable in whole or in part upon the occurrence of a change of control, at the option of the holders, at a purchase price in cash equal to 101% of the principal plus accrued interest. The Company may redeem the Notes prior to maturity in whole or in part at an amount equal to the principal amount thereof plus accrued and unpaid interest and an applicable premium. The Notes include, among other terms and conditions, limitations on the Company's ability to create, incur or allow certain liens; enter into sale and lease-back transactions; create, assume, incur or guarantee additional indebtedness of certain of the Company's subsidiaries; and consolidate or merge with, or convey, transfer or lease all or substantially all of the Company's and its subsidiaries assets, to another person. As of December 31, 2016 and December 31, 2015, the Company was in compliance with all related covenants.
v3.6.0.2
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Streaming Content
At December 31, 2016, the Company had $14.5 billion of obligations comprised of $3.6 billion included in "Current content liabilities" and $2.9 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $8.0 billion of obligations that are not reflected on the Consolidated Balance Sheets as they do not yet meet the criteria for asset recognition.
At December 31, 2015, the Company had $10.9 billion of obligations comprised of $2.8 billion included in "Current content liabilities" and $2.0 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $6.1 billion of obligations that are not reflected on the Consolidated Balance Sheets as they do not yet meet the criteria for asset recognition.
The expected timing of payments for these streaming content obligations is as follows:
 
As of December 31,
 
2016
 
2015
 
(in thousands)
Less than one year
$
6,200,611

 
$
4,703,172

Due after one year and through 3 years
6,731,336

 
5,249,147

Due after 3 years and through 5 years
1,386,934

 
891,864

Due after 5 years
160,606

 
58,048

Total streaming content obligations
$
14,479,487

 
$
10,902,231


    
Streaming content obligations include amounts related to the acquisition, licensing and production of streaming content. Obligations that are in non-U.S. dollar currencies are translated to U.S. dollar at period end rates. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements. An obligation for the acquisition and licensing of content is incurred at the time the Company enters into an agreement to obtain future titles. Once a title becomes available, a content liability is generally recorded on the Consolidated Balance Sheets. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. Traditional film output deals, like the U.S. output deal with Disney, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of such license agreements. The Company does not include any estimated obligation for these future titles beyond the known minimum amount. However, the unknown obligations are expected to be significant.

Lease obligations
The Company leases facilities under non-cancelable operating leases with various expiration dates through 2027. Several lease agreements contain rent escalation clauses or rent holidays. For purposes of recognizing minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date of initial possession to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation for intended use. For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of initial occupancy, the Company records minimum rental expenses on a straight-line basis over the terms of the leases in the Consolidated Statements of Operations. The Company has the option to extend or renew most of its leases which may increase the future minimum lease commitments.
Because the terms of the Company’s facilities lease agreements for its original Los Gatos, California headquarters site required the Company’s involvement in the construction funding of the buildings, the Company is the “deemed owner” (for accounting purposes only) of these buildings. Accordingly, the Company recorded an asset of $40.7 million, representing the total costs of the buildings and improvements, including the costs paid by the lessor (the legal owner of the buildings), with corresponding liabilities. Upon completion of construction of each building, the Company did not meet the sale-leaseback criteria for de-recognition of the building assets and liabilities. Therefore the leases are accounted for as financing obligations. At December 31, 2016, the lease financing obligation balance was $29.2 million, the majority of which is recorded in “Other non-current liabilities,” on the Consolidated Balance Sheets. The remaining future minimum payments under the lease financing obligation are $18.5 million. The lease financing obligation balance at the end of the lease term will be approximately $21.8 million which approximates the net book value of the buildings to be relinquished to the lessor.
In addition to the lease financing obligation, future minimum lease payments include $530.2 million as of December 31, 2016 related to non-cancelable operating leases for the expanded headquarters in Los Gatos, California and the new office space in Los Angeles, California.
Future minimum payments under lease financing obligations and non-cancelable operating leases as of December 31, 2016 are as follows:
 
Year Ending December 31,
Future
Minimum
Payments
 
(in thousands)
2017
$
64,502

2018
76,310

2019
68,456

2020
66,603

2021
57,434

Thereafter
307,535

Total minimum payments
$
640,840


Rent expense associated with the operating leases was $53.1 million, $34.7 million and $26.6 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Legal Proceedings
From time to time, in the normal course of its operations, the Company is subject 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.

The Company is involved in litigation matters not listed herein 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.
v3.6.0.2
Guarantees—Indemnification Obligations
 12 Months Ended
Dec. 31, 2016
Guarantees [Abstract]  
Guarantees—Indemnification Obligations
Guarantees—Indemnification Obligations
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 guarantees.
v3.6.0.2
Stockholders' Equity
 12 Months Ended
Dec. 31, 2016
Stockholders' Equity Note [Abstract]  
Stockholders' Equity
Stockholders’ Equity
Stock Split
In March 2015, the Company's Board of Directors adopted an amendment to the Company's Certificate of Incorporation, to increase the number of shares of capital stock the Company is authorized to issue from 170,000,000 (160,000,000 shares of common stock and 10,000,000 shares of preferred stock), par value $0.001 to 5,000,000,000 (4,990,000,000 shares of common stock and 10,000,000 shares of preferred stock), par value $0.001. This amendment to the Company's certificate of incorporation was approved by the Company's stockholders at the 2015 Annual Meeting held on June 9, 2015.
On June 23, 2015, the Company's Board of Directors declared a seven-for-one stock split in the form of a stock dividend that was paid on July 14, 2015 to all shareholders of record as of July 2, 2015. Outstanding share and per-share amounts disclosed for all periods presented have been retroactively adjusted to reflect the effects of the Stock Split. 
Preferred Stock
The Company has authorized 10,000,000 shares of undesignated preferred stock with a par value of $0.001 per share. None of the preferred shares were issued and outstanding at December 31, 2016 and 2015.
Voting Rights
The holders of each share of common stock shall be entitled to one vote per share on all matters to be voted upon by the Company’s stockholders.
Stock Option Plans
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 December 31, 2016, 13.3 million shares were reserved for future grants under the 2011 Stock Plan.
A summary of the activities related to the Company’s stock option plans, as adjusted for the Stock Split, is as follows:
 
 
Shares Available
for Grant
 
Options Outstanding
 
Weighted- Average Remaining Contractual Term (in Years)
 
Aggregate
Intrinsic Value
(in Thousands)
 
Number of
Shares
 
Weighted- Average Exercise Price
(per Share)
 
Balances as of December 31, 2013
23,844,219

 
24,688,286

 
$
13.61

 
 
 
 
Granted
(3,819,011
)
 
3,819,011

 
57.55

 
 
 
 
Exercised
—

 
(5,661,880
)
 
10.81

 
 
 
 
Balances as of December 31, 2014
20,025,208

 
22,845,417

 
$
21.65

 
 
 
 
Granted
(3,179,892
)
 
3,179,892

 
82.67

 
 
 
 
Exercised

 
(5,029,553
)
 
15.38

 
 
 
 
Balances as of December 31, 2015
16,845,316

 
20,995,756

 
$
32.39

 
 
 
 
Granted
(3,555,363
)
 
3,555,363

 
102.03

 
 
 
 
Exercised
—

 
(2,113,772
)
 
17.48

 
 
 
 
Balances as of December 31, 2016
13,289,953

 
22,437,347

 
$
44.83

 
6.18
 
$
1,772,185

Vested and exercisable at
December 31, 2016

 
22,437,347

 
$
44.83

 
6.18
 
$
1,772,185


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 2016 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 the last trading day of 2016. This amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised for the years ended December 31, 2016, 2015 and 2014 was $189.2 million, $368.4 million and $265.1 million, respectively.
Cash received from option exercises for the years ended December 31, 2016, 2015 and 2014 was $37.0 million, $78.0 million and $60.5 million, respectively.
Stock-Based Compensation
Stock options granted are exercisable for the full ten year contractual term regardless of employment status. The following table summarizes the assumptions used to value option grants using the lattice-binomial model and the valuation data:
 
 
 
Year Ended December 31,
 
 
2016
 
2015
 
2014
Dividend yield
 
—
%
 
—
%
 
—
%
Expected volatility
 
40% - 50%

 
36% - 53%

 
41% - 48%

Risk-free interest rate
 
1.57% - 2.04%

 
2.03% - 2.29%

 
2.39% - 2.83%

Suboptimal exercise factor
 
2.48

 
2.47 - 2.48

 
2.66 - 5.44

Valuation data:
 
 
 
 
 
 
Weighted-average fair value (per share)
 
$
48.85

 
$
39.22

 
$
30.17

Total stock-based compensation expense (in thousands)
 
173,675

 
124,725

 
115,239

Total income tax impact on provision (in thousands)
 
65,173

 
47,125

 
43,999



The Company considers several factors in determining the suboptimal exercise factor, including the historical and estimated option exercise behavior and the employee groupings. Prior to January 1, 2015, the Company bifurcated its option grants into two employee groupings (executive and non-executive) to determine the suboptimal exercise factor. Beginning on January 1, 2015, the Company began aggregating employee groupings for its determination of the suboptimal exercise factor as the previous bifurcation into two groupings did not have a material impact on the fair value of the options granted.
Prior to January 1, 2015, the Company's computation of expected volatility was based on a blend of historical volatility of its common stock and implied volatility of tradable forward call options to purchase shares of its common stock, as low trade volume of its tradable forward call options prior to 2011 precluded sole reliance on implied volatility. Beginning on January 1, 2015, expected volatility is based solely on implied volatility. The Company believes that implied volatility of publicly traded options in its common stock is more reflective of market conditions, and given consistently high trade volumes of the options, can reasonably be expected to be a better indicator of expected volatility than historical volatility of its common stock.
In valuing shares issued under the Company’s employee stock option plans, the Company bases the risk-free interest rate on U.S. Treasury zero-coupon issues with terms similar to the contractual term of the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company does not use a post-vesting termination rate as options are fully vested upon grant date.
v3.6.0.2
Accumulated Other Comprehensive Loss
 12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:

