Netflix (NFLX) 10-Q 20 Apr 17 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information	3 Months Ended
	Mar. 31, 2017shares
Document And Entity Information [Abstract]
Entity Registrant Name	NETFLIX INC
Entity Central Index Key	1,065,280
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding	430,993,429

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenues	$ 2,636,635	$ 1,957,736
Cost of revenues	1,657,024	1,369,540
Marketing	271,270	208,010
Technology and development	257,108	203,508
General and administrative	194,291	127,225
Operating income	256,942	49,453
Other income (expense):
Interest expense	(46,742)	(35,537)
Interest and other income (expense)	13,592	25,963
Income before income taxes	223,792	39,879
Provision for income taxes	45,570	12,221
Net income	$ 178,222	$ 27,658
Earnings per share:
Basic (in dollars per share)	$ 0.41	$ 0.06
Diluted (in dollars per share)	$ 0.40	$ 0.06
Weighted-average common shares outstanding:
Basic (in shares)	430,600	428,117
Diluted (in shares)	445,458	437,993

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 178,222	$ 27,658
Other comprehensive income:
Foreign currency translation adjustments	2,579	7,542
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $77 and $835, respectively	127	1,365
Total other comprehensive income	2,706	8,907
Comprehensive income	$ 180,928	$ 36,565

Consolidated Statements of Com4

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Change in unrealized gains on available-for-sale securities, tax	$ 77	$ 835

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 178,222	$ 27,658
Adjustments to reconcile net income to net cash used in operating activities:
Additions to streaming content assets	(2,348,666)	(2,316,599)
Change in streaming content liabilities	366,257	905,723
Amortization of streaming content assets	1,305,683	1,058,521
Amortization of DVD content assets	18,598	20,441
Depreciation and amortization of property, equipment and intangibles	15,049	14,798
Stock-based compensation expense	44,888	42,422
Excess tax benefits from stock-based compensation	0	(11,316)
Other non-cash items	21,666	12,757
Deferred taxes	(26,764)	(16,603)
Changes in operating assets and liabilities:
Other current assets	(25,402)	14,308
Accounts payable	(11,000)	(19,898)
Accrued expenses	93,542	41,232
Deferred revenue	15,221	27,502
Other non-current assets and liabilities	8,850	(29,536)
Net cash used in operating activities	(343,856)	(228,590)
Cash flows from investing activities:
Acquisition of DVD content assets	(25,372)	(23,207)
Purchases of property and equipment	(52,523)	(8,425)
Change in other assets	(769)	(356)
Purchases of short-term investments	(57,774)	(34,962)
Proceeds from sale of short-term investments	55,748	8,188
Proceeds from maturities of short-term investments	5,100	63,025
Net cash (used in) provided by investing activities	(75,590)	4,263
Cash flows from financing activities:
Proceeds from issuance of common stock	24,178	3,536
Excess tax benefits from stock-based compensation	0	11,316
Other financing activities	61	55
Net cash provided by financing activities	24,239	14,907
Effect of exchange rate changes on cash and cash equivalents	5,455	5,334
Net decrease in cash and cash equivalents	(389,752)	(204,086)
Cash and cash equivalents, beginning of period	1,467,576	1,809,330
Cash and cash equivalents, end of period	1,077,824	1,605,244
Supplemental disclosure:
Change in investing activities included in liabilities	$ (16,672)	$ (503)

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 1,077,824	$ 1,467,576
Short-term investments	263,405	266,206
Current content assets, net	4,026,615	3,726,307
Other current assets	292,486	260,202
Total current assets	5,660,330	5,720,291
Non-current content assets, net	8,029,112	7,274,501
Property and equipment, net	275,083	250,395
Other non-current assets	394,571	341,423
Total assets	14,359,096	13,586,610
Current liabilities:
Current content liabilities	3,861,447	3,632,711
Accounts payable	294,831	312,842
Accrued expenses	296,258	197,632
Deferred revenue	458,693	443,472
Total current liabilities	4,911,229	4,586,657
Non-current content liabilities	3,035,430	2,894,654
Long-term debt	3,365,431	3,364,311
Other non-current liabilities	73,323	61,188
Total liabilities	11,385,413	10,906,810
Commitments and contingencies (Note 6)
Stockholders’ equity:
Common stock, $0.001 par value; 4,990,000,000 shares authorized at March 31, 2017 and December 31, 2016; 430,993,429 and 430,054,212 issued and outstanding at March 31, 2017 and December 31, 2016, respectively	1,669,132	1,599,762
Accumulated other comprehensive loss	(45,859)	(48,565)
Retained earnings	1,350,410	1,128,603
Total stockholders’ equity	2,973,683	2,679,800
Total liabilities and stockholders’ equity	$ 14,359,096	$ 13,586,610

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock, par value (dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (shares)	4,990,000,000	4,990,000,000
Common stock, shares issued (shares)	430,993,429	430,054,212
Common stock, shares outstanding (shares)	430,993,429	430,054,212

