The company I chose for the financial valuation and analysis report is
Netflix (NFLX). Netflix began in 1997 as a mailing DVD-rental
business and in 2007 launched it's online streaming services. Netflix
provides entertainment services with paid memberships in various
countries engaging in TV series, documentaries, feature films and
mobile games across a variety of genres and languages (Mergent,
2022).
Netflix acquires, licenses, and produces content, including original
programming, in order to offer their members unlimited viewing of
video entertainment. The content licenses are for a fixed fee and
specific windows of availability. Payment terms for certain content
licenses and the production of content require more upfront cash
payments relative to the amortization expense. Netflix recognizes
content assets (licensed and produced) as "Content assets, net" on
the Consolidated Balance Sheets (SEC, 2022). For licensed content,
Netflix capitalizes the fee per title and records a corresponding
liability at the gross amount of the liability when the license period
begins, the cost of the title is known and the title is accepted and
available for streaming (SEC, 2022). For produced content, Netflix
capitalizes costs associated with the production, including
development costs, direct costs and production overhead.
Participations and residuals are expensed in line with the
amortization of production costs (SEC, 2022).
References
Mergent. (2022). Netflix Inc. Mergent Online. Retrieved
from: https://www-mergentonline-com.ezproxy.snhu.edu/companyfi
nancials.php?compnumber=105639
SEC. (2022). Netflix, Inc: Form 10-K. SEC.gov. Retrieved
from: https://www.sec.gov/ix?doc=/Archives/edgar/data/1065280/
000106528022000036/nflx-20211231.htm