 
Foreign currency
 
Change in unrealized gains on available-for-sale securities
 
Total
 
(in thousands)
Balances as of December 31, 2014
$
(4,615
)
 
$
169

 
$
(4,446
)
Other comprehensive loss before reclassifications
(37,887
)
 
(771
)
 
(38,658
)
Amounts reclassified from accumulated other comprehensive (loss)income
—

 
(204
)
 
(204
)
Net increase in other comprehensive loss
(37,887
)
 
(975
)
 
(38,862
)
Balances as of December 31, 2015
$
(42,502
)
 
$
(806
)
 
$
(43,308
)
Other comprehensive (loss) income before reclassifications
(5,464
)
 
310

 
(5,154
)
Amounts reclassified from accumulated other comprehensive (loss)income
—

 
(103
)
 
(103
)
Net (increase) decrease in other comprehensive loss
(5,464
)
 
207

 
(5,257
)
Balances as of December 31, 2016
$
(47,966
)
 
$
(599
)
 
$
(48,565
)


As discussed in Note 1, other comprehensive (loss) income for the year ended December 31, 2015 includes the impact of the change in functional currency for certain of the Company's European entities.
All amounts reclassified from accumulated other comprehensive (loss) income related to realized gains on available-for-sale securities. These reclassifications impacted "Interest and other income (expense)" on the Consolidated Statements of Operations.
v3.6.0.2
Income Taxes
 12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Income before provision for income taxes was as follows:
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
United States
$
188,078

 
$
95,644

 
$
325,081

Foreign
72,429

 
46,241

 
24,288

Income before income taxes
$
260,507

 
$
141,885

 
$
349,369


The components of provision for income taxes for all periods presented were as follows:
 
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Current tax provision:
 
 
 
 
 
Federal
$
54,315

 
$
52,557

 
$
86,623

State
5,790

 
(1,576
)
 
9,866

Foreign
60,571

 
26,918

 
16,144

Total current
120,676

 
77,899

 
112,633

Deferred tax provision:
 
 
 
 
 
Federal
(24,383
)
 
(37,669
)
 
(10,994
)
State
(14,080
)
 
(17,635
)
 
(17,794
)
Foreign
(8,384
)
 
(3,351
)
 
(1,275
)
Total deferred
(46,847
)
 
(58,655
)
 
(30,063
)
Provision for income taxes
$
73,829

 
$
19,244

 
$
82,570



U.S. income taxes and foreign withholding taxes associated with the repatriation of earnings of certain foreign subsidiaries were not provided for on a cumulative total of $121.1 million of undistributed earnings for certain foreign subsidiaries as of December 31, 2016. The Company intends to reinvest these earnings indefinitely in its foreign subsidiaries. If these earnings were distributed to the United States in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes net of available foreign tax credits associated with these earnings. The amount of unrecognized deferred income tax liability related to these earnings is approximately $42.4 million.
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate to income before income taxes is as follows:
 
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Expected tax expense at U.S. Federal statutory rate of 35%
$
91,179

 
$
49,658

 
$
122,279

State income taxes, net of Federal income tax effect
7,261

 
4,783

 
13,274

R&D tax credit
(41,144
)
 
(29,363
)
 
(18,655
)
Release of tax reserves on previously unrecognized tax benefits
—

 
(13,438
)
 
(38,612
)
Foreign earnings at other than US rates
14,639

 
5,310

 
2,959

Other
1,894

 
2,294

 
1,325

Provision for income taxes
$
73,829

 
$
19,244

 
$
82,570





The components of deferred tax assets and liabilities were as follows:
 
 
As of December 31,
 
2016
 
2015
 
(in thousands)
Deferred tax assets (liabilities):
 
 
 
Stock-based compensation
$
188,458

 
$
131,339

Accruals and reserves
29,231

 
14,367

Depreciation and amortization
(93,760
)
 
(43,204
)
R&D credits
107,283

 
74,091

Other
(2,363
)
 
3,980

Gross deferred tax assets
228,849

 
180,573

Valuation allowance
(1,601
)
 
—

Net deferred tax assets
$
227,248

 
$
180,573



All deferred tax assets are classified as “Other non-current assets” on the Consolidated Balance Sheets as of December 31, 2016 and December 31, 2015. 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 December 31, 2016 and 2015, it was considered more likely than not that substantially all deferred tax assets would be realized, and no significant valuation allowance was recorded.
As of December 31, 2016, the Company's Federal R&D tax credit and state tax credit carryforwards for tax return purposes were $72.5 million, and $77.7 million, respectively. The Federal R&D tax credit carryforwards expire through 2036. State tax credit carryforwards of $77.3 million can be carried forward indefinitely and $0.4 million expire in 2024.
As of December 31, 2016, the Company’s net operating loss carryforwards for Federal and state tax return purposes were $108.9 million and $100.0 million, respectively, which expire in 2035. These net operating losses were generated as a result of excess stock option deductions. Pursuant to Accounting Standards Codification 718, Compensation - Stock Compensation, the Company has not recognized the related $45.1 million tax benefit from the Federal and state net operating losses attributable to excess stock option deductions in gross deferred tax assets. The $45.1 million tax benefit will be credited directly to additional paid-in capital when net operating losses attributable to excess stock option deductions are utilized to reduce taxes payable.
Income tax benefits attributable to the exercise of employee stock options of $64.3 million, $79.9 million and $88.9 million for the years ended December 31, 2016, 2015 and 2014, respectively, were recorded directly to additional paid-in-capital.
The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “Other non-current liabilities” and a reduction of deferred tax assets which is classified as "Other non-current assets" in the Consolidated Balance Sheets. As of December 31, 2016, the total amount of gross unrecognized tax benefits was $19.7 million, of which $17.0 million, if recognized, would favorably impact the Company’s effective tax rate. As of December 31, 2015, the total amount of gross unrecognized tax benefits was $17.1 million, of which $13.5 million, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows (in thousands):
 
Balances as of December 31, 2014
$
34,812

Increases related to tax positions taken during prior periods
1,960

Decreases related to tax positions taken during prior periods
(12,334
)
Increases related to tax positions taken during the current period
7,077

Decreases related to settlements with taxing authorities
(14,398
)
Balances as of December 31, 2015
17,117

 Increases related to tax positions taken during prior periods
1,047

 Decreases related to tax positions taken during prior periods
(7,105
)
 Increases related to tax positions taken during the current period
8,713

 Decreases related to expiration of statute of limitations
(33
)
Balances as of December 31, 2016
$
19,739


The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes and in “Other non-current liabilities” in the Consolidated Balance Sheets. Interest and penalties included in the Company's provision for income taxes were not material in all the periods presented.
The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS for the years 2014 and 2015. The years 2010 through 2015 remain subject to examination by the state of California. The Company has no significant foreign jurisdiction audits underway. The years 2012 through 2015 remain subject to examination by foreign jurisdictions.
Given the potential outcome of the current examinations as well as the impact of the current examinations 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, an estimate of the range of reasonably possible adjustments cannot be made.
v3.6.0.2
Employee Benefit Plan
 12 Months Ended
Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plan
Employee Benefit Plan
The Company maintains a 401(k) savings plan covering substantially all of its employees. Eligible employees may contribute up to 60% of their annual salary through payroll deductions, but not more than the statutory limits set by the Internal Revenue Service. The Company matches employee contributions at the discretion of the Board. During 2016, 2015 and 2014, the Company’s matching contributions totaled $15.7 million, $11.2 million and $8.3 million, respectively.
v3.6.0.2
Segment Information
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Segment Information
Segment Information
The Company has three reportable segments: Domestic streaming, International streaming and Domestic DVD. Segment information is presented in the same manner that the Company’s chief operating decision maker ("CODM") reviews the operating results in assessing performance and allocating resources. The Company’s CODM 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 incurred by the segment. The Company has aggregated the results of the International operating segments into one reportable segment because these operating segments share similar long-term economic and other qualitative characteristics.
The Domestic streaming segment derives revenues from monthly membership fees for services consisting solely of streaming content to the members in the United States. The International streaming segment derives revenues from monthly membership fees for services consisting solely of streaming content to members outside of the United States. The Domestic DVD segment derives revenues from monthly membership fees for services consisting solely of DVD-by-mail. Revenues and the related payment card fees are attributed to the operating segment based on the nature of the underlying membership (streaming or DVD) and the geographic region from which the membership originates. There are no internal revenue transactions between the Company’s segments.
The vast majority of the cost of revenues relate to content expenses, which include the amortization of streaming content assets and other costs associated with the licensing and acquisition of streaming content. In connection with the Company's global expansion, content acquired, licensed, and produced increasingly includes global rights. The Company allocates this content between the International and Domestic streaming segments based on estimated fair market value. Content expenses for each streaming segment thus includes both expenses directly incurred by the segment as well as an allocation of expenses incurred for global rights. Other costs of revenues such as delivery costs are primarily attributed to the operating segment based on amounts directly incurred by the segment. Marketing expenses consist primarily of advertising expenses and payments made to our device partners, MVPD's, mobile platforms and ISP's which are generally included in the segment in which the expenditures are directly incurred.
The Company's long-lived tangible assets were located as follows:
 
As of December 31,
 
2016
 
2015
 
(in thousands)
United States
$
236,977

 
$
159,566

International
13,418

 
13,846



The following tables represent segment information for the year ended December 31, 2016:
 
 
As of/Year ended December 31, 2016
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Total memberships at end of period (1)
49,431

 
44,365

 
4,114

 
—

Revenues
$
5,077,307

 
$
3,211,095

 
$
542,267

 
$
8,830,669

Cost of revenues
2,855,789

 
2,911,370

 
262,742

 
6,029,901

Marketing
382,832

 
608,246

 
—

 
991,078

Contribution profit (loss)
$
1,838,686

 
$
(308,521
)
 
$
279,525

 
1,809,690

Other operating expenses
 
 
 
 
 
 
1,429,897

Operating income
 
 
 
