The ratings on Los Gatos, Calif.-based Netflix Inc. reflect Standard&Poor's Ratings Services' view that the company has transitioned its business from a DVD rental business to a streaming and DVD-by-mail business and has maintained a moderate financial profile while rapidly growing. Overall, we view the company's business risk profile as fair, reflecting its position in the highly competitive and rapidly evolving domestic media entertainment industry, its dependence on decisions made by movie studios, a growing subscriber base, and the technology and content risks associated with delivery of video movies and streaming content to the home. In addition, we view the company's financial risk profile as intermediate, reflecting its good cash flow-generating capabilities, credit protection measures that are currently
