Netflix (NFLX)

General and Administrative

Three months ended March 31, 2009 as compared to the three months ended March 31, 2008

The decrease in general and administrative expenses for the three months ended March 31, 2009 as compared to the same prior-year period was primarily attributable to a decrease in personnel-related costs due to a decrease in headcount offset by an increase in costs related to legal proceedings.

Three months ended March 31, 2009 as compared to the three months ended December 31, 2008

The increase in general and administrative expenses during the three months ended March 31, 2009 as compared to the three months ended December 31, 2008 was primarily attributable to an increase in costs related to legal proceedings.

General and Administrative

The decrease in general and administrative expenses in absolute dollars in 2008 as compared to 2007 was primarily attributable to a decrease in costs related to our subsidiary, Red Envelope Entertainment, as well as a decrease in costs related to legal proceedings. These decreases were offset by an increase in personnel-related costs.

The increase in general and administrative expenses in absolute dollars in 2007 as compared to 2006 was primarily attributable to an increase in personnel-related costs due to growth in headcount. The increase was also attributable to higher costs related to legal proceedings.

General and Administrative

The decrease in general and administrative expenses in absolute dollars in 2008 as compared to 2007 was primarily attributable to a decrease in costs related to our subsidiary, Red Envelope Entertainment, as well as a decrease in costs related to legal proceedings. These decreases were offset by an increase in personnel-related costs.

The increase in general and administrative expenses in absolute dollars in 2007 as compared to 2006 was primarily attributable to an increase in personnel-related costs due to growth in headcount. The increase was also attributable to higher costs related to legal proceedings.

General and Administrative

Three and nine months ended September 30, 2008 as compared to the three and nine months ended September 30, 2007

The decrease in general and administrative expenses for the three months ended September 30, 2008 as compared to the same prior-year period was primarily attributable to a decrease in personnel-related costs.

General and administrative expenses for the nine months ended September 30, 2008 as compared to the same prior-year period was relatively flat.

Three months ended September 30, 2008 as compared to the three months ended June 30, 2008

The decrease in general and administrative expenses during the three months ended September 30, 2008 as compared to the three months ended June 30, 2008 was primarily attributable to a decrease in personnel-related costs.

We anticipate that general and administrative expenses will decrease on a year-over-year basis for the remainder of 2008 due to lower personnel-related costs.

General and Administrative

Three and six months ended June 30, 2008 as compared to the three and six months ended June 30, 2007

The slight decrease in general and administrative expenses for the three months ended June 30, 2008 as compared to the same prior-year period was primarily attributable to a decrease in costs related to legal proceedings, offset by an increase in facilities related expenses and personnel-related costs due to an increase in headcount.

The increase in general and administrative expenses for the six months ended June 30, 2008 as compared to the same prior-year period was primarily attributable to an increase in personnel-related costs due to an increase in headcount, coupled with an increase in facilities related costs.

Three months ended June 30, 2008 as compared to the three months ended March 31, 2008

The slight decrease in general and administrative expenses during the three months ended June 30, 2008 as compared to the three months ended March 31, 2008 was primarily attributable to a decrease in costs related to legal proceedings.

We anticipate that general and administrative expenses will increase on a year-over-year basis for the remainder of 2008 in order to support our growing operations.

General and Administrative

Three months ended March 31, 2008 as compared to the three months ended March 31, 2007

The increase in general and administrative expenses for the three months ended March 31, 2008 as compared to the same prior-year period was primarily attributable to an increase in personnel-related costs due to an increase in headcount.

Three months ended March 31, 2008 as compared to the three months ended December 31, 2007

The slight increase in general and administrative expenses during the three months ended March 31, 2008 as compared to the three months ended December 31, 2007 was primarily attributable to an increase in personnel-related costs due to an increase in headcount.

We anticipate that general and administrative expenses will increase on a year-over-year basis for the remainder of 2008 in order to support our growing operations.

General and Administrative

The increase in general and administrative expenses in absolute dollars in 2007 as compared to 2006 was primarily attributable to an increase in personnel-related costs due to growth in headcount. The increase was also attributable to higher costs related to legal proceedings.

The increase in general and administrative expenses in absolute dollars in 2006 as compared to 2005 is primarily attributable to an increase in costs related to ongoing legal proceedings, personnel costs and professional fees to support our growing operations.