 
 
 
379,793

Other income (expense)
 
 
 
 
 
 
(119,286
)
Provision for income taxes
 
 
 
 
 
 
73,829

Net income
 
 
 
 
 
 
$
186,678



 
Year ended December 31, 2016
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Amortization of content assets
$
2,337,950

 
$
2,450,548

 
$
78,952

 
$
4,867,450


The following tables represent segment information for the year ended December 31, 2015:
 
 
As of/Year ended December 31, 2015
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Total memberships at end of period (1)
44,738

 
30,024

 
4,904

 
—

Revenues
$
4,180,339

 
$
1,953,435

 
$
645,737

 
$
6,779,511

Cost of revenues
2,487,193

 
1,780,375

 
323,908

 
4,591,476

Marketing
317,646

 
506,446

 
—

 
824,092

Contribution profit (loss)
$
1,375,500

 
$
(333,386
)
 
$
321,829

 
1,363,943

Other operating expenses
 
 
 
 
 
 
1,058,117

Operating income
 
 
 
 
 
 
305,826

Other income (expense)
 
 
 
 
 
 
(163,941
)
Provision for income taxes
 
 
 
 
 
 
19,244

Net income
 
 
 
 
 
 
$
122,641


 
Year ended December 31, 2015
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Amortization of content assets
$
1,905,069

 
$
1,500,313

 
$
79,380

 
$
3,484,762


The following tables represent segment information for the year ended December 31, 2014:
 
As of/Year ended December 31, 2014
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Total memberships at end of period (1)
39,114

 
18,277

 
5,767

 
—

Revenues
$
3,431,434

 
$
1,308,061

 
$
765,161

 
$
5,504,656

Cost of revenues
2,201,761

 
1,154,117

 
396,882

 
3,752,760

Marketing
293,453

 
313,733

 
—

 
607,186

Contribution profit (loss)
$
936,220

 
$
(159,789
)
 
$
368,279

 
1,144,710

Other operating expenses
 
 
 
 
 
 
742,062

Operating income
 
 
 
 
 
 
402,648

Other income (expense)
 
 
 
 
 
 
(53,279
)
Provision for income taxes
 
 
 
 
 
 
82,570

Net income
 
 
 
 
 
 
$
266,799


 
Year ended December 31, 2014
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Amortization of content assets
$
1,657,673

 
$
998,606

 
$
71,491

 
$
2,727,770

(1)
A membership (also referred to as a subscription or a member) is defined as the right to receive the Netflix service following sign-up and a method of payment being provided. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by our internal systems, which utilize industry standard geo-location technology. We offer free-trial memberships to new and certain rejoining members. Total members include those who are on a free-trial as long as a method of payment has been provided. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations become effective at the end of the prepaid membership period, while involuntary cancellation of the service, as a result of a failed method of payment, becomes effective immediately except in limited circumstances where a short grace period is offered to ensure the streaming service is not interrupted for members who are impacted by payment processing delays by our banks or integrated payment partners. The number of members in a grace period at any given point is not material.
v3.6.0.2
Selected Quarterly Financial Data (Unaudited)
 12 Months Ended
Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]  
Selected Quarterly Financial Data (Unaudited)
Selected Quarterly Financial Data (Unaudited)
 
 
December 31
 
September 30
 
June 30
 
March 31
 
(in thousands, except for per share data)
2016
 
Total revenues
$
2,477,541

 
$
2,290,188

 
$
2,105,204

 
$
1,957,736

Gross profit
823,122

 
757,344

 
632,106

 
588,196

Net income
66,748

 
51,517

 
40,755

 
27,658

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.16

 
$
0.12

 
$
0.10

 
$
0.06

Diluted
0.15

 
0.12

 
0.09

 
0.06

2015
 
 
 
 
 
 
 
Total revenues
$
1,823,333

 
$
1,738,355

 
$
1,644,694

 
$
1,573,129

Gross profit
573,968

 
564,397

 
522,942

 
526,728

Net income
43,178

 
29,432

 
26,335

 
23,696

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.10

 
$
0.07

 
$
0.06

 
$
0.06

Diluted
0.10

 
0.07

 
0.06

 
0.05
v3.6.0.2
Organization and Summary of Significant Accounting Policies (Policy)
 12 Months Ended
Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Use of Estimates
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the amortization policy for the streaming content assets; the recognition and measurement of income tax assets and liabilities; and the valuation of stock-based compensation. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates.
Accounting Guidance Not Yet Adopted
Accounting Guidance Not Yet Adopted
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company will adopt ASU 2014-09 in the first quarter of 2018 and apply the full retrospective approach. The Company does not expect the impact on its consolidated financial statements to be material.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. The Company will adopt ASU 2016-02 in the first quarter of 2019 and is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standards Codification ("ASC") Topic 718, Compensation – Stock Compensation.  ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company will adopt ASU 2016-09 in the first quarter of 2017. The Company is unable to estimate the impact of adoption as it is dependent upon future stock option exercises which can not be predicted. However, the Company is expecting the adoption of the ASU to have a material impact on net income, basic and diluted earnings per share, deferred tax assets and net cash from operations and the effective tax rate may be reduced.
In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-08 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company does not expect the impact on its consolidated financial statements to be material.
Cash Equivalents and Short-Term Investments
Cash Equivalents and Short-term Investments
The Company considers investments in instruments purchased with an original maturity of 90 days or less to be cash equivalents. The Company also classifies amounts in transit from payment processors for customer credit card and debit card transactions as cash equivalents.
The Company classifies short-term investments, which consist of marketable securities with original maturities in excess of 90 days as available-for-sale. Short-term investments are reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive loss” within Stockholders’ equity in the Consolidated Balance Sheets. The amortization of premiums and discounts on the investments, realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in “Interest and other income (expense)” in the Consolidated Statements of Operations. The Company uses the specific identification method to determine cost in calculating realized gains and losses upon the sale of short-term investments.
Short-term investments are reviewed periodically to identify possible other-than-temporary impairment. When evaluating the investments, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the Company’s intent to sell, or whether it would be more likely than not that the Company would be required to sell the investments before the recovery of their amortized cost basis.
Streaming Content
Streaming Content
The Company acquires, licenses and produces content, including original programming, in order to offer members unlimited viewing of TV shows and films. The content licenses are for a fixed fee and specific windows of availability. Payment terms for certain content licenses and the production of content require more upfront cash payments relative to the amortization expense. Payments for content, including additions to streaming assets and the changes in related liabilities, are classified within "Net cash (used in) provided by operating activities" on the Consolidated Statements of Cash Flows.
For licenses, the Company capitalizes the fee per title and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the title is known and the title is accepted and available for streaming. The portion available for streaming within one year is recognized as “Current content assets, net” and the remaining portion as “Non-current content assets, net” on the Consolidated Balance Sheets.
For productions, the Company capitalizes costs associated with the production, including development costs and direct costs. These amounts are included in "Non-current content assets, net" on the Consolidated Balance Sheets. Participations and residuals are expensed in line with the amortization of production costs.
Based on factors including historical and estimated viewing patterns, the Company amortizes the content assets (licensed and produced) in “Cost of revenues” on the Consolidated Statements of Operations over the shorter of each title's contractual window of availability or estimated period of use, beginning with the month of first availability. The amortization period typically ranges from six months to five years. For content where the Company expects more upfront viewing, for instance due to additional merchandising and marketing efforts, the amortization is on an accelerated basis. The Company reviews factors impacting the amortization of the content assets on a regular basis. The Company's estimates related to these factors require considerable management judgment.  In the third quarter of 2016, the Company changed the amortization method of certain content given changes in estimated viewing patterns of this content. The effect of this change in estimate was a $19.8 million decrease in operating income and a $12.3 million decrease in net income for the year ended December 31, 2016. The effect on both basic earnings per share and diluted earnings per share was a decrease of $0.03 for the year ended December 31, 2016. Changes in estimates could have a significant impact on the Company's future results of operations.
The Company's business model is subscription based as opposed to a model generating revenues at a specific title level. Therefore, content assets, both licensed and produced are reviewed in aggregate at the operating segment level when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than amortized cost. To date, we have not identified any such event or changes in circumstances. If such changes are identified in the future, these aggregated content assets will be stated at the lower of unamortized cost, net realizable value or fair value. In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off. No material write-down from unamortized cost was recorded in any of the periods presented.
The Company has entered into certain licenses with collective management organizations, and are currently involved in negotiations with others who hold certain rights to music and other entertainment works "publicly performed" in connection with streaming content into various territories. Accruals for estimated license fees are recorded and then adjusted based on any changes in estimates. These amounts are included in the streaming content obligations. The results of these negotiations are uncertain and may be materially different from management's estimates.
DVD Content
DVD Content
The Company acquires DVD content for the purpose of renting such content to its domestic DVD members and earning membership rental revenues, and, as such, the Company considers its direct purchase DVD assets to be a productive asset. Accordingly, the Company classifies its DVD assets in “Non-current content assets, net” on the Consolidated Balance Sheets. The acquisition of DVD content assets, net of changes in related liabilities, is classified within "Net cash provided by (used in) investing activities" on the Consolidated Statements of Cash Flows because the DVD content assets are considered a productive asset. Other companies in the in-home entertainment video industry classify these cash flows as operating activities. The Company amortizes its direct purchase DVDs on an accelerated basis over their estimated useful lives, which range from one year to two years. The Company also obtains DVD content through revenue sharing agreements with studios and other content providers. Revenue sharing obligations are expensed as incurred based on shipments.
Property and Equipment
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally up to 30 years, or the lease term for leasehold improvements, if applicable. Leased buildings are capitalized and included in property and equipment when the Company was involved in the construction funding and did not meet the “sale-leaseback” criteria.
Revenue Recognition
Revenue Recognition
Revenues are recognized ratably over each monthly membership period. Revenues are presented net of the taxes that are collected from members and remitted to governmental authorities. Deferred revenue consists of membership fees billed that have not been recognized and gift and other prepaid memberships that have not been redeemed.
Marketing
Marketing
Marketing expenses consist primarily of advertising expenses and payments made to the Company’s partners, including device partners, MVPD's, mobile platforms and ISP's. Advertising expenses include promotional activities such as digital and television advertising. Advertising costs are expensed as incurred.
Research and Development
Research and Development
Research and development expenses are included within "Technology and Development" on the Company's Consolidated Statements of Operations and primarily consist of payroll and related costs incurred in making improvements to our service offerings.
Income Taxes
Income Taxes
The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. There was no significant valuation allowance as of December 31, 2016 or 2015.
The Company did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. The Company may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
Foreign Currency
Foreign Currency
The functional currency for the Company's subsidiaries is determined based on the primary economic environment in which the subsidiary operates. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in cumulative translation adjustment included in "Accumulated other comprehensive loss" in Stockholders’ equity on the Consolidated Balance Sheets.
Prior to January 1, 2015, the functional currency of certain of the Company's European entities was the British pound. The Company changed the functional currency of these entities to the euro effective January 1, 2015 following the redomiciliation of the European headquarters and the launch of the Netflix service in several significant European countries. The change in functional currency was applied prospectively from January 1, 2015. Monetary assets and liabilities have been remeasured to the euro at current exchange rates. Non-monetary assets and liabilities have been remeasured to the euro using the exchange rate effective for the period in which the balance arose. As a result of this change of functional currency, the Company recorded a $21.8 million cumulative translation adjustment included in other comprehensive loss for year ended December 31, 2015.
The Company remeasures monetary assets and liabilities that are not denominated in the functional currency at exchange rates in effect at the end of each period. Gains and losses from these remeasurements are recognized in interest and other income (expense).
Earnings Per Share
Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential common shares outstanding during the period. Potential common shares consist of incremental shares issuable upon the assumed exercise of stock options.
Stock-Based Compensation
Stock-Based Compensation
The Company grants fully vested non-qualified stock options to its employees on a monthly basis. As a result of immediate vesting, stock-based compensation expense is fully recognized on the grant date, and no estimate is required for post-vesting option forfeitures.
v3.6.0.2
Organization and Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Computation of Net Income Per Share
The computation of earnings per share is as follows:
 
