Slide 1: Overview of Content Accounting
Overview of Content Accounting Investor Relations May 2026 1
Slide 2: Disclosure
Disclosure This presentation is intended to provide additional information to investors on certain accounting matters. This information should be considered in addition to, not as a substitute for or superior to the disclosure contained in our filings with the Securities and Exchange Commission. You
Slide 3: Contents
Contents. ● Overview ● ASC 920: Entertainment - Broadcasters and ASC 926: Entertainment - Films ● Financial Statements ● Impact on Cash Flow ● Frequently Asked Questions 3
Slide 4: Overview
Overview. NETFLIX
Slide 5: Content accounting standards
Content accounting standards. We use two accounting standards for our content costs. Since we launched streaming in 2007, we have used the guidance of ASC 920: Entertainment - Broadcasters because we started the streaming service with content that we license (rather than own). ● We license both Netfl
Slide 6: Examples
Examples. 2nd Run movies & Netflix Originals (Branded) TV shows Type of content Owned Licensed Licensed Wednesday (MGM), Ozark Stranger Things, Squid Shameless (Warner (MRC), Emily In Paris Game, Bridgerton, Fool Brothers), The Blacklist (Paramount), Nobody Examples Me Once, Bird Box, Dark, (Sony), G
Slide 7: Amortization methodology
Amortization methodology. ● The amortization schedule for content is based on historical and estimated viewing patterns. ● All titles in our content library are amortized on an accelerated basis. ● Content assets are amortized over the shorter of the title’s window of availability, estimated period
Slide 8: ASC 920: Entertainment - Broadcasters & ASC 926: Entertainment - Films
ASC 920: Entertainment - Broadcasters & ASC 926: Entertainment - Films 8
Slide 9: We use ASC 920 to account for licensed content assets
We use ASC 920 to account for licensed content assets. ASC 920 specifies that a broadcaster shall account for a license agreement for program material as a purchase of rights For licensed content, we capitalize the fee per title and record a corresponding liability at the gross amount of the liabilit
Slide 10: We use ASC 926 for produced assets
We use ASC 926 for produced assets. For content that we produce, we capitalize the costs associated with production, including development cost, direct costs and production overhead, as costs a. These amounts and licensed content are included in “Content assets, net” and classified as non-current ass
Slide 11: Financial statements
Financial statements. NETFLIX
Slide 12: Content accounting in our financials
Content accounting in our financials. Balance sheet ● Total cost of titles (net of tax incentives) are recorded as assets in content assets, net ● Total unpaid cost of titles is recorded as current or non-current content liabilities Income statement ● Content assets are amortized over the shorter of
Slide 13: Balance Sheet
Balance Sheet. All content assets including produced assets and available licensed assets are included in content assets, net and classified as non-current assets, in accordance with ASU 2019-2 Content payments due within 12 months Content payments due > 1 year 13
Slide 14: Income Statement
Income Statement. Content amortization included in cost of revenues. It is broken out in the Consolidated Statements of Cash Flows and further details available in the Notes to Consolidated Financial Statements. 14
Slide 15: Amortization expense disclosure
Amortization expense disclosure. (1) Tax incentives earned on qualified production spend generally reduce the cost-basis of content assets and result in lower content amortization over the life of the title. For the years ended December 31, 2025, 2024 and 2023, tax incentives resulted in lower conte
Slide 16: Cash Flow Statement
Cash Flow Statement. Includes content amortization from the Income Statement Gross additions to content assets Change in content liabilities (current and non-current) Content amortization 16
Slide 17: Content Obligations
Content Obligations. Content obligations include amounts related to the acquisition, licensing and production of content. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements, as well as other production related commitments.
Slide 18: Content Obligations (cont'd)
Content Obligations (cont’d). 18
Slide 19: Content Obligations
Content Obligations. ● Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date and are not included in content obligations. Traditional film output deals or certain TV series l
Slide 20: Impact on Cash Flow
Impact on Cash Flow. NETFLIX
Slide 21: Cash costs for original content are more front end loaded
Cash costs for original content are more front end loaded. ● For produced original content, we often fund the production costs during the content creation process prior to completion and release on the Netflix service. This could be years in advance of a release date. ● This also creates a content as
Slide 22: Frequently Asked Questions (FAQ)
Frequently Asked Questions (FAQ). 22
Slide 23: FAQ
FAQ. You have discussed your ratio of cash spending on content to P&L spending on content. What does this refer to? ● This ratio is our cash spending on content (as derived from our cash flow statement) divided by our content amortization (which flows through our income statement) ● This ratio is an i
Slide 24: FAQ (continued)
FAQ (continued). How do I calculate your cash spending on content? ● Cash spending on content can be derived from our cash flow statement. The sum of Additions to Content Assets and the Change in Content Liabilities equates to our cash spending on content ~$17.7 bil. in cash spent on content in FY25
Slide 25: FAQ (continued)
FAQ (continued). Can I divide your content amortization by your content library to derive an indication of your average amortization term or changes in your amortization schedules? ● No, because our content library is presented net of amortization, not on a gross basis ● On average, over 90% of a li
Slide 26: FAQ (continued)
FAQ (continued). What is your process for determining possible impairment of your content library? ● Content assets (licensed and produced) are predominantly monetized as a group and therefore are reviewed at a group level when an event or change in circumstances indicates a change in the expected u
Slide 27: FAQ (continued)
FAQ (continued). Are there other non-amortization content costs in cost of revenue on your income statement? ● Yes, our cost of revenues also include other content costs that are not classified as amortization. ● These costs include content personnel costs, portions of our overall deals with certain
Slide 28: Thank you
Thank you. NETFLIX 28