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	Basis of Presentation and Summary of Significant Accounting Policies The accompanying interim consolidated financial statements of Netflix, Inc. and its wholly owned subsidiaries (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on January 27, 2017. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the streaming content asset amortization policy; 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. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Interim results are not necessarily indicative of the results for a full year. The Company has three reportable segments: Domestic streaming, International streaming and Domestic DVD, all of which derive revenue from monthly membership fees. See Note 10 for further detail on the Company's segments. There have been no material changes in the Company’s significant accounting policies, other than the adoption of Accounting Standards Update ("ASU") 2016-09 described below and in Note 9, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . In March 2016, the Financial Accounting Standards Board ("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. Under the new standard, all excess tax benefits and tax deficiencies are recorded as a component of the provision for income taxes in the reporting period in which they occur. Additionally, ASU 2016-09 requires that the Company present excess tax benefits on the Statement of Cash Flows as an operating activity. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016. The Company adopted ASU 2016-09 in the first quarter of 2017 and elected to apply this adoption prospectively. Prior periods have not been adjusted. See Note 9 for information regarding the impact on the Company’s financial statements. In May 2014, the FASB issued 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. Because the Company's primary source of revenues is from monthly membership fees which are recognized ratably over each monthly membership period, 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. Although the Company is in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements, the Company currently believes the most significant changes will be related to the recognition of new right-of-use assets and lease liabilities on the Company's balance sheet for real estate operating leases. 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, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented and early adoption is permitted. The Company will adopt ASU 2016-18 in the first quarter of 2018 and does not expect the impact on its consolidated financial statements to be material.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
Earnings Per Share	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. The computation of earnings per share is as follows: Three Months Ended March 31, March 31, (in thousands, except per share data) Basic earnings per share: Net income $ 178,222 $ 27,658 Shares used in computation: Weighted-average common shares outstanding 430,600 428,117 Basic earnings per share $ 0.41 $ 0.06 Diluted earnings per share: Net income $ 178,222 $ 27,658 Shares used in computation: Weighted-average common shares outstanding 430,600 428,117 Employee stock options 14,858 9,876 Weighted-average number of shares 445,458 437,993 Diluted earnings per share $ 0.40 $ 0.06 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: Three Months Ended March 31, March 31, (in thousands) Employee stock options 237 1,337

Short-term Investments

Short-term Investments	3 Months Ended
	Mar. 31, 2017
Short-Term Investments And Fair Value Measurement [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 investment 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, the category using the fair value hierarchy and where they are classified on the Consolidated Balance Sheets: As of March 31, 2017 Amortized Gross Gross Estimated Cash and cash equivalents Short-term investments Non-current assets (1) (in thousands) Cash $ 1,073,756 $ — $ — $ 1,073,756 $ 1,070,361 $ — $ 3,395 Level 1 securities: Money market funds 8,730 — 8,730 7,463 — 1,267 Level 2 securities: Corporate debt securities 204,507 177 (592 ) 204,092 — 204,092 — Government securities 35,925 — (142 ) 35,783 — 35,783 — Certificates of deposit/commercial paper 2,180 — — 2,180 2,180 Agency securities 21,566 — (216 ) 21,350 — 21,350 — Total $ 1,346,664 $ 177 $ (950 ) $ 1,345,891 $ 1,077,824 $ 263,405 $ 4,662 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 — Certificates 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 (1) Primarily restricted cash that is related to workers compensation deposits and letter of credit agreements. Fair value is a market-based measurement that is determined based on the assumptions that market participants would use in pricing an asset or liability. The hierarchy level assigned to each security in the Company’s available-for-sale portfolio and cash equivalents is based on its assessment of the transparency and reliability of the inputs used in the valuation of such instrument at the measurement date. The fair value of available-for-sale securities and cash equivalents included in the Level 1 category is based on quoted prices that are readily and regularly available in an active market. The fair value of available-for-sale securities included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. These values were obtained from an independent pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established independent pricing vendors and broker-dealers. The Company's procedures include controls to ensure that appropriate fair values are recorded, such as comparing prices obtained from multiple independent sources. See Note 5 to the consolidated financial statements for further information regarding the fair value of the Company’s senior notes. Because the Company does not intend to sell the investments that are in an unrealized loss position and it is not likely that the Company will be required to sell any investments before recovery of their amortized cost basis, the Company does not consider those investments with an unrealized loss to be other-than-temporarily impaired at March 31, 2017 or December 31, 2016 , respectively. There were no material other-than-temporary impairments or credit losses related to available-for-sale securities in the three months ended March 31, 2017 and 2016 , respectively. In addition, there were no material gross realized gains or losses in the three months ended March 31, 2017 and 2016 , respectively. The estimated fair value of short-term investments by contractual maturity as of March 31, 2017 is as follows: (in thousands) Due within one year $ 37,228 Due after one year and through five years 226,177 Total short-term investments $ 263,405

Balance Sheet Components

Balance Sheet Components	3 Months Ended
	Mar. 31, 2017
Balance Sheet Components Disclosure [Abstract]
Balance Sheet Components	Balance Sheet Components Content Assets Content assets consisted of the following: As of March 31, December 31, (in thousands) Licensed content, net $ 10,330,305 $ 9,595,315 Produced content, net Released, less amortization 473,054 335,400 In production 1,146,982 1,010,463 In development 82,980 34,215 1,703,016 1,380,078 DVD, net 22,406 25,415 Total $ 12,055,727 $ 11,000,808 Current content assets, net $ 4,026,615 $ 3,726,307 Non-current content assets, net $ 8,029,112 $ 7,274,501 Produced content is included in "Non-current content assets, net" on the Consolidated Balance Sheets. Certain original content is licensed and therefore not included in produced content. Of the produced content that has been released, approximately 28% and 79% is expected to be amortized over the next twelve and thirty-six months, respectively, and over 80% is expected to be amortized over the next forty-eight months. 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 March 31, December 31, Estimated Useful Lives (in thousands) Information technology assets $ 204,331 $ 185,345 3 years Furniture and fixtures 41,899 32,185 3 years Buildings 40,681 40,681 30 years Leasehold improvements 198,386 107,945 Over life of lease DVD operations equipment 70,151 70,152 5 years Capital work-in-progress 11,235 108,296 Property and equipment, gross 566,683 544,604 Less: Accumulated depreciation (291,600 ) (294,209 ) Property and equipment, net $ 275,083 $ 250,395 The decrease 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 were placed into operation in the first quarter of 2017.