 
Year ended December 31,
 
2016
 
2015
 
2014
 
(in thousands, except per share data)
Basic earnings per share:
 
 
 
 
 
Net income
$
186,678

 
$
122,641

 
$
266,799

Shares used in computation:
 
 
 
 
 
Weighted-average common shares outstanding
428,822

 
425,889

 
420,544

Basic earnings per share
$
0.44

 
$
0.29

 
$
0.63

Diluted earnings per share:
 
 
 
 
 
Net income
$
186,678

 
$
122,641

 
$
266,799

Shares used in computation:
 
 
 
 
 
Weighted-average common shares outstanding
428,822

 
425,889

 
420,544

Employee stock options
9,830

 
10,567

 
11,350

Weighted-average number of shares
438,652

 
436,456

 
431,894

Diluted earnings per share
$
0.43

 
$
0.28

 
$
0.62
Summary of Potential Common Shares Excluded from Diluted Calculation
The following table summarizes the potential common shares excluded from the diluted calculation:
 
 
Year ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Employee stock options
1,545

 
517

 
917
v3.6.0.2
Short-term Investments (Tables)
 12 Months Ended
Dec. 31, 2016
Short-term Investments [Abstract]  
Available-For-Sale Securities Reported at Fair Value
The following tables summarize, 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 and where they are classified on the Consolidated Balance Sheets.
 
As of December 31, 2016
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Cash and cash equivalents
 
Short-term investments
 
Non-current assets (1)
 
(in thousands)
Cash
$
1,267,523

 
$
—

 
$
—

 
$
1,267,523

 
$
1,264,126

 
$
—

 
$
3,397

Level 1 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
204,967

 
—

 
—

 
204,967

 
203,450

 
—

 
1,517

Level 2 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
199,843

 
110

 
(731
)
 
199,222

 
—

 
199,222

 
—

Government securities
35,944

 
—

 
(128
)
 
35,816

 
—

 
35,816

 
—

Certificate of deposit
9,833

 
—

 
—

 
9,833

 
—

 
9,833

 
—

Agency securities
21,563

 
—

 
(228
)
 
21,335

 
—

 
21,335

 
—

Total
$
1,739,673

 
$
110

 
$
(1,087
)
 
$
1,738,696

 
$
1,467,576

 
$
266,206

 
$
4,914


 
 
As of December 31, 2015
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Cash and cash equivalents
 
Short-term investments
 
Non-current assets (1)
 
(in thousands)
Cash
$
1,708,220

 
$
—

 
$
—

 
$
1,708,220

 
$
1,706,592

 
$
—

 
$
1,628

Level 1 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
107,199

 
—

 
—

 
107,199

 
102,738

 
—

 
4,461

Level 2 securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
240,867

 
154

 
(409
)
 
240,612

 
—

 
240,612

 
—

Government securities
235,252

 
—

 
(1,046
)
 
234,206

 
—

 
234,206

 
—

Agency securities
26,576

 
—

 
(9
)
 
26,567

 
—

 
26,567

 
—

Total
$
2,318,114

 
$
154

 
$
(1,464
)
 
$
2,316,804

 
$
1,809,330

 
$
501,385

 
$
6,089


(1) Primarily restricted cash that is related to workers compensation deposits and letter of credit agreements.
Estimated Fair Value of Short-Term Investments by Contractual Maturity
The estimated fair value of short-term investments by contractual maturity as of December 31, 2016 is as follows:
 
 
 
(in thousands)
Due within one year
 
$
61,833

Due after one year and through 5 years
 
204,373

Total short-term investments
 
$
266,206
v3.6.0.2
Balance Sheet Components (Tables)
 12 Months Ended
Dec. 31, 2016
Balance Sheet Components Disclosure [Abstract]  
Components of Content Library
Content assets consisted of the following:
 
 
As of December 31,
 
2016
 
2015
 
(in thousands)
 
 
 
 
Licensed content, net
$
9,595,315

 
$
6,827,119

 
 
 
 
Produced content, net
 
 
 
Released, less amortization
335,400

 
61,515

In production
1,010,463

 
279,013

In development
34,215

 
24,651

 
1,380,078

 
365,179

DVD, net
25,415

 
26,517

Total
$
11,000,808

 
$
7,218,815

 
 
 
 
Current content assets, net
$
3,726,307

 
$
2,905,998

Non-current content assets, net
$
7,274,501

 
$
4,312,817
Property and Equipment and Accumulated Depreciation
Property and equipment and accumulated depreciation consisted of the following:
 
 
 
As of December 31,
 
Estimated Useful Lives (in Years)
 
 
2016
 
2015
 
 
 
(in thousands)
 
 
Information technology assets
 
$
185,345

 
$
194,054

 
3 years
Furniture and fixtures
 
32,185

 
30,914

 
3 years
Building
 
40,681

 
40,681

 
30 years
Leasehold improvements
 
107,945

 
107,793

 
Over life of lease
DVD operations equipment
 
70,152

 
88,471

 
5 years
Capital work-in-progress
 
108,296

 
8,845

 
 
Property and equipment, gross
 
544,604

 
470,758

 
 
Less: Accumulated depreciation
 
(294,209
)
 
(297,346
)
 
 
Property and equipment, net
 
$
250,395

 
$
173,412

 
 
v3.6.0.2
Long-term Debt (Tables)
 12 Months Ended
Dec. 31, 2016
Debt Disclosure [Abstract]  
Schedule of Long-term Debt Instruments
The following table provides a summary of the Company's outstanding long-term debt and the fair values based on quoted market prices in less active markets as of December 31, 2016 and December 31, 2015:

 
 
 
 
 
 
 
 
 
Level 2 Fair Value as of
 
Principal Amount at Par
 
Issuance Date
 
Maturity
 
Interest Due Dates
 
December 31,
2016
 
December 31,
2015
 
(in millions)
 
 
 
 
 
 
 
(in millions)
4.375% Senior Notes
1,000

 
October 2016
 
2026

 
May 15 and November 15
 
$
975

 
$
—

5.50% Senior Notes
700

 
February 2015
 
2022

 
April 15 and October 15
 
758

 
718

5.875% Senior Notes
800

 
February 2015
 
2025

 
April 15 and October 15
 
868

 
820

5.750% Senior Notes
400

 
February 2014
 
2024

 
March 1 and September 1
 
431

 
411

5.375% Senior Notes
500

 
February 2013
 
2021

 
February 1 and August 1
 
539

 
525
v3.6.0.2
Commitments and Contingencies (Tables)
 12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Expected timing of payments for streaming content obligations
The expected timing of payments for these streaming content obligations is as follows:
 
As of December 31,
 
2016
 
2015
 
(in thousands)
Less than one year
$
6,200,611

 
$
4,703,172

Due after one year and through 3 years
6,731,336

 
5,249,147

Due after 3 years and through 5 years
1,386,934

 
891,864

Due after 5 years
160,606

 
58,048

Total streaming content obligations
$
14,479,487

 
$
10,902,231
Future minimum payments under lease financing obligations and non-cancelable operating leases
Future minimum payments under lease financing obligations and non-cancelable operating leases as of December 31, 2016 are as follows:
 
Year Ending December 31,
Future
Minimum
Payments
 
(in thousands)
2017
$
64,502

2018
76,310

2019
68,456

2020
66,603

2021
57,434

Thereafter
307,535

Total minimum payments
$
640,840
v3.6.0.2
Stockholders' Equity (Tables)
 12 Months Ended
Dec. 31, 2016
Stockholders' Equity Note [Abstract]  
Summary of Activity Related to Stock Option Plans
A summary of the activities related to the Company’s stock option plans, as adjusted for the Stock Split, is as follows:
 
 
Shares Available
for Grant
 
Options Outstanding
 
Weighted- Average Remaining Contractual Term (in Years)
 