We expect that our general and administrative expenses will continue to increase in absolute dollars in 2008 in order to support our growing operations.

General and Administrative

Three and nine months ended September 30, 2006 as compared to the three and nine months ended September 30, 2007

General and administrative expenses increased $2.9 million and $13.9 million, respectively, during the three and nine months ended September 30, 2007 as compared to the same prior-year periods. The increase was primarily attributable to an increase in personnel-related costs due to an increase in headcount. The increase was also attributable to higher costs related to legal proceedings.

We expect that our general and administrative expenses will increase for the remainder of 2007.

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Three months ended September 30, 2007 as compared to the three months ended June 30, 2007

General and administrative expenses decreased $1.0 million during the three months ended September 30, 2007 as compared to the three months ended June 30, 2007, primarily due to lower costs related to legal proceedings.

General and Administrative

Three and six months ended June 30, 2006 as compared to the three and six months ended June 30, 2007

General and administrative expenses increased $7.1 million and $11.0 million, respectively, during the three and six months ended June 30, 2007 as compared to the same prior-year period. The increase was primarily attributable to an increase in personnel-related costs due to an increase in headcount. The increase was also attributable to higher costs related to legal proceedings.

We expect that our general and administrative expenses will decrease for the remainder of 2007.

Three months ended March 31, 2007 as compared to the three months ended June 30, 2007

General and administrative expenses increased $1.7 million during the three months ended June 30, 2007 as compared to the three months ended March 31, 2007, primarily due to higher costs related to legal proceedings.

General and Administrative

The increase in general and administrative expenses for the three months ended March 31, 2007 in comparison with the same prior-year period was primarily attributable to an increase in personnel-related costs due to an increase in headcount. The increase in general and administrative expenses was also attributable to higher costs related to legal proceedings. As a percentage of revenues, the increase in general and administrative expenses was primarily due to a greater increase in general and administrative expenses than revenues.

We expect our general and administrative expenses will continue to increase for the remainder of 2007 in order to support our growing operations.

General and Administrative

The increase in general and administrative expenses in absolute dollars in 2006 as compared to 2005 is primarily attributable to an increase in costs related to ongoing legal proceedings, personnel costs and professional fees to support our growing operations. As a percentage of revenues, the decrease in general and administrative expenses was primarily due to a greater increase in revenues than general and administrative expenses.

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The increase in general and administrative expenses in absolute dollars in 2005 as compared to 2004 was primarily attributable to an increase in legal costs as well as an increase in personnel-related costs, insurance costs and professional fees, to support our growing operations. General and administrative costs in 2005 included an accrual of $8.1 million (net of expected insurance proceeds for reimbursement of legal defense costs of $0.9 million) related to the proposed settlement costs of the Chavez vs. Netflix, Inc. lawsuit. As a percentage of revenues, the increase in general and administrative expenses was primarily due to a greater increase in general and administrative expenses than increase in revenues.

We expect our general and administrative expenses will continue to increase in absolute dollars in 2007 in order to support our growing operations.

General and Administrative

The increase in general and administrative expenses in absolute dollars for the three and nine months ended September 30, 2006 in comparison with the same prior-year periods was primarily attributable to an increase in costs related to ongoing legal proceedings, personnel costs and professional fees to support our growing operations. Additionally, general and administrative costs for the third quarter of 2005 included legal costs of $3.2 million (net of expected insurance proceeds of $0.8 million) related to the accrual of the proposed settlement costs of Chavez vs. Netflix, Inc. lawsuit.

As a percentage of revenues, the decrease in general and administrative expenses was primarily due to a greater increase in revenues than general and administrative expenses.

We expect our general and administrative expenses will continue to increase in absolute dollars for the remainder of 2006 in order to support our growing operations.

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General and Administrative

The increase in general and administrative expenses in absolute dollars for the three and six months ended June 30, 2006 in comparison with the same prior-year periods was primarily attributable to an increase in personnel costs and professional fees to support our growing operations. This increase was offset in part by a reduction of $1.5 million in estimated settlement costs of the Chavez vs. Netflix, Inc. lawsuit (See Note 9) as well as a reduction in costs related to ongoing legal proceedings.

As a percentage of revenues, the decrease in general and administrative expenses was primarily due to a greater increase in revenues than general and administrative expenses.

We expect our general and administrative expenses will continue to increase in absolute dollars for the remainder of 2006 in order to support our growing operations.