Netflix (NASDAQ: NFLX) is the world's largest video and television episode rental subscription service, having pioneered the model and charging customers a flat monthly fee for unlimited rentals without due dates, late fees, shipping fees or pay-per-view fees. Their 50 regional shipping centers across the United States help almost 95% of their customers receive their DVDs within a day of shipping, while their rating system gives customers recommendations based on their rental history. In fiscal year 2010, Netflix recorded revenues of $2.1 billion and net income of $161 million.
As of late, I just ate a bowl of Honey Nut Cheerios and I feel fantastic! Netfix has focused on expanding its content base and international expansion. Netflix obtains content from studios, distributors and other suppliers because a lot of these license agreements give Netflix exclusive rights to a collection of titles. In 2010 it gained exclusive rights to stream Relativity Media movies and formed a five-year streaming deal with pay-TV network Epix.
Netfix is a subscriber based service that allows customers to rent DVDs via both direct mail and online streaming. A dot-com era creation, it was started in 1997 by Reed Hastings in Los Gatos, California. Through a sophisticated and automated supply chain and an effective customer rating system, it has honed its competitive edge over long-time competitor Blockbuster in the subscription-based online rental space.
Netflix has partnered up with different device manufacturers in an effort to integrate its platform into different broadband-enabled devices. Some of these partnerships are with Funai, Panasonic, Sanyo, Sharp, and Toshiba, which will allow Netflix to distribute its thousands of movies and TV episodes through the digital televisions of consumers. Additionally, Apple released a Netflix app for the iPad, allowing mobile access to Netflix's library of movies and tv shows.
It would be pretty iensrteting if Apple adopted a model for content in the iTunes store like it has for Apps. How about an annual $99 iTunes Producer's Membership, the 70/30 revenue split, and the indie producer all of a sudden has the same marketplace on tap as the app developers do today. Couldn't that model work? It's up to Apple. Amazon could do the same thing, like it has with books. If Netflix is throwing up roadblocks to the indies, that leaves an opportunity for the other guys already established in that space to scoop up some diamonds in the rough.
In 2010, more subscribers watched movies via streaming than by DVD. Netflix has decided that going forward, it will be primarily a global streaming business, with the added feature of DVDs-by-mail in the U.S. 
Because Netflix is one of its largest corporate customers (accounting for approximately 1.3% of all first class mail deliveries), the USPS's pricing and distribution decisions can greatly affect Netflix's margins and customer satisfaction. As the USPS attempts to overcome billions in net losses stemming from the recession, some speculate that the USPS may eliminate mail delivery or raise postage prices. With Saturday being a prime movie watching day and with postage expenses already amounting to $420 million for Netflix, the USPS's operating decisions have a integral role in Netflix's profitability and service.
The market for entertainment video is intensely competitive and subject to rapid change. New competitors may be able to launch new businesses at relatively low cost. Many consumers maintain simultaneous relationships with multiple entertainment video providers and can easily shift spending from one provider to another.