Aggregate
Intrinsic Value
(in Thousands)
 
Number of
Shares
 
Weighted- Average Exercise Price
(per Share)
 
Balances as of December 31, 2013
23,844,219

 
24,688,286

 
$
13.61

 
 
 
 
Granted
(3,819,011
)
 
3,819,011

 
57.55

 
 
 
 
Exercised
—

 
(5,661,880
)
 
10.81

 
 
 
 
Balances as of December 31, 2014
20,025,208

 
22,845,417

 
$
21.65

 
 
 
 
Granted
(3,179,892
)
 
3,179,892

 
82.67

 
 
 
 
Exercised

 
(5,029,553
)
 
15.38

 
 
 
 
Balances as of December 31, 2015
16,845,316

 
20,995,756

 
$
32.39

 
 
 
 
Granted
(3,555,363
)
 
3,555,363

 
102.03

 
 
 
 
Exercised
—

 
(2,113,772
)
 
17.48

 
 
 
 
Balances as of December 31, 2016
13,289,953

 
22,437,347

 
$
44.83

 
6.18
 
$
1,772,185

Vested and exercisable at
December 31, 2016

 
22,437,347

 
$
44.83

 
6.18
 
$
1,772,185
Summary of Assumptions Used to Value Stock Option Grants Using Lattice-Binomial Model
The following table summarizes the assumptions used to value option grants using the lattice-binomial model and the valuation data:
 
 
 
Year Ended December 31,
 
 
2016
 
2015
 
2014
Dividend yield
 
—
%
 
—
%
 
—
%
Expected volatility
 
40% - 50%

 
36% - 53%

 
41% - 48%

Risk-free interest rate
 
1.57% - 2.04%

 
2.03% - 2.29%

 
2.39% - 2.83%

Suboptimal exercise factor
 
2.48

 
2.47 - 2.48

 
2.66 - 5.44

Valuation data:
 
 
 
 
 
 
Weighted-average fair value (per share)
 
$
48.85

 
$
39.22

 
$
30.17

Total stock-based compensation expense (in thousands)
 
173,675

 
124,725

 
115,239

Total income tax impact on provision (in thousands)
 
65,173

 
47,125

 
43,999
v3.6.0.2
Accumulated Other Comprehensive Loss (Tables)
 12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
Schedule of Changes in Accumulated Other Comprehensive Income
The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:

 
Foreign currency
 
Change in unrealized gains on available-for-sale securities
 
Total
 
(in thousands)
Balances as of December 31, 2014
$
(4,615
)
 
$
169

 
$
(4,446
)
Other comprehensive loss before reclassifications
(37,887
)
 
(771
)
 
(38,658
)
Amounts reclassified from accumulated other comprehensive (loss)income
—

 
(204
)
 
(204
)
Net increase in other comprehensive loss
(37,887
)
 
(975
)
 
(38,862
)
Balances as of December 31, 2015
$
(42,502
)
 
$
(806
)
 
$
(43,308
)
Other comprehensive (loss) income before reclassifications
(5,464
)
 
310

 
(5,154
)
Amounts reclassified from accumulated other comprehensive (loss)income
—

 
(103
)
 
(103
)
Net (increase) decrease in other comprehensive loss
(5,464
)
 
207

 
(5,257
)
Balances as of December 31, 2016
$
(47,966
)
 
$
(599
)
 
$
(48,565
)
v3.6.0.2
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Schedule of Income before Income Taxes
Income before provision for income taxes was as follows:
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
United States
$
188,078

 
$
95,644

 
$
325,081

Foreign
72,429

 
46,241

 
24,288

Income before income taxes
$
260,507

 
$
141,885

 
$
349,369
Components of Provision for Income Taxes
The components of provision for income taxes for all periods presented were as follows:
 
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Current tax provision:
 
 
 
 
 
Federal
$
54,315

 
$
52,557

 
$
86,623

State
5,790

 
(1,576
)
 
9,866

Foreign
60,571

 
26,918

 
16,144

Total current
120,676

 
77,899

 
112,633

Deferred tax provision:
 
 
 
 
 
Federal
(24,383
)
 
(37,669
)
 
(10,994
)
State
(14,080
)
 
(17,635
)
 
(17,794
)
Foreign
(8,384
)
 
(3,351
)
 
(1,275
)
Total deferred
(46,847
)
 
(58,655
)
 
(30,063
)
Provision for income taxes
$
73,829

 
$
19,244

 
$
82,570
Reconciliation of Provision for Income Taxes
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate to income before income taxes is as follows:
 
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Expected tax expense at U.S. Federal statutory rate of 35%
$
91,179

 
$
49,658

 
$
122,279

State income taxes, net of Federal income tax effect
7,261

 
4,783

 
13,274

R&D tax credit
(41,144
)
 
(29,363
)
 
(18,655
)
Release of tax reserves on previously unrecognized tax benefits
—

 
(13,438
)
 
(38,612
)
Foreign earnings at other than US rates
14,639

 
5,310

 
2,959

Other
1,894

 
2,294

 
1,325

Provision for income taxes
$
73,829

 
$
19,244

 
$
82,570
Deferred Tax Assets and Liabilities
The components of deferred tax assets and liabilities were as follows:
 
 
As of December 31,
 
2016
 
2015
 
(in thousands)
Deferred tax assets (liabilities):
 
 
 
Stock-based compensation
$
188,458

 
$
131,339

Accruals and reserves
29,231

 
14,367

Depreciation and amortization
(93,760
)
 
(43,204
)
R&D credits
107,283

 
74,091

Other
(2,363
)
 
3,980

Gross deferred tax assets
228,849

 
180,573

Valuation allowance
(1,601
)
 
—

Net deferred tax assets
$
227,248

 
$
180,573
Summary of Changes in Unrecognized Tax Benefits
The aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows (in thousands):
 
Balances as of December 31, 2014
$
34,812

Increases related to tax positions taken during prior periods
1,960

Decreases related to tax positions taken during prior periods
(12,334
)
Increases related to tax positions taken during the current period
7,077

Decreases related to settlements with taxing authorities
(14,398
)
Balances as of December 31, 2015
17,117

 Increases related to tax positions taken during prior periods
1,047

 Decreases related to tax positions taken during prior periods
(7,105
)
 Increases related to tax positions taken during the current period
8,713

 Decreases related to expiration of statute of limitations
(33
)
Balances as of December 31, 2016
$
19,739
v3.6.0.2
Segment Information (Tables)
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Long-lived Assets by Geographic Areas
The Company's long-lived tangible assets were located as follows:
 
As of December 31,
 
2016
 
2015
 
(in thousands)
United States
$
236,977

 
$
159,566

International
13,418

 
13,846
Information on Reportable Segments and Reconciliation to Consolidated Net Income
The following tables represent segment information for the year ended December 31, 2016:
 
 
As of/Year ended December 31, 2016
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Total memberships at end of period (1)
49,431

 
44,365

 
4,114

 
—

Revenues
$
5,077,307

 
$
3,211,095

 
$
542,267

 
$
8,830,669

Cost of revenues
2,855,789

 
2,911,370

 
262,742

 
6,029,901

Marketing
382,832

 
608,246

 
—

 
991,078

Contribution profit (loss)
$
1,838,686

 
$
(308,521
)
 
$
279,525

 
1,809,690

Other operating expenses
 
 
 
 
 
 
1,429,897

Operating income
 
 
 
 
 
 
379,793

Other income (expense)
 
 
 
 
 
 
(119,286
)
Provision for income taxes
 
 
 
 
 
 
73,829

Net income
 
 
 
 
 
 
$
186,678



 
Year ended December 31, 2016
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Amortization of content assets
$
2,337,950

 
$
2,450,548

 
$
78,952

 
$
4,867,450


The following tables represent segment information for the year ended December 31, 2015:
 
 
As of/Year ended December 31, 2015
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Total memberships at end of period (1)
44,738

 
30,024

 
4,904

 
—

Revenues
$
4,180,339

 
$
1,953,435

 
$
645,737

 
$
6,779,511

Cost of revenues
2,487,193

 
1,780,375

 
323,908

 
4,591,476

Marketing
317,646

 
506,446

 
—

 
824,092

Contribution profit (loss)
$
1,375,500

 
$
(333,386
)
 
$
321,829

 
1,363,943

Other operating expenses
 
 
 
 
 
 
1,058,117

Operating income
 
 
 
 
 
 
305,826

Other income (expense)
 
 
 
 
 
 
(163,941
)
Provision for income taxes
 
 
 
 
 
 
19,244

Net income
 
 
 
 
 
 
$
122,641


 
Year ended December 31, 2015
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Amortization of content assets
$
1,905,069

 
$
1,500,313

 
$
79,380

 
$
3,484,762


The following tables represent segment information for the year ended December 31, 2014:
 
As of/Year ended December 31, 2014
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Total memberships at end of period (1)
39,114

 
18,277

 
5,767

 
—

Revenues
$
3,431,434

 
$
1,308,061

 
$
765,161

 
$
5,504,656

Cost of revenues
2,201,761

 
1,154,117

 
396,882

 
3,752,760

Marketing
293,453

 
313,733

 
—

 
607,186

Contribution profit (loss)
$
936,220

 
$
(159,789
)
 
$
368,279

 
1,144,710

Other operating expenses
 
 
 
 
 
 
742,062

Operating income
 
 
 
 
 
 
402,648

Other income (expense)
 
 
 
 
 
 
(53,279
)
Provision for income taxes
 
 
 
 
 
 
82,570

Net income
 
 
 
 
 