Long-term Debt

Long-term Debt	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Long-term Debt	Long-term Debt As of March 31, 2017 , the Company had aggregate outstanding long-term debt of $3,365.4 million , net of $34.6 million of issuance costs, 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 Notes and the fair values based on quoted market prices in less active markets as of March 31, 2017 and December 31, 2016 : Level 2 Fair Value as of Principal Amount at Par Issuance Date Maturity Interest Payment Dates March 31, 2017 December 31, 2016 (in millions) (in millions) 4.375% Senior Notes $ 1,000 October 2016 2026 May 15 and November 15 $ 986 $ 975 5.50% Senior Notes 700 February 2015 2022 April 15 and October 15 745 758 5.875% Senior Notes 800 February 2015 2025 April 15 and October 15 860 868 5.750% Senior Notes 400 February 2014 2024 March 1 and September 1 429 431 5.375% Senior Notes 500 February 2013 2021 February 1 and August 1 535 539 $ 3,400 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 March 31, 2017 and December 31, 2016 , the Company was in compliance with all related covenants.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Streaming Content As of March 31, 2017 , the Company had $15.3 billion of obligations comprised of $3.9 billion included in "Current content liabilities" and $3.0 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $8.4 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition. As of 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 did not yet meet the criteria for asset recognition. The expected timing of payments for these streaming content obligations is as follows: As of March 31, December 31, (in thousands) Less than one year $ 6,599,754 $ 6,200,611 Due after one year and through three years 6,939,847 6,731,336 Due after three years and through five years 1,562,941 1,386,934 Due after five years 187,592 160,606 Total streaming content obligations $ 15,290,134 $ 14,479,487 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 the 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 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. 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. Indemnification In the ordinary course of business, the Company has entered into contractual arrangements under which it has agreed to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. The Company's obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary. It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. No amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2017
Stockholders' Equity and Stock-based Compensation Disclosure [Abstract]
Stockholders' Equity	Stockholders’ Equity Stock Option Plan In June 2011, the Company adopted the 2011 Stock Plan. The 2011 Stock Plan provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants. As of March 31, 2017 , 12.6 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 is as follows: Options Outstanding Shares Number of Weighted- (per share) Weighted-Average Remaining Aggregate Balances as of December 31, 2016 13,289,953 22,437,347 $ 44.83 Granted (719,874 ) 719,874 136.82 Exercised — (939,217 ) 26.69 Expired — (1,561 ) $ 3.25 Balances as of March 31, 2017 12,570,079 22,216,443 $ 48.58 6.1 $ 2,204,541 Vested and exercisable as of March 31, 2017 22,216,443 $ 48.58 6.1 $ 2,204,541 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the first quarter of 2017 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 the first quarter of 2017 . This amount changes based on the fair market value of the Company’s common stock. A summary of the amounts related to option exercises, is as follows: Three Months Ended March 31, March 31, (in thousands) Total intrinsic value of options exercised $ 107,097 $ 31,457 Cash received from options exercised $ 24,178 $ 3,536 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: Three Months Ended March 31, March 31, Dividend yield — % — % Expected volatility 37 % 50 % Risk-free interest rate 2.45 % 2.04 % Suboptimal exercise factor 2.48 2.48 Weighted-average fair value (per share) $ 62.36 $ 50.76 Total stock-based compensation expense (in thousands) $ 44,888 $ 42,422 Total income tax impact on provision (in thousands) $ 14,701 $ 15,963 The Company considers several factors in determining the suboptimal exercise factor, including the historical and estimated option exercise behavior. The Company calculates expected volatility 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.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	3 Months Ended
	Mar. 31, 2017
Equity [Abstract]
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss The following table summarizes the changes in the accumulated balance of other comprehensive income (loss), net of tax, for the three months ended March 31, 2017 : Foreign currency Change in unrealized gains on available-for-sale securities Total (in thousands) Balance as of December 31, 2016 $ (47,966 ) $ (599 ) $ (48,565 ) Other comprehensive income before reclassifications 2,579 127 2,706 Net decrease in other comprehensive loss 2,579 127 2,706 Balance as of March 31, 2017 $ (45,387 ) $ (472 ) $ (45,859 ) The amounts reclassified from accumulated other comprehensive loss were immaterial for the three months ended March 31, 2017 .

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The effective tax rates for the three months ended March 31, 2017 and 2016 were 20% and 31% , respectively. The effective tax rate for the three months ended March 31, 2017 differed from the Federal statutory rate primarily due to the recognition of excess tax benefits as a component of the provision for income taxes attributable to the adoption of ASU 2016-09 and Federal and California research and development ("R&D") credits offset by state taxes, foreign taxes and non-deductible expenses. The effective tax rate for the three months ended March 31, 2016 differed from the Federal statutory rate primarily due to Federal and California R&D credits partially offset by state taxes, foreign taxes and non-deductible expenses. The decrease in effective tax rate for the three months ended March 31, 2017 as compared to the same period in 2016 was due primarily to the recognition of excess tax benefits attributable to the adoption of ASU 2016-09 in the first quarter of 2017. Gross unrecognized tax benefits were $30.7 million and $19.7 million as of March 31, 2017 and December 31, 2016 , respectively. The gross unrecognized tax benefits, if recognized by the Company, will result in a reduction of approximately $27.3 million to the provision for income taxes thereby favorably impacting the Company’s effective tax rate. As of March 31, 2017 , the Company had identified gross unrecognized tax benefits of $ 30.7 million , of which $12.8 million was classified as “Other non-current liabilities” and $17.9 million as a reduction to deferred tax assets which was classified as "Other non-current assets" in the Consolidated Balance Sheets. The Company includes interest and penalties related to unrecognized tax benefits within the "Provision for income taxes" on the Consolidated Statements of Operations and “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 any of the periods presented. Deferred tax assets include $297.6 million and $227.2 million classified as “Other non-current assets” on the Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 , respectively. In evaluating its ability to realize the net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of March 31, 2017 , the Company has a valuation allowance of $23.5 million primarily due to foreign tax credit carryovers. As of December 31, 2016 , it was considered more likely than not that substantially all deferred tax assets would be realized. As a result of the adoption of ASU 2016-09 in the first quarter of 2017, the Company recorded a cumulative effect adjustment to increase retained earnings by $43.6 million with a corresponding increase to deferred tax assets for the Federal and state net operating losses attributable to excess tax benefits from stock-based compensation which had not been previously recognized. All excess tax benefits and deficiencies in the current and future periods will be recognized as income tax expense in the Company’s Consolidated Statement of Operations in the reporting period in which they occur. This will result in increased volatility in the Company’s effective tax rate. For the three months ended March 31, 2017, the Company recognized a discrete tax benefit of $36.0 million related to the excess tax benefits. The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS for 2014 and 2015. The 2008 through 2015 state tax returns are subject to examination by state tax authorities. The Company has no significant foreign jurisdiction audits underway. The years 2011 through 2016 remain subject to examination by foreign tax authorities. 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. At this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be made.

