Case | HBS Case Collection | August 2012 (Revised July 2017)

Netflix: Valuing a New Business Model

by Francois Brochet, Suraj Srinivasan and Michael Norris


In autumn 2011, Netflix was working to right the ship after publicly stumbling through a price hike and strategic shift and then retreat. The company was changing its business model to focus on streaming video service rather than the DVDs by mail that had brought the company success and praise. One important wrinkle in this business model shift came in the accounting of streaming content. The case describes the rule, FAS 63, that Netflix used to account for streaming content and the implications for the future of the company that could be attributed to this accounting shift.

Keywords: accounting; performance measurement; online business; asset recognition; Accounting; Performance Evaluation; Online Technology; Motion Pictures and Video Industry; United States; Canada; Latin America; West Indies;


Brochet, Francois, Suraj Srinivasan, and Michael Norris. "Netflix: Valuing a New Business Model." Harvard Business School Case 113-018, August 2012. (Revised July 2017.)