 
$
266,799


 
Year ended December 31, 2014
 
Domestic
Streaming
 
International
Streaming
 
Domestic
DVD
 
Consolidated
 
(in thousands)
Amortization of content assets
$
1,657,673

 
$
998,606

 
$
71,491

 
$
2,727,770

(1)
A membership (also referred to as a subscription or a member) is defined as the right to receive the Netflix service following sign-up and a method of payment being provided. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by our internal systems, which utilize industry standard geo-location technology. We offer free-trial memberships to new and certain rejoining members. Total members include those who are on a free-trial as long as a method of payment has been provided. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations become effective at the end of the prepaid membership period, while involuntary cancellation of the service, as a result of a failed method of payment, becomes effective immediately except in limited circumstances where a short grace period is offered to ensure the streaming service is not interrupted for members who are impacted by payment processing delays by our banks or integrated payment partners. The number of members in a grace period at any given point is not material.
v3.6.0.2
Selected Quarterly Financial Data (Tables)
 12 Months Ended
Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]  
Selected Quarterly Financial Data
 
December 31
 
September 30
 
June 30
 
March 31
 
(in thousands, except for per share data)
2016
 
Total revenues
$
2,477,541

 
$
2,290,188

 
$
2,105,204

 
$
1,957,736

Gross profit
823,122

 
757,344

 
632,106

 
588,196

Net income
66,748

 
51,517

 
40,755

 
27,658

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.16

 
$
0.12

 
$
0.10

 
$
0.06

Diluted
0.15

 
0.12

 
0.09

 
0.06

2015
 
 
 
 
 
 
 