Segment Information

Segment Information	3 Months Ended
	Mar. 31, 2017
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 revenues 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 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 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 include 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 marketing partners, including consumer electronics ("CE") manufacturers, multichannel video programming distributors ("MVPDs"), mobile operators and internet service providers ("ISPs"), 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 March 31, December 31, 2016 (in thousands) United States $ 257,091 $ 236,977 International 17,992 13,418 The following table represents segment information for the three months ended March 31, 2017 : As of/Three Months Ended March 31, 2017 Domestic International Domestic Consolidated (in thousands) Total memberships at end of period (1) 50,854 47,894 3,944 — Revenues $ 1,470,042 $ 1,046,199 $ 120,394 $ 2,636,635 Cost of revenues 749,488 847,317 60,219 1,657,024 Marketing 115,038 156,232 — 271,270 Contribution profit $ 605,516 $ 42,650 $ 60,175 $ 708,341 Other operating expenses 451,399 Operating income 256,942 Other income (expense) (33,150 ) Provision for income taxes 45,570 Net income $ 178,222 The following table represents segment information for the three months ended March 31, 2016 : As of/Three Months Ended March 31, 2016 Domestic International Domestic Consolidated (in thousands) Total memberships at end of period (1) 46,967 34,533 4,741 — Revenues $ 1,161,241 $ 651,748 $ 144,747 $ 1,957,736 Cost of revenues 666,546 629,899 73,095 1,369,540 Marketing 81,942 126,068 — 208,010 Contribution profit (loss) $ 412,753 $ (104,219 ) $ 71,652 $ 380,186 Other operating expenses 330,733 Operating income 49,453 Other income (expense) (9,574 ) Provision for income taxes 12,221 Net income $ 27,658 The following table represents the amortization of content assets: Domestic Streaming International Streaming Domestic DVD Consolidated (in thousands) Three months ended March 31, 2017 $ 608,748 $ 696,935 $ 18,598 $ 1,324,281 2016 530,739 527,782 20,441 1,078,962 (1) A membership (also referred to as a subscription or a member) is defined as the right to receive 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 the Company's internal systems, which utilize industry standard geo-location technology. The Company offers 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 the Company's banks or integrated payment partners. The number of members in a grace period at any given point is not material.

Basis of Presentation and Sum18

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Use of Estimates	The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the streaming content asset amortization policy; 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. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates.
New Accounting Pronouncements	In March 2016, the Financial Accounting Standards Board ("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. Under the new standard, all excess tax benefits and tax deficiencies are recorded as a component of the provision for income taxes in the reporting period in which they occur. Additionally, ASU 2016-09 requires that the Company present excess tax benefits on the Statement of Cash Flows as an operating activity. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016. The Company adopted ASU 2016-09 in the first quarter of 2017 and elected to apply this adoption prospectively. Prior periods have not been adjusted. See Note 9 for information regarding the impact on the Company’s financial statements. In May 2014, the FASB issued 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. Because the Company's primary source of revenues is from monthly membership fees which are recognized ratably over each monthly membership period, 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. Although the Company is in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements, the Company currently believes the most significant changes will be related to the recognition of new right-of-use assets and lease liabilities on the Company's balance sheet for real estate operating leases. 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, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented and early adoption is permitted. The Company will adopt ASU 2016-18 in the first quarter of 2018 and does not expect the impact on its consolidated financial statements to be material.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
Computation of Earnings Per Share	The computation of earnings per share is as follows: Three Months Ended March 31, March 31, (in thousands, except per share data) Basic earnings per share: Net income $ 178,222 $ 27,658 Shares used in computation: Weighted-average common shares outstanding 430,600 428,117 Basic earnings per share $ 0.41 $ 0.06 Diluted earnings per share: Net income $ 178,222 $ 27,658 Shares used in computation: Weighted-average common shares outstanding 430,600 428,117 Employee stock options 14,858 9,876 Weighted-average number of shares 445,458 437,993 Diluted earnings per share $ 0.40 $ 0.06
Summary of Potential Common Shares Excluded from Diluted Calculation	The following table summarizes the potential common shares excluded from the diluted calculation: Three Months Ended March 31, March 31, (in thousands) Employee stock options 237 1,337

Short-term Investments (Tables)

Short-term Investments (Tables)	3 Months Ended
	Mar. 31, 2017
Short-Term Investments And Fair Value Measurement [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, the category using the fair value hierarchy and where they are classified on the Consolidated Balance Sheets: As of March 31, 2017 Amortized Gross Gross Estimated Cash and cash equivalents Short-term investments Non-current assets (1) (in thousands) Cash $ 1,073,756 $ — $ — $ 1,073,756 $ 1,070,361 $ — $ 3,395 Level 1 securities: Money market funds 8,730 — 8,730 7,463 — 1,267 Level 2 securities: Corporate debt securities 204,507 177 (592 ) 204,092 — 204,092 — Government securities 35,925 — (142 ) 35,783 — 35,783 — Certificates of deposit/commercial paper 2,180 — — 2,180 2,180 Agency securities 21,566 — (216 ) 21,350 — 21,350 — Total $ 1,346,664 $ 177 $ (950 ) $ 1,345,891 $ 1,077,824 $ 263,405 $ 4,662 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 — Certificates 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 (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 March 31, 2017 is as follows: (in thousands) Due within one year $ 37,228 Due after one year and through five years 226,177 Total short-term investments $ 263,405

