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Hi Jean,

Please forgive me for not answering this sooner. Every time I sat down to do so, something else would come up and this moved further and further down the list of things to do. Thank you for your patience and your persistence.

Please have the slide show found at the bottom of the investor relations page open: (expanding the size opens a new window with slides big enough to read).

Other resources include:
10-Q for Q2: -- streaming obligations in Footnote 8, table on pg 14.
10-K for 2011: -- streaming obligations in Footnote 5, table on pg 62.

How did you decide that the current content liability from December 31,2010 was the other piece of streaming content cost in the P&L line costs of subscription? It would also have to be unamortized—is it? And if it is unamortized how did you figure that out?

On Slide 7, Netflix says that Current Content Liability on the B/S is for streaming only that is due within a year, as of the date of the B/S. I believe in the Footnotes, it broke that line item into 2 pieces, one that was streaming, one that was DVD. That line item existed on the 12/31/10 B/S and that's why I added the streaming portion to the expected cost for 2011. The cost would be unamortized at that moment in time, but then amortized evenly over time, depending on the length of time of each contract. Remember, multiple contracts are running at once, each with a different length, and therefore each with a different straight-line amortization amount per quarterly period.

But all of that is now moot. Netflix is telling us exactly how much it has to pay in the upcoming year for streaming content in the Commitments Footnote (#8, pg 14 in the latest 10-Q). In the version showed in the 10-Q (and the version showed in Slide 12), that is $2.05 B for the next year, as of 6/30/12.

This less than 1 year amount would change (that is, increase) quarter-over-quarter for two reasons. First, amounts from years 1 - 3 will flow into the <1 year category. Second, Netflix could sign new streaming contracts during a quarter that start immediately.

Bottom line is, at the end of 2011, it owed $1.71 B in streaming content costs for 2011. After one quarter of 2012, it owed $1.87 B (same table) over the subsequent 12 months. Halfway through the year, it owes $2.05 B over the next 12 months. So far this year, it seems to be adding about $170 MM a quarter to its current obligations. Use that as a run rate and you get total expected 2011 streaming expense of $2.39 B.

That entire $2.39 B (or whatever it turns out to be for 2012) will flow through the P/L as part of Cost of Subscription.

While that might or might not answer your specific question, the item that you're after -- streaming costs -- is now right there in the footnotes.

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