Total revenues
$
1,823,333

 
$
1,738,355

 
$
1,644,694

 
$
1,573,129

Gross profit
573,968

 
564,397

 
522,942

 
526,728

Net income
43,178

 
29,432

 
26,335

 
23,696

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.10

 
$
0.07

 
$
0.06

 
$
0.06

Diluted
0.10

 
0.07

 
0.06

 
0.05
v3.6.0.2
Organization and Summary of Significant Accounting Policies (Narrative) (Details)
$ / shares in Units, $ in Thousands, member in Millions
 3 Months Ended 12 Months Ended
Jul. 14, 2015
Jun. 30, 2015
Dec. 31, 2016
USD ($)
country
member
Sep. 30, 2016
USD ($)
Jun. 30, 2016
USD ($)
Mar. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Sep. 30, 2015
USD ($)
Jun. 30, 2015
USD ($)
Mar. 31, 2015
USD ($)
Dec. 31, 2016
USD ($)
country
segment
member
$ / shares
Dec. 31, 2015
USD ($)
Dec. 31, 2014
USD ($)
Organization And Summary Of Significant Accounting Policies [Line Items]                          
Number of streaming members (more than) | member     93               93    
Number of countries (over) | country     190               190    
Number of hours (more than)                     125000000 hours    
Number of reportable segments | segment                     3    
Stock split, conversion ratio 7 7                      
Decrease in operating income                     $ (379,793) $ (305,826) $ (402,648)
Decrease in net income     $ (66,748) $ (51,517) $ (40,755) $ (27,658) $ (43,178) $ (29,432) $ (26,335) $ (23,696) (186,678) (122,641) (266,799)
Advertising expense                     842,400 714,300 533,100
Technology and development                     768,300 570,000 398,200
Foreign currency translation adjustment, other comprehensive loss                       21,800  
Foreign currency transaction gain (loss)                     $ 22,800 $ (37,300) $ (8,200)
Minimum [Member]                          
Organization And Summary Of Significant Accounting Policies [Line Items]                          
Streaming content library useful life                     6 months    
DVD content library useful life                     1 year    
Maximum [Member]                          
Organization And Summary Of Significant Accounting Policies [Line Items]                          
Streaming content library useful life                     5 years    
DVD content library useful life                     2 years    
Property and equipment estimated useful life                     30 years    
Content Library, Current [Member]                          
Organization And Summary Of Significant Accounting Policies [Line Items]                          
Streaming content library useful life                     1 year    
Intangible Assets, Amortization Period [Member]                          
Organization And Summary Of Significant Accounting Policies [Line Items]                          
Decrease in operating income                     $ 19,800    
Decrease in net income                     $ 12,300    
Decrease in earnings per share, basic and diluted | $ / shares                     $ 0.03    
v3.6.0.2
Organization and Summary of Significant Accounting Policies (Computation of Net Income Per Share) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Basic earnings per share:                      
Net income $ 66,748 $ 51,517 $ 40,755 $ 27,658 $ 43,178 $ 29,432 $ 26,335 $ 23,696 $ 186,678 $ 122,641 $ 266,799
Weighted-average common shares outstanding                 428,822 425,889 420,544
Basic earnings per share (in USD per share) $ 0.16 $ 0.12 $ 0.10 $ 0.06 $ 0.10 $ 0.07 $ 0.06 $ 0.06 $ 0.44 $ 0.29 $ 0.63
Diluted earnings per share:                      
Net income $ 66,748 $ 51,517 $ 40,755 $ 27,658 $ 43,178 $ 29,432 $ 26,335 $ 23,696 $ 186,678 $ 122,641 $ 266,799
Shares used in computation:                      
Weighted-average common shares outstanding                 428,822 425,889 420,544
Employee stock options                 9,830 10,567 11,350
Weighted-average number of shares                 438,652 436,456 431,894
Diluted earnings per share (in USD per share) $ 0.15 $ 0.12 $ 0.09 $ 0.06 $ 0.10 $ 0.07 $ 0.06 $ 0.05 $ 0.43 $ 0.28 $ 0.62
v3.6.0.2
Organization And Summary Of Significant Accounting Policies (Summary of Potential Common Shares Excluded From Diluted Calculation) (Details) - shares
shares in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Equity Option [Member]      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Employee stock options 1,545 517 917
v3.6.0.2
Short-term Investments (Available-For-Sale Securities Reported At Fair Value) (Details) - USD ($)
$ in Thousands
Dec. 31, 2016
Dec. 31, 2015
Level 1 Securities [Member] | Money market funds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash and Money market funds, Amortized Cost $ 204,967 $ 107,199
Cash and Money market funds, Fair Value Disclosure 204,967 107,199
Cash [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash and Money market funds, Amortized Cost 1,267,523 1,708,220
Cash and Money market funds, Fair Value Disclosure 1,267,523 1,708,220
Fair Value, Measurements, Recurring [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale Securities, Gross Unrealized Gains 110 154
Available-for-sale Securities, Gross Unrealized Losses (1,087) (1,464)
Total, Amortized Cost 1,739,673 2,318,114
Total, Estimated Fair Value 1,738,696 2,316,804
Fair Value, Measurements, Recurring [Member] | Cash and Cash Equivalents [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Total, Estimated Fair Value 1,467,576 1,809,330
Fair Value, Measurements, Recurring [Member] | Short-term Investments [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Total, Estimated Fair Value 266,206 501,385
Fair Value, Measurements, Recurring [Member] | Non-current Assets [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Total, Estimated Fair Value [1] 4,914 6,089
Fair Value, Measurements, Recurring [Member] | Level 1 Securities [Member] | Money market funds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash, Cash Equivalents and Restricted Cash, Gross Unrealized Gains 0 0
Cash, Cash Equivalents and Restricted Cash, Gross Unrealized Losses 0 0
Cash and Money market funds, Fair Value Disclosure 203,450 102,738
Cash and Money market funds, Non-current assets [1] 1,517 4,461
Fair Value, Measurements, Recurring [Member] | Level 2 Securities [Member] | Corporate debt securities [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale Securities, Amortized Cost 199,843 240,867
Available-for-sale Securities, Gross Unrealized Gains 110 154
Available-for-sale Securities, Gross Unrealized Losses (731) (409)
Available-for-sale Securities, Estimated Fair Value 199,222 240,612
Fair Value, Measurements, Recurring [Member] | Level 2 Securities [Member] | Government securities [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale Securities, Amortized Cost 35,944 235,252
Available-for-sale Securities, Gross Unrealized Gains 0 0
Available-for-sale Securities, Gross Unrealized Losses (128) (1,046)
Available-for-sale Securities, Estimated Fair Value 35,816 234,206
Fair Value, Measurements, Recurring [Member] | Level 2 Securities [Member] | Certificates of Deposit [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale Securities, Amortized Cost 9,833  
Available-for-sale Securities, Gross Unrealized Gains 0  
Available-for-sale Securities, Gross Unrealized Losses 0  
Available-for-sale Securities, Estimated Fair Value 9,833  
Fair Value, Measurements, Recurring [Member] | Level 2 Securities [Member] | Agency securities [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale Securities, Amortized Cost 21,563 26,576
Available-for-sale Securities, Gross Unrealized Gains 0 0
Available-for-sale Securities, Gross Unrealized Losses (228) (9)
Available-for-sale Securities, Estimated Fair Value 21,335 26,567
Fair Value, Measurements, Recurring [Member] | Cash [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash, Cash Equivalents and Restricted Cash, Gross Unrealized Gains 0 0
Cash, Cash Equivalents and Restricted Cash, Gross Unrealized Losses 0 0
Cash and Money market funds, Fair Value Disclosure 1,264,126 1,706,592
Cash and Money market funds, Non-current assets [1] $ 3,397 $ 1,628
[1] Primarily restricted cash that is related to workers compensation deposits and letter of credit agreements.
v3.6.0.2
Short-term Investments (Estimated Fair Value Of Short-Term Investments By Contractual Maturity) (Details)
$ in Thousands
Dec. 31, 2016
USD ($)
Short-term Investments [Abstract]  
Due within one year $ 61,833
Due after one year and through 5 years 204,373
Total short-term investments $ 266,206
v3.6.0.2
Balance Sheet Components (Components of Content Library) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]    
Total content assets, net $ 11,000,808 $ 7,218,815
Current content assets, net 3,726,307 2,905,998
Non-current content assets, net 7,274,501 4,312,817
Licensed Content [Member]    
Finite-Lived Intangible Assets [Line Items]    
Finite-lived intangible assets, net 9,595,315 6,827,119
Produced Content [Member]    
Finite-Lived Intangible Assets [Line Items]    
Finite-lived intangible assets, net 335,400 61,515
In production 1,010,463 279,013
In development 34,215 24,651
Total content assets, net $ 1,380,078 365,179
Produced content amortization period tranche one, percent 28.00%  
Produced content amortization period tranche two, percent 81.00%  
Produced content, amortization period, tranche one (in months) 12 months  
Produced content, amortization period, tranche two (in months) 36 months  
DVD [Member]    
Finite-Lived Intangible Assets [Line Items]    
Finite-lived intangible assets, net $ 25,415 $ 26,517
v3.6.0.2
Balance Sheet Components (Property and Equipment and Accumulated Depreciation) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 544,604 $ 470,758
Less: Accumulated depreciation (294,209) (297,346)
Property and equipment, net 250,395 173,412
Information technology assets Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 185,345 194,054
Estimated Useful Lives 3 years  
Furniture and fixtures [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 32,185 30,914
Estimated Useful Lives 3 years  
Building [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 40,681 40,681
Estimated Useful Lives 30 years  
Leasehold improvements [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 107,945 107,793
DVD operations equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 70,152 88,471
Estimated Useful Lives 5 years  
Capital work-in-progress [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 108,296 $ 8,845
v3.6.0.2
Long-term Debt (Narrative) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Aggregate outstanding principal $ 3,364,311 $ 2,371,362
Debt issuance cost $ 35,700  
Senior Notes [Member]    
Debt Instrument [Line Items]    
Redemption price, percent of outstanding principal 101.00%  
v3.6.0.2
Long-term Debt (Summary of Long-term Debt) (Details) - Senior Notes [Member] - USD ($)
Dec. 31, 2016
Dec. 31, 2015
4.375% Senior Notes [Member]    
Debt Instrument [Line Items]    
Interest rate 4.375% 4.375%
Face amount $ 1,000,000,000  
Long-term debt, fair value $ 975,000,000 $ 0
5.50% Senior Notes [Member]    
Debt Instrument [Line Items]    
Interest rate 5.50% 5.50%
Face amount $ 700,000,000.0  
Long-term debt, fair value $ 758,000,000 $ 718,000,000
5.875% Senior Notes [Member]    
Debt Instrument [Line Items]    
Interest rate 5.875% 5.875%
Face amount $ 800,000,000  
Long-term debt, fair value $ 868,000,000 $ 820,000,000
5.750% Senior Notes [Member]    
Debt Instrument [Line Items]    
Interest rate 5.75% 5.75%
Face amount $ 400,000,000  
Long-term debt, fair value $ 431,000,000 $ 411,000,000
5.375% Senior Notes [Member]    
Debt Instrument [Line Items]    
Interest rate 5.375% 5.375%
Face amount $ 500,000,000  
Long-term debt, fair value $ 539,000,000 $ 525,000,000
v3.6.0.2
Commitments and Contingencies (Streaming Content) (Narrative) (Details) - USD ($)
$ in Thousands
Dec. 31, 2016
Dec. 31, 2015
Contractual Obligation [Line Items]    
Total streaming content obligations $ 14,479,487 $ 10,902,231
Current content liabilities 3,632,711 2,789,023
Non-current content liabilities 2,894,654 2,026,360
Unrecorded streaming obligations 8,000,000 6,100,000
Current Content Liabilities [Member]    
Contractual Obligation [Line Items]    
Current content liabilities 3,632,700 2,789,000
Non-current Content Liabilities [Member]    
Contractual Obligation [Line Items]    
Non-current content liabilities $ 2,900,000 $ 2,000,000
v3.6.0.2
Commitments and Contingencies (Expected Timing of Payments for Commitments) (Details) - USD ($)
$ in Thousands
Dec. 31, 2016
Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]    
Less than one year $ 6,200,611 $ 4,703,172
Due after one year and through 3 years 6,731,336 5,249,147
Due after 3 years and through 5 years 1,386,934 891,864
Due after 5 years 160,606 58,048
Total streaming content obligations $ 14,479,487 $ 10,902,231
v3.6.0.2
Commitments and Contingencies (Lease Obligations) (Narrative) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Capital Leased Assets [Line Items]      
Rent expense $ 53.1 $ 34.7 $ 26.6
Land, Buildings and Improvements [Member] | Los Gatos Buildings [Member]      
Capital Leased Assets [Line Items]      
Total costs of buildings and improvements 40.7    
Capital lease obligations 29.2    
Capital leases, future minimum payments due 18.5    
Capital lease financing obligation under extended lease term 21.8    
Land, Buildings and Improvements [Member] | Los Gatos Buildings Expanded Site and Los Angeles [Member]      
Capital Leased Assets [Line Items]      
Operating leases, future minimum payments due $ 530.2    
v3.6.0.2
Commitments and Contingencies (Future Minimum Payments Under Lease Financing Obligations and Non-Cancelable Operating Leases) (Details)
$ in Thousands
Dec. 31, 2016
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
2017 $ 64,502
2018 76,310
2019 68,456
2020 66,603
2021 57,434
Thereafter 307,535
Total minimum payments $ 640,840
v3.6.0.2
Stockholders' Equity (Stock Split) (Narrative) (Details)
Jul. 14, 2015
Jun. 30, 2015
Dec. 31, 2016
$ / shares
shares
Dec. 31, 2015
$ / shares
shares
Mar. 31, 2015
$ / shares
shares
Feb. 28, 2015
$ / shares
shares
Stockholders' Equity Note [Abstract]            
Capital units, authorized         5,000,000,000 170,000,000