Balance Sheet Components (Table

Balance Sheet Components (Tables)	3 Months Ended
	Mar. 31, 2017
Balance Sheet Components Disclosure [Abstract]
Content Assets	Content assets consisted of the following: As of March 31, December 31, (in thousands) Licensed content, net $ 10,330,305 $ 9,595,315 Produced content, net Released, less amortization 473,054 335,400 In production 1,146,982 1,010,463 In development 82,980 34,215 1,703,016 1,380,078 DVD, net 22,406 25,415 Total $ 12,055,727 $ 11,000,808 Current content assets, net $ 4,026,615 $ 3,726,307 Non-current content assets, net $ 8,029,112 $ 7,274,501
Property and Equipment, Net	Property and equipment and accumulated depreciation consisted of the following: As of March 31, December 31, Estimated Useful Lives (in thousands) Information technology assets $ 204,331 $ 185,345 3 years Furniture and fixtures 41,899 32,185 3 years Buildings 40,681 40,681 30 years Leasehold improvements 198,386 107,945 Over life of lease DVD operations equipment 70,151 70,152 5 years Capital work-in-progress 11,235 108,296 Property and equipment, gross 566,683 544,604 Less: Accumulated depreciation (291,600 ) (294,209 ) Property and equipment, net $ 275,083 $ 250,395

Long-term Debt (Tables)

Long-term Debt (Tables)	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Summary of Long-term Debt	The following table provides a summary of the Company's Notes and the fair values based on quoted market prices in less active markets as of March 31, 2017 and December 31, 2016 : Level 2 Fair Value as of Principal Amount at Par Issuance Date Maturity Interest Payment Dates March 31, 2017 December 31, 2016 (in millions) (in millions) 4.375% Senior Notes $ 1,000 October 2016 2026 May 15 and November 15 $ 986 $ 975 5.50% Senior Notes 700 February 2015 2022 April 15 and October 15 745 758 5.875% Senior Notes 800 February 2015 2025 April 15 and October 15 860 868 5.750% Senior Notes 400 February 2014 2024 March 1 and September 1 429 431 5.375% Senior Notes 500 February 2013 2021 February 1 and August 1 535 539 $ 3,400

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Expected Timing of Payments for Commitments	The expected timing of payments for these streaming content obligations is as follows: As of March 31, December 31, (in thousands) Less than one year $ 6,599,754 $ 6,200,611 Due after one year and through three years 6,939,847 6,731,336 Due after three years and through five years 1,562,941 1,386,934 Due after five years 187,592 160,606 Total streaming content obligations $ 15,290,134 $ 14,479,487

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	3 Months Ended
	Mar. 31, 2017
Stockholders' Equity and Stock-based Compensation Disclosure [Abstract]
Summary of Activity Related to Stock Option Plans	A summary of the activities related to the Company’s stock option plans is as follows: Options Outstanding Shares Number of Weighted- (per share) Weighted-Average Remaining Aggregate Balances as of December 31, 2016 13,289,953 22,437,347 $ 44.83 Granted (719,874 ) 719,874 136.82 Exercised — (939,217 ) 26.69 Expired — (1,561 ) $ 3.25 Balances as of March 31, 2017 12,570,079 22,216,443 $ 48.58 6.1 $ 2,204,541 Vested and exercisable as of March 31, 2017 22,216,443 $ 48.58 6.1 $ 2,204,541
Summary of Amounts Related to Option Exercises	A summary of the amounts related to option exercises, is as follows: Three Months Ended March 31, March 31, (in thousands) Total intrinsic value of options exercised $ 107,097 $ 31,457 Cash received from options exercised $ 24,178 $ 3,536
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: Three Months Ended March 31, March 31, Dividend yield — % — % Expected volatility 37 % 50 % Risk-free interest rate 2.45 % 2.04 % Suboptimal exercise factor 2.48 2.48 Weighted-average fair value (per share) $ 62.36 $ 50.76 Total stock-based compensation expense (in thousands) $ 44,888 $ 42,422 Total income tax impact on provision (in thousands) $ 14,701 $ 15,963

Accumulated Other Comprehensi25

Accumulated Other Comprehensive Loss (Tables)	3 Months Ended
	Mar. 31, 2017
Equity [Abstract]
Schedule of Changes in Accumulated Other Comprehensive Income (Loss)	The following table summarizes the changes in the accumulated balance of other comprehensive income (loss), net of tax, for the three months ended March 31, 2017 : Foreign currency Change in unrealized gains on available-for-sale securities Total (in thousands) Balance as of December 31, 2016 $ (47,966 ) $ (599 ) $ (48,565 ) Other comprehensive income before reclassifications 2,579 127 2,706 Net decrease in other comprehensive loss 2,579 127 2,706 Balance as of March 31, 2017 $ (45,387 ) $ (472 ) $ (45,859 )

