Netflix Inc.: 10-K Risk Factor Changes

7 7 7 Table of Contents Table of Contents We have limited experience and operating history offering advertising on our service, and our advertising revenue may not grow as we expect. Our ability to generate advertising revenue is subject to various risks and will depend on a number of factors, including: •our ability to attract and retain advertisers; •fluctuations in memberships, including those selecting the ad-supported subscription plan, and member engagement; •the quantity or quality of ads shown to our members; •our ability to compete effectively for advertising spend; •the impact of seasonal, cyclical or other shifts in advertising spend, including the impact of macroeconomic conditions; •the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that demonstrate the value of our ads to marketers, or our ability to further improve such tools; •changes in the way advertising on devices, connected TVs or on personal computers is measured or priced; •adverse legal developments relating to advertising or measurement tools; •changes in third-party policies, which may negatively impact the ability to measure, deliver and select ads to be served; •regulatory, legislative and industry developments relating to the collection and use of information and other privacy considerations, including regulations related to ad targeting and measurement tools; •any liability or reputational harm from advertisements shown on our service; •our relationship with third-party service providers for the management, operation, sale and technology to support advertisements on our service; •our ability to develop and expand an advertising sales organization team; •our ability to develop the technology and related infrastructure to support advertising; •the impact of our content and reputation on advertisers’ willingness to spend with us; and •any member dissatisfaction due to advertisements.

We began offering an ad-supported subscription plan that generates revenue partially from digital advertising on our service. We have limited experience and operating history offering advertising on our service, and our advertising revenue may not grow as we expect. Our ad-supported plan offering and our ability to generate advertising revenue are subject to various risks and will depend on a number of factors, including: 7 7 7 Table of Contents Table of Contents •our ability to attract and retain advertisers; •fluctuations in memberships, including those selecting the ad-supported subscription plan, and member engagement; •the quantity or quality of ads shown to our members; •our ability to compete effectively for advertising spend; •the impact of seasonal, cyclical or other shifts in advertising spend, including the impact of macroeconomic conditions; •the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that demonstrate the value of our ads to marketers, or our ability to further improve such tools; •changes in the way advertising on devices, connected TVs or on personal computers is measured or priced; •adverse legal developments relating to advertising or measurement tools; •changes in third-party policies, which may negatively impact the ability to measure, deliver and select ads to be served; •regulatory, legislative and industry developments relating to the collection and use of information and other privacy considerations, including regulations related to ad targeting and measurement tools; •any liability or reputational harm from advertisements shown on our service; •our relationship with third-party service providers for the management, sale and technology to support advertisements on our service; •the impact of our content and reputation on advertisers’ willingness to spend with us; and •any member dissatisfaction due to advertisements.

We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred taxes and other tax liabilities and receivables, and in evaluating our tax positions and other tax attributes on a worldwide basis. We are subject to the periodic examination of our domestic and foreign tax returns by the IRS, state, local, and foreign tax authorities, some of whom are challenging our tax positions. We regularly assess the likelihood of adverse outcomes from these examinations in determining the adequacy of our provision for income taxes and other tax liabilities. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and may not accurately forecast actual tax audit outcomes. If the ultimate determination of income and other tax liabilities differ from the amounts recorded or accrued, our business, financial condition or results of operations may be adversely impacted. Tax laws are regularly being re-examined and evaluated globally. New laws and interpretations of the law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of companies and we have tax audits pending in several jurisdictions. The U.S. federal and state governments, countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in jurisdictions where we do business. If U.S. or other tax authorities change applicable tax laws or successfully challenge how or where our profits are currently recognized, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be challenged by jurisdictional tax authorities, which may have a significant impact on our global provision for taxes. Tax laws are being re-examined and evaluated globally. New laws and interpretations of the law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of companies and we have tax audits pending in several jurisdictions. The U.S. federal and state governments, countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in jurisdictions where we do business. If U.S. or other foreign tax authorities change applicable tax laws or successfully challenge how or where our profits are currently recognized, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

We and our partners, suppliers, and vendors engage writers, directors, actors, other talent, trade employees and others who are subject to collective bargaining agreements in the motion picture industry, both in the U.S. and internationally. Expiring collective bargaining agreements may be renewed on terms that are unfavorable to us. If expiring collective bargaining agreements cannot be renewed, affected unions have, and could in the future, take action in the form of strikes or work stoppages. For example, the Writers Guild (“WGA”) and Screen Actors Guild (“SAG-AFTRA”) collective bargaining 14 14 14 Table of Contents Table of Contents agreements expired in 2023, and WGA members and the SAG-AFTRA members went on strike in May 2023 and July 2023, respectively. Collective bargaining agreements with the I.A.T.S.E. representing technicians and “behind the camera” crews as well as contracts with Teamster unions expire in mid-2024. The WGA and SAG-AFTRA strikes as well as the recent resurgence of organized labor in the United States may lead those workers to strike. Such work stoppages have resulted, and may in the future result, in halted productions and delays in our ability to provide new content to our members. Such actions, as well as higher costs or operating complexities in connection with these collective bargaining agreements or a significant labor dispute, could have an adverse effect on our business by causing delays in production, added costs or by reducing profit margins, and our ability to provide new content to our members could likewise be delayed or dropped.

Our partners, suppliers, vendors and we employ the services of writers, directors, actors and other talent as well as trade employees and others who are subject to collective bargaining agreements in the motion picture industry, both in the U.S. and internationally. Expiring collective bargaining agreements may be renewed on terms that are unfavorable to us. If expiring collective bargaining agreements cannot be renewed, then it is possible that the affected unions could take action in the form of strikes or work stoppages. Such actions, as well as higher costs or operating complexities in connection with these collective bargaining agreements or a significant labor dispute, could have an adverse effect on our business by causing delays in 14 14 14 Table of Contents Table of Contents production, added costs or by reducing profit margins, and our ability to provide new content to our members could likewise be delayed or dropped.