Common stock, shares authorized     4,990,000,000 4,990,000,000 4,990,000,000 160,000,000
Preferred stock, shares authorized     10,000,000 10,000,000 10,000,000 10,000,000
Common stock, par value (in USD per share) | $ / shares     $ 0.001 $ 0.001 $ 0.001 $ 0.001
Stock split, conversion ratio 7 7        
v3.6.0.2
Stockholders' Equity (Preferred Stock and Voting Rights) (Narrative) (Details)
 12 Months Ended
Dec. 31, 2016
vote
$ / shares
shares
Dec. 31, 2015
$ / shares
shares
Mar. 31, 2015
shares
Feb. 28, 2015
shares
Stockholders' Equity Note [Abstract]        
Preferred stock, shares authorized 10,000,000 10,000,000 10,000,000 10,000,000
Preferred stock, par value (in USD per share) | $ / shares $ 0.001 $ 0.001    
Preferred stock, shares issued 0 0    
Preferred stock, shares outstanding 0 0    
Number of voting rights per share | vote 1      
v3.6.0.2
Stockholders' Equity (Stock Option Plans) (Narrative) (Details) - USD ($)
shares in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total intrinsic value of options exercised $ 189.2 $ 368.4 $ 265.1
Cash received from option exercised $ 37.0 $ 78.0 $ 60.5
2011 Stock Plan [Member] | Employee Stock Option [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares available for future issuance 13.3    
v3.6.0.2
Stockholders' Equity (Summary of Activity Related to Stock Option Plans) (Details) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended 96 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]        
Shares Available for Grant, Beginning Balances 16,845,316 20,025,208 23,844,219  
Options Outstanding, Number of Shares, Beginning Balances 20,995,756 22,845,417 24,688,286  
Options Outstanding, Number of Shares, Granted (3,555,363) (3,179,892) (3,819,011)  
Options Outstanding, Number of Shares, Exercised (2,113,772) (5,029,553) (5,661,880)  
Shares Available for Grant, Ending Balances 13,289,953.000 16,845,316 20,025,208 20,025,208
Options Outstanding, Number of Shares, Ending Balances 22,437,347 20,995,756 22,845,417 22,845,417
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]        
Options Outstanding, Weighted-Average Exercise Price, Beginning Balances (in USD per share) $ 32.39 $ 21.65 $ 13.61  
Options Outstanding, Weighted-Average Exercise Price, Granted (in USD per share) 102.03 82.67 57.55  
Options Outstanding, Weighted-Average Exercise Price, Exercised (in USD per share) 17.48 15.38 10.81  
Options Outstanding, Weighted-Average Exercise Price, Ending Balances (in USD per share) $ 44.83 $ 32.39 $ 21.65 $ 21.65
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]        
Options Outstanding, Number of Shares, Vested and exercisable 22,437,347      
Options Outstanding, Weighted-Average Exercise Price, Vested and exercisable (in USD per share) $ 44.83      
Weighted-Average Remaining Contractual Term, Vested and exercisable (in Years) 6 years 2 months 5 days      
Aggregate Intrinsic Value, Vested and exercisable $ 1,772,185      
Expiration period       10 years
v3.6.0.2
Stockholders' Equity (Summary of Assumptions Used to Value Stock Option Grants) (Details)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2016
USD ($)
$ / shares
Dec. 31, 2015
USD ($)
$ / shares
Dec. 31, 2014
USD ($)
$ / shares
Stockholders' Equity Note [Abstract]      
Dividend yield 0.00% 0.00% 0.00%
Expected volatility, minimum 40.00% 36.00% 41.00%
Expected volatility, maximum 50.00% 53.00% 48.00%
Risk-free interest rate, minimum 1.57% 2.03% 2.39%
Risk-free interest rate, maximum 2.04% 2.29% 2.83%
Suboptimal exercise factor, minimum 2.48 2.47 2.66
Suboptimal exercise factor, maximum 2.48 2.48 5.44
Valuation data:      
Weighted-average fair value (in USD per share) | $ / shares $ 48.85 $ 39.22 $ 30.17
Total stock-based compensation expense (in thousands) $ 173,675 $ 124,725 $ 115,239
Total income tax impact on provision (in thousands) $ 65,173 $ 47,125 $ 43,999
v3.6.0.2
Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Roll Forward]    
Beginning balance $ (43,308) $ (4,446)
Other comprehensive (loss) income before reclassifications (5,154) (38,658)
Amounts reclassified from accumulated other comprehensive (loss) income (103) (204)
Net decrease in other comprehensive (loss) income (5,257) (38,862)
Ending balance (48,565) (43,308)
Foreign currency [Member]    
Accumulated Other Comprehensive Income (Loss) [Roll Forward]    
Beginning balance (42,502) (4,615)
Other comprehensive (loss) income before reclassifications (5,464) (37,887)
Amounts reclassified from accumulated other comprehensive (loss) income 0 0
Net decrease in other comprehensive (loss) income (5,464) (37,887)
Ending balance (47,966) (42,502)
Change in unrealized gains on available for sale securities [Member]    
Accumulated Other Comprehensive Income (Loss) [Roll Forward]    
Beginning balance (806) 169
Other comprehensive (loss) income before reclassifications 310 (771)
Amounts reclassified from accumulated other comprehensive (loss) income (103) (204)
Net decrease in other comprehensive (loss) income 207 (975)
Ending balance $ (599) $ (806)
v3.6.0.2
Income Taxes (Schedule of Income before Income Taxes) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]      
United States $ 188,078 $ 95,644 $ 325,081
Foreign 72,429 46,241 24,288
Income before income taxes $ 260,507 $ 141,885 $ 349,369
v3.6.0.2
Income Taxes (Components of Provision for Income Taxes) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Current tax provision:      
Federal $ 54,315 $ 52,557 $ 86,623
State 5,790 (1,576) 9,866
Foreign 60,571 26,918 16,144
Total current 120,676 77,899 112,633
Deferred tax provision:      
Federal (24,383) (37,669) (10,994)
State (14,080) (17,635) (17,794)
Foreign (8,384) (3,351) (1,275)
Total deferred (46,847) (58,655) (30,063)
Provision for income taxes $ 73,829 $ 19,244 $ 82,570
v3.6.0.2
Income Taxes (Narrative) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Operating Loss Carryforwards [Line Items]      
Undistributed earnings of foreign subsidiaries $ 121,100    
Unrecognized deferred tax liability related to undistributed foreign earnings 42,400    
R&D tax credit 41,144 $ 29,363 $ 18,655
Deferred federal, state and local tax benefit 45,100    
Income tax benefits attributable to the exercise of employee stock options 64,300 79,900 88,900
Unrecognized tax benefits 19,739 17,117 $ 34,812
Reduction in provision for income taxes due to impact of effective tax rate 17,000 $ 13,500  
Domestic Tax Authority [Member]      
Operating Loss Carryforwards [Line Items]      
Tax credit carryforward amount 72,500    
State and Local Jurisdiction [Member]      
Operating Loss Carryforwards [Line Items]      
Tax credit carryforward amount 77,700    
Tax credit carryforward not subject to expiration 77,300    
Tax credit carryforward subject to expiration 400    
Internal Revenue Service (IRS) [Member]      
Operating Loss Carryforwards [Line Items]      
Deferred federal, state and local tax benefit 45,100    
Internal Revenue Service (IRS) [Member] | Domestic Tax Authority [Member]      
Operating Loss Carryforwards [Line Items]      
Operating loss carryforwards 108,900    
Internal Revenue Service (IRS) [Member] | State and Local Jurisdiction [Member]      
Operating Loss Carryforwards [Line Items]      
Operating loss carryforwards $ 100,000    
v3.6.0.2
Income Taxes (Reconciliation of Provision for Income Taxes) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]      
Federal statutory rate 35.00% 35.00% 35.00%
Expected tax expense at U.S. federal statutory rate of 35% $ 91,179 $ 49,658 $ 122,279
State income taxes, net of Federal income tax effect 7,261 4,783 13,274
R&D tax credit (41,144) (29,363) (18,655)
Release of tax reserves on previously unrecognized tax benefits 0 (13,438) (38,612)
Foreign earnings at other than US rates 14,639 5,310 2,959
Other 1,894 2,294 1,325
Provision for income taxes $ 73,829 $ 19,244 $ 82,570
v3.6.0.2
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($)
$ in Thousands
Dec. 31, 2016
Dec. 31, 2015
Deferred tax assets (liabilities):    
Stock-based compensation $ 188,458 $ 131,339
Accruals and reserves 29,231 14,367
Depreciation and amortization (93,760) (43,204)
R&D credits 107,283 74,091
Other (2,363)  
Other   3,980
Gross deferred tax assets 228,849 180,573
Valuation allowance (1,601) 0
Net deferred tax assets $ 227,248 $ 180,573
v3.6.0.2
Income Taxes (Summary of Changes in Unrecognized Tax Benefits) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]    
Beginning Balance $ 17,117 $ 34,812
Increases related to tax positions taken during prior periods 1,047 1,960
Decreases related to tax positions taken during prior periods (7,105) (12,334)
Increases related to tax positions taken during the current period 8,713 7,077
Decreases related to settlements with taxing authorities   (14,398)
Decreases related to expiration of statute of limitations 33  
Ending Balance $ 19,739 $ 17,117
v3.6.0.2
Employee Benefit Plan (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]      
Eligible employees maximum contribution percentage 60.00%    
Contributions by employer $ 15.7 $ 11.2 $ 8.3
v3.6.0.2
Segment Information (Narrative) (Details)
 12 Months Ended
Dec. 31, 2016
segment
Segment Reporting [Abstract]  
Number of reportable segments 3
v3.6.0.2
Segment Information (Long-lived Assets by Geographic Areas) (Details) - USD ($)
$ in Thousands
Dec. 31, 2016
Dec. 31, 2015
United States [Member]    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets $ 236,977 $ 159,566
International [Member]    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets $ 13,418 $ 13,846
v3.6.0.2
Segment Information (Information on Reportable Segments and Reconciliation to Consolidated Net Income) (Details)
subscription in Thousands, $ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2016
USD ($)
subscription
Sep. 30, 2016
USD ($)
Jun. 30, 2016
USD ($)
Mar. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
subscription
Sep. 30, 2015
USD ($)
Jun. 30, 2015
USD ($)
Mar. 31, 2015
USD ($)
Dec. 31, 2016
USD ($)
subscription
Dec. 31, 2015
USD ($)
subscription
Dec. 31, 2014
USD ($)
subscription
Segment Reporting Information [Line Items]                      
Total members at end of period | subscription [1] 0       0       0 0 0
Revenues $ 2,477,541 $ 2,290,188 $ 2,105,204 $ 1,957,736 $ 1,823,333 $ 1,738,355 $ 1,644,694 $ 1,573,129 $ 8,830,669 $ 6,779,511 $ 5,504,656
Cost of revenues                 6,029,901 4,591,476 3,752,760
Marketing                 991,078 824,092 607,186
Contribution profit (loss)                 1,809,690 1,363,943 1,144,710
Other operating expenses                 1,429,897 1,058,117 742,062
Operating income                 379,793 305,826 402,648
Other income (expense)                 (119,286) (163,941) (53,279)
Provision for income taxes                 73,829 19,244 82,570
Net income $ 66,748 $ 51,517 $ 40,755 $ 27,658 $ 43,178 $ 29,432 $ 26,335 $ 23,696 186,678 122,641 266,799
Amortization of content assets                 $ 4,867,450 $ 3,484,762 $ 2,727,770
Domestic Streaming [Member]                      
Segment Reporting Information [Line Items]                      
Total members at end of period | subscription [1] 49,431       44,738       49,431 44,738 39,114
Revenues                 $ 5,077,307 $ 4,180,339 $ 3,431,434
Cost of revenues                 2,855,789 2,487,193 2,201,761
Marketing                 382,832 317,646 293,453
Contribution profit (loss)                 1,838,686 1,375,500 936,220
Amortization of content assets                 $ 2,337,950 $ 1,905,069 $ 1,657,673
International Streaming [Member]                      
Segment Reporting Information [Line Items]                      
Total members at end of period | subscription [1] 44,365       30,024       44,365 30,024 18,277
Revenues                 $ 3,211,095 $ 1,953,435 $ 1,308,061
Cost of revenues                 2,911,370 1,780,375 1,154,117
Marketing                 608,246 506,446 313,733
Contribution profit (loss)                 (308,521) (333,386) (159,789)
Amortization of content assets                 $ 2,450,548 $ 1,500,313 $ 998,606
Domestic DVD [Member]                      
Segment Reporting Information [Line Items]                      
Total members at end of period | subscription [1] 4,114       4,904       4,114 4,904 5,767
Revenues                 $ 542,267 $ 645,737 $ 765,161
Cost of revenues                 262,742 323,908 396,882
Marketing                 0 0 0
Contribution profit (loss)                 279,525 321,829 368,279
Amortization of content assets                 $ 78,952 $ 79,380 $ 71,491
[1] (1)A membership (also referred to as a subscription or a member) is defined as the right to receive the Netflix service following sign-up and a method of payment being provided. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by our internal systems, which utilize industry standard geo-location technology. We offer free-trial memberships to new and certain rejoining members. Total members include those who are on a free-trial as long as a method of payment has been provided. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations become effective at the end of the prepaid membership period, while involuntary cancellation of the service, as a result of a failed method of payment, becomes effective immediately except in limited circumstances where a short grace period is offered to ensure the streaming service is not interrupted for members who are impacted by payment processing delays by our banks or integrated payment partners. The number of members in a grace period at any given point is not material.
v3.6.0.2
Selected Quarterly Financial Data (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]                      
Total revenues $ 2,477,541 $ 2,290,188 $ 2,105,204 $ 1,957,736 $ 1,823,333 $ 1,738,355 $ 1,644,694 $ 1,573,129 $ 8,830,669 $ 6,779,511 $ 5,504,656
Gross profit 823,122 757,344 632,106 588,196 573,968 564,397 522,942 526,728      
Net income $ 66,748 $ 51,517 $ 40,755 $ 27,658 $ 43,178 $ 29,432 $ 26,335 $ 23,696 $ 186,678 $ 122,641 $ 266,799
Earnings (loss) per share:                      
Basic (in USD per share) $ 0.16 $ 0.12 $ 0.10 $ 0.06 $ 0.10 $ 0.07 $ 0.06 $ 0.06 $ 0.44 $ 0.29 $ 0.63
Diluted (in USD per share) $ 0.15 $ 0.12 $ 0.09 $ 0.06 $ 0.10 $ 0.07 $ 0.06 $ 0.05 $ 0.43 $ 0.28 $ 0.62