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2017
Segment Reporting [Abstract]
Long-lived Assets by Geographic Areas	The Company's long-lived tangible assets were located as follows: As of March 31, December 31, 2016 (in thousands) United States $ 257,091 $ 236,977 International 17,992 13,418
Information on Reportable Segments And Reconciliation To Consolidated Net Income	The following table represents segment information for the three months ended March 31, 2017 : As of/Three Months Ended March 31, 2017 Domestic International Domestic Consolidated (in thousands) Total memberships at end of period (1) 50,854 47,894 3,944 — Revenues $ 1,470,042 $ 1,046,199 $ 120,394 $ 2,636,635 Cost of revenues 749,488 847,317 60,219 1,657,024 Marketing 115,038 156,232 — 271,270 Contribution profit $ 605,516 $ 42,650 $ 60,175 $ 708,341 Other operating expenses 451,399 Operating income 256,942 Other income (expense) (33,150 ) Provision for income taxes 45,570 Net income $ 178,222 The following table represents segment information for the three months ended March 31, 2016 : As of/Three Months Ended March 31, 2016 Domestic International Domestic Consolidated (in thousands) Total memberships at end of period (1) 46,967 34,533 4,741 — Revenues $ 1,161,241 $ 651,748 $ 144,747 $ 1,957,736 Cost of revenues 666,546 629,899 73,095 1,369,540 Marketing 81,942 126,068 — 208,010 Contribution profit (loss) $ 412,753 $ (104,219 ) $ 71,652 $ 380,186 Other operating expenses 330,733 Operating income 49,453 Other income (expense) (9,574 ) Provision for income taxes 12,221 Net income $ 27,658 The following table represents the amortization of content assets: Domestic Streaming International Streaming Domestic DVD Consolidated (in thousands) Three months ended March 31, 2017 $ 608,748 $ 696,935 $ 18,598 $ 1,324,281 2016 530,739 527,782 20,441 1,078,962 (1) A membership (also referred to as a subscription or a member) is defined as the right to receive 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 the Company's internal systems, which utilize industry standard geo-location technology. The Company offers 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 the Company's banks or integrated payment partners. The number of members in a grace period at any given point is not material.

Basis of Presentation and Sum27

Basis of Presentation and Summary of Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2017segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	3

Earnings Per Share - Computatio

Earnings Per Share - Computation of Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Basic earnings per share:
Net income	$ 178,222	$ 27,658
Weighted-average common shares outstanding (in shares)	430,600	428,117
Basic earnings per share (in dollars per share)	$ 0.41	$ 0.06
Diluted earnings per share:
Net income	$ 178,222	$ 27,658
Shares used in computation:
Weighted-average common shares outstanding (in shares)	430,600	428,117
Employee stock options (in shares)	14,858	9,876
Weighted-average number of shares (in shares)	445,458	437,993
Diluted earnings per share (in dollars per share)	$ 0.40	$ 0.06

Earnings Per Share - Schedule o

Earnings Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Employee stock options (in shares)	237	1,337

Short-term Investments - Availa

Short-term Investments - Available-For-Sale Securities Reported At Fair Value (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Other than temporary impairment losses, investments, available-for-sale securities		$ 0	$ 0
Available-for-sale securities, gross realized gain (loss), excluding other than temporary impairments		0	$ 0
Level 1 Securities | Money market funds
Schedule of Available-for-sale Securities [Line Items]
Cash and Money Market Funds, Estimated Fair Value		8,730		$ 204,967
Level 2 Securities | Certificates of deposit/commercial
Schedule of Available-for-sale Securities [Line Items]
Level 2 securities, Estimated Fair Value				9,833
Cash
Schedule of Available-for-sale Securities [Line Items]
Cash and Money Market Funds, Estimated Fair Value		1,073,756		1,267,523
Fair Value, Measurements, Recurring
Schedule of Available-for-sale Securities [Line Items]
Level 2 securities, Gross Unrealized Gains		177		110
Level 2 securities, Gross Unrealized Losses		(950)		(1,087)
Total, amortized cost		1,346,664		1,739,673
Total, estimated fair value		1,345,891		1,738,696
Fair Value, Measurements, Recurring | Level 1 Securities | Money market funds
Schedule of Available-for-sale Securities [Line Items]
Cash and Money Market Funds, Amortized Cost		8,730		204,967
Cash and Money Market Funds, Estimated Fair Value		7,463		203,450
Cash, Cash Equivalents and Restricted Cash, Noncurrent Assets		1,267		1,517
Fair Value, Measurements, Recurring | Level 2 Securities | Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Level 2 securities, Amortized Cost		204,507		199,843
Level 2 securities, Gross Unrealized Gains		177		110
Level 2 securities, Gross Unrealized Losses		(592)		(731)
Level 2 securities, Estimated Fair Value		204,092		199,222
Fair Value, Measurements, Recurring | Level 2 Securities | Government securities
Schedule of Available-for-sale Securities [Line Items]
Level 2 securities, Amortized Cost		35,925		35,944
Level 2 securities, Gross Unrealized Losses		(142)		(128)
Level 2 securities, Estimated Fair Value		35,783		35,816
Fair Value, Measurements, Recurring | Level 2 Securities | Certificates of deposit/commercial
Schedule of Available-for-sale Securities [Line Items]
Level 2 securities, Amortized Cost		2,180		9,833
Level 2 securities, Estimated Fair Value		2,180		9,833
Fair Value, Measurements, Recurring | Level 2 Securities | Agency securities
Schedule of Available-for-sale Securities [Line Items]
Level 2 securities, Amortized Cost		21,566		21,563
Level 2 securities, Gross Unrealized Losses		(216)		(228)
Level 2 securities, Estimated Fair Value		21,350		21,335
Fair Value, Measurements, Recurring | Cash
Schedule of Available-for-sale Securities [Line Items]
Cash and Money Market Funds, Amortized Cost		1,073,756		1,267,523
Cash and Money Market Funds, Estimated Fair Value		1,070,361		1,264,126
Cash, Cash Equivalents and Restricted Cash, Noncurrent Assets		3,395		3,397
Cash and Cash Equivalents | Fair Value, Measurements, Recurring
Schedule of Available-for-sale Securities [Line Items]
Total, estimated fair value		1,077,824		1,467,576
Short-term Investments | Fair Value, Measurements, Recurring
Schedule of Available-for-sale Securities [Line Items]
Total, estimated fair value		263,405		266,206
Non-current Assets | Fair Value, Measurements, Recurring
Schedule of Available-for-sale Securities [Line Items]
Total, estimated fair value	[1]	$ 4,662		$ 4,914
[1]	Primarily restricted cash that is related to workers compensation deposits and letter of credit agreements.

