THE NUMBERS and estimated payment dates everyone's referring to are contained in Note 9 of the July 2011 10-Q, printed pg 11, here: http://ir.netflix.com/sec.cfm?DocType=Quarterly&Year=&FormatFilter=. It's also Note 9 in April's 10-Q. Here's a cut and paste of the expected timing of payments as of June 30, 2011 for these commitments is as follows:
(in thousands) Less than one year $ 624,545 Due after one year and through 3 years 1,363,510 Due after 3 years and through 5 years 440,239 Due after 5 years 8,467
Total streaming content obligations $ 2,436,761
The Note's effect is unclear to me: are these expense numbers minimums or estimates? The numbers went up between 1Q's Note 9 and 2Q's Note 9 and are higher yet in Credit Suisse's Sept 29 research report -- does that mean these numbers are climbing minimums, or might they be adjusted downward later if, say, fewer NFLX users watch the expanded content? Basically, does incurring these expenses provide NFLX with any additional revenue to offset them, or are these expenses just being incurred to make their library bigger and hoping that the bigger (presumably cooler) library attracts enough new clients to offset its cost of acquisition? What happens if the expanding library doesn't attract as many new clients as expected?