Short-term Investments - Estima

Short-term Investments - Estimated Fair Value Of Short-Term Investments By Contractual Maturity (Details) $ in Thousands	Mar. 31, 2017USD ($)
Short-Term Investments And Fair Value Measurement [Abstract]
Due within one year	$ 37,228
Due after one year and through five years	226,177
Total short-term investments	$ 263,405

Balance Sheet Components - Comp

Balance Sheet Components - Components of Content Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Content assets, net	$ 12,055,727	$ 11,000,808
Current content assets, net	4,026,615	3,726,307
Non-current content assets, net	8,029,112	7,274,501
Licensed content
Finite-Lived Intangible Assets [Line Items]
Net content	10,330,305	9,595,315
Produced content
Finite-Lived Intangible Assets [Line Items]
Net content	473,054	335,400
In production	1,146,982	1,010,463
In development	82,980	34,215
Content assets, net	$ 1,703,016	1,380,078
Produced content amortization percentage over one year	28.00%
Produced content amortization percent over three years	79.00%
Produced content amortization period over the next 48 months (more than)	80.00%
DVD
Finite-Lived Intangible Assets [Line Items]
Content assets, net	$ 22,406	$ 25,415

Balance Sheet Components - Prop

Balance Sheet Components - Property And Equipment And Accumulated Depreciation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 566,683	$ 544,604
Less: Accumulated depreciation	(291,600)	(294,209)
Property and equipment, net	275,083	250,395
Accrued participation liabilities, due in next operating cycle	0
Information technology assets
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 204,331	185,345
Estimated Useful Lives	3 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 41,899	32,185
Estimated Useful Lives	3 years
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 40,681	40,681
Estimated Useful Lives	30 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 198,386	107,945
DVD operations equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 70,151	70,152
Estimated Useful Lives	5 years
Capital work-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 11,235	$ 108,296

Long-term Debt - Narrative (Det

Long-term Debt - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Aggregate outstanding principal	$ 3,365,431	$ 3,364,311
Debt issuance cost	$ 34,600
Senior Notes
Debt Instrument [Line Items]
Redemption prices, percent of outstanding principal	101.00%

Long-term Debt - Summary of Lon

Long-term Debt - Summary of Long-term Debt (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Principal amount at par	$ 3,400,000,000
Senior Notes | 4.375% Senior Notes
Debt Instrument [Line Items]
Principal amount at par	1,000,000,000
Fair value	$ 986,000,000	$ 975,000,000
Interest rate	4.375%
Senior Notes | 5.50% Senior Notes
Debt Instrument [Line Items]
Principal amount at par	$ 700,000,000
Fair value	$ 745,000,000	758,000,000
Interest rate	5.50%
Senior Notes | 5.875% Senior Notes
Debt Instrument [Line Items]
Principal amount at par	$ 800,000,000
Fair value	$ 860,000,000	868,000,000
Interest rate	5.875%
Senior Notes | 5.750% Senior Notes
Debt Instrument [Line Items]
Principal amount at par	$ 400,000,000
Fair value	$ 429,000,000	431,000,000
Interest rate	5.75%
Senior Notes | 5.375% Senior Notes
Debt Instrument [Line Items]
Principal amount at par	$ 500,000,000
Fair value	$ 535,000,000	$ 539,000,000
Interest rate	5.375%

Commitments and Contingencies -

Commitments and Contingencies - Streaming Content - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Contractual Obligation [Line Items]
Streaming obligations included in current content liabilities	$ 15,290,134	$ 14,479,487
Streaming obligations not reflected on Consolidated Balance Sheets	8,400,000	8,000,000
Current Content Liabilities
Contractual Obligation [Line Items]
Streaming obligations included in non-current content liabilities	3,900,000	3,600,000
Non-current Content Liabilities
Contractual Obligation [Line Items]
Streaming obligations included in non-current content liabilities	$ 3,000,000	$ 2,900,000

Commitments and Contingencies37

Commitments and Contingencies - Expected Timing of Payments for Commitments (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Less than one year	$ 6,599,754	$ 6,200,611
Due after one year and through three years	6,939,847	6,731,336
Due after three years and through five years	1,562,941	1,386,934
Due after five years	187,592	160,606
Total streaming content obligations	$ 15,290,134	$ 14,479,487

Commitments and Contingencies38

Commitments and Contingencies - Legal Proceedings - Narrative (Details)	Mar. 31, 2017USD ($)
Commitments and Contingencies Disclosure [Abstract]
Commitments and contingencies	$ 0

Stockholders' Equity (Narrative

Stockholders' Equity (Narrative) (Details) shares in Millions	Mar. 31, 2017shares
2011 Stock Plan
Components of Stockholders' Equity [Line Items]
Shares reserved for future issuance	12.6

Stockholders' Equity - Summary

Stockholders' Equity - Summary of Activity Related to Stock Option Plans (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Shares available for grant, beginning balance	13,289,953
Options outstanding, number of shares, beginning balance	22,437,347
Shares available for grant, granted	(719,874)
Options outstanding, number of shares, exercised	(939,217)
Shares available for grant, expired	(1,561)
Options outstanding, number of shares, ending balance	22,216,443
Shares available for grant, ending balance	12,570,079
Options vested and exercisable, number of shares, ending balance	22,216,443
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Options outstanding, weighted-average exercise price, beginning balance (dollars per share) | $ / shares	$ 44.83
Options outstanding, weighted-average exercise price, granted (dollars per share) | $ / shares	136.82
Options outstanding, weighted-average exercise price, exercised (dollars per share) | $ / shares	26.69
Options outstanding, weighted-average exercise price, canceled (dollars per share) | $ / shares	3.25
Options outstanding, weighted-average exercise price, ending balance (dollars per share) | $ / shares	48.58
Options outstanding, weighted-average exercise price, vested and exercisable (dollars per share) | $ / shares	$ 48.58
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted-average remaining contractual term, ending balance (in years)	6 years 1 month 6 days
Weighted-average remaining contractual term, vested and exercisable (in years)	6 years 1 month 6 days
Aggregate intrinsic value, ending balance | $	$ 2,204,541
Aggregate intrinsic value, vested and exercisable | $	$ 2,204,541

Stockholders' Equity - Summar41

Stockholders' Equity - Summary of Amounts Related to Option Exercises (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Equity [Abstract]
Total intrinsic value of options exercised	$ 107,097	$ 31,457
Cash received from options exercised	$ 24,178	$ 3,536

Stockholders' Equity - Summar42

Stockholders' Equity - Summary of Assumptions Used to Value Stock Option Grants Using Lattice-Binomial Model (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)$ / shares	Mar. 31, 2016USD ($)$ / shares
Stockholders' Equity and Stock-based Compensation Disclosure [Abstract]
Share-based payment award, expiration period (in years)	10 years
Dividend yield	0.00%	0.00%
Expected volatility	37.00%	50.00%
Risk-free interest rate	2.45%	2.04%
Suboptimal exercise factor	2.48	2.48
Weighted-average fair value (in dollars per share) | $ / shares	$ 62.36	$ 50.76
Stock-based compensation expense	$ 44,888	$ 42,422
Total income tax impact on provision (in thousands)	$ 14,701	$ 15,963

Accumulated Other Comprehensi43

Accumulated Other Comprehensive Loss (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	$ 2,679,800
Ending Balance	2,973,683
Foreign currency
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(47,966)
Other comprehensive income (loss) before reclassifications	2,579
Net decrease (increase) in other comprehensive loss	2,579
Ending Balance	(45,387)
Change in unrealized gains on available-for-sale securities
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(599)
Other comprehensive income (loss) before reclassifications	127
Net decrease (increase) in other comprehensive loss	127
Ending Balance	(472)
AOCI Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance	(48,565)
Other comprehensive income (loss) before reclassifications	2,706
Net decrease (increase) in other comprehensive loss	2,706
Ending Balance	$ (45,859)

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Effective tax rates	20.00%	31.00%
Income Tax Contingency [Line Items]
Unrecognized tax benefits	$ 30.7		$ 19.7
Reduction in provision for income taxes due to impact of effective tax rate	27.3
Deferred tax assets classified as other non-current assets	297.6		$ 227.2
Deferred tax assets, valuation allowance	23.5
Other Noncurrent Liabilities
Income Tax Contingency [Line Items]
Increase in unrecognized tax benefits is reasonably possible	12.8
Other Noncurrent Assets
Income Tax Contingency [Line Items]
Unrecognized tax benefits	17.9
Accounting Standards Update 2016-09
Income Tax Contingency [Line Items]
Increase to deferred tax assets	43.6
Effective income tax rate reconciliation, share-based compensation, excess tax benefit	36
Retained Earnings | Accounting Standards Update 2016-09
Income Tax Contingency [Line Items]
Cumulative effect adjustment to retained earnings	$ 43.6

Segment Information - Narrativ

Segment Information - Narrative (Details)	3 Months Ended
	Mar. 31, 2017segment
Segment Reporting Information [Line Items]
Number of reportable segments	3
International Streaming
Segment Reporting Information [Line Items]
Number of reportable segments	1

Segment Information - Long-liv

Segment Information - Long-lived Assets by Geographical Areas (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived tangible assets	$ 257,091	$ 236,977
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived tangible assets	$ 17,992	$ 13,418

Segment Information - Informat

Segment Information - Information On Reportable Segments And Reconciliation To Consolidated Net Income (Details) subscription in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2017USD ($)subscription	Mar. 31, 2016USD ($)subscription
Segment Reporting Information [Line Items]
Total memberships at end of period | subscription	[1]	0	0
Revenues		$ 2,636,635	$ 1,957,736
Cost of revenues		1,657,024	1,369,540
Marketing		271,270	208,010
Contribution profit		708,341	380,186
Other operating expenses		451,399	330,733
Operating income		256,942	49,453
Other income (expense)		(33,150)	(9,574)
Provision for income taxes		45,570	12,221
Net income		178,222	27,658
Amortization of content assets		$ 1,324,281	$ 1,078,962
Domestic Streaming
Segment Reporting Information [Line Items]
Total memberships at end of period | subscription	[1]	50,854	46,967
Revenues		$ 1,470,042	$ 1,161,241
Cost of revenues		749,488	666,546
Marketing		115,038	81,942
Contribution profit		605,516	412,753
Amortization of content assets		$ 608,748	$ 530,739
International Streaming
Segment Reporting Information [Line Items]
Total memberships at end of period | subscription	[1]	47,894	34,533
Revenues		$ 1,046,199	$ 651,748
Cost of revenues		847,317	629,899
Marketing		156,232	126,068
Contribution profit		42,650	(104,219)
Amortization of content assets		$ 696,935	$ 527,782
Domestic DVD
Segment Reporting Information [Line Items]
Total memberships at end of period | subscription	[1]	3,944	4,741
Revenues		$ 120,394	$ 144,747
Cost of revenues		60,219	73,095
Marketing		0	0
Contribution profit		60,175	71,652
Amortization of content assets		$ 18,598	$ 20,441
[1]	A membership (also referred to as a subscription or a member) is defined as the right to receive 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 the Company's internal systems, which utilize industry standard geo-location technology. The Company offers 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 the Company's banks or integrated payment partners. The number of members in a grace period at any given point is not material.