Document:

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                                                                   Exhibit 10.12

                                               As of May 1, 2000

NETFLIX, Inc.
970 University Avenue
Suite 100
Los Gatos, CA 95032-7606
Attn: Ted Sarandos, Vice President, Content Acquisition

        This letter agreement ("Agreement") sets forth the terms of the
                                ---------
agreement between Netflix ("Netflix") and Columbia TriStar Home Entertainment,
                            -------
Inc. ("CTHE") (formerly known as Columbia TriStar Home Video) in connection with
       ----
Netflix's ordering of certain "DVDs" (as such term is defined below) pursuant to
the terms hereof solely for the purposes of renting such DVDs to consumers
pursuant to Netflix's rental-by-mail business, and in connection therewith,
Netflix's and CTHE's participation in a "Revenue Sharing Program" (as defined
below) for the "Rental Pictures" (as defined below) covered by this Agreement.

A.      CONDITIONS PRECEDENT: All of CTHE's obligations under this Agreement are
        --------------------
subject to the satisfaction of the following conditions precedent ("Conditions
                                                                    ----------
Precedent"):(i) Netflix's willingness and operational capability to
---------
electronically report to CTHE (utilizing an electronic reporting system approved
by CTHE [CTHE hereby preapproves SuperComm]) point-of-sale information with
respect to Rental Pictures on an ongoing basis; and (ii) CTHE's receipt of this
Agreement executed by Netflix.

1.      TERM: The term of this Agreement shall be for a period of 5 years
        ----
        commencing on June 1, 2000 and ending on May 31, 2005 (the "Term")
                                                                    ----
        unless earlier terminated pursuant to the terms hereof. Each year of the
        Term shall be hereinafter referred to as a "Contract Year," with the
                                                    -------------
        first year being referred to as the "First Contract Year," etc.
                                             -------------------

2.      TERRITORY: The territory of the rights granted hereunder shall be and be
        ---------
        limited to the United States and its territories and possessions (the
        "Territory").
         ---------

3.      RENTAL PICTURES:
        ---------------

        a.      Definition: For purposes of this Agreement, "Rental Picture"
                ----------

        shall be defined as [*] motion picture for which CTHE owns or controls
        home entertainment distribution rights in the Territory (specifically
        including "Direct to Video Pictures," as defined below) which CTHE
        intends to release to consumers in the Territory on a Street Date during
        the Term for the first time on "DVD". For purposes of this Agreement,
        "Direct to Video Pictures" shall mean [*]
                    ------------------------

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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        [*] motion picture that is initially made available for viewing in the
        Territory to consumers in videocassette and/or DVD format or premium
        cable premiere format and which otherwise fits within the description of
        a Rental Picture. A "DVD" shall mean a digital
                             ---
        versatile disc (or otherwise known as "digital video disc") format and
        shall include all sub-formats thereof.

4.      RENTAL TERMS: All DVDs ordered by Netflix hereunder shall be included in
        ------------
        Netflix's mail order rental program which makes DVDs available, on a
        rental or subscription basis, to consumers for home viewing purposes.
        Consumers can access information regarding Netflix's mail-order program
        and DVD inventory through Netflix's website at Netflix. In connection
        with the foregoing, Netflix represents, warrants and agrees as follows:

        a.      Shelf Space Guarantee: All Rental Pictures will be placed in the
                ---------------------
        "New Release" section of Netflix's website [*] for such Rental Picture.
        The New Release section shall be accessible by tab from Netflix's Home
        Page. The titles shall remain within the rotation of the line listing
        and box art for such [*] period.

        b.      Under the Netflix rental program the customers pay a monthly
        flat fee ("Subscription Fee") and may order an unlimited (up to 4 at a
        time) number of DVD titles during a month-to-month (i.e. February 3rd
        through March 2nd) period; provided, that all DVDs must be returned to
        Netflix within such one month period. If Netflix expands the duration of
        the month-to-month period during the Term, CTHE shall be entitled to
        terminate this Agreement following 30 days notice thereof to Netflix and
        CTHE shall have no further obligation to Netflix hereunder. Such
        termination, if any, shall be CTHE's sole remedy in connection with any
        such expansion. Notwithstanding the foregoing, in the event of such a
        termination, Netflix shall remain obligated to CTHE pursuant to the
        terms and conditions hereof with respect to all DVDs of Rental Pictures
        ordered by Netflix prior to the date of such termination.

        c.     [*]. Any Netflix customer who [*] will, for purposes of this
        Agreement, be [*] ([*] such customer such [*]), which [*] shall be an
        amount equal to the [*] below, as calculated pursuant to [*] below, for
        each [*].

        d.      CTHE Page: Netflix will create and continuously maintain
                ---------
        (subject to CTHE's approval thereof) a "CTHE Page" listing all of CTHE's
        available titles which CTHE Page shall be accessible directly from
        Netflix's Home Page.

5.      ORDER REQUIREMENTS. Netflix shall order [*] Rental Picture
        ------------------
        from CTHE (i.e., on an output basis). In connection with each such
        order, the following shall apply:

        a.      Order Requirements: Netflix agrees to order and CTHE agrees to
                ------------------
        provide (provided Netflix is not in breach hereunder), a specified
        number of DVDs for such Rental Picture determined as follows:

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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          i.  First and Second Contract Years. During the First and Second
              -------------------------------
          Contract Years, Netflix shall order such quantity of DVDs [*] basis.

          ii. Third, Fourth and Fifth Contract Years. During the Third, Fourth
              --------------------------------------
          and Fifth Contract Years, Netflix agrees to order such quantity (which
          quantity will be sufficient to [*] or DVDs [*].

6.   STREET DATE/ORDERING OF COPIES/DISTRIBUTION OF COPIES: With respect to each
     -----------------------------------------------------
     of the Rental Pictures, CTHE shall specify the date for the first DVD
     rental by Netflix of such Rental Picture to the general public for home
     entertainment purposes (the "Street Date"). Netflix shall place its orders
                                  -----------
     with CTHE for each Rental Picture, in accordance with subparagraph 5.a.
     above ("Initial Order"), not later than [*] prior to the Street Date
             -------------
     for such Rental Picture. Netflix acknowledges and agrees that if Netflix
     does not place its Initial Order within such [*] period, CTHE can not
     guarantee timely delivery of such DVDs.

7.   "REVENUE SHARING PROGRAM": [*] Rental Picture hereunder shall be
      -----------------------
     ordered by Netflix and shall be provided by CTHE pursuant to the revenue
     sharing terms set forth in this Agreement (the "Revenue Sharing Program").
                                                     -----------------------
     The consideration payable by Netflix for the right to participate in the
     Revenue Sharing Program with respect to any particular Rental Picture shall
     consist, in whole or in part, of a percentage of the "Rental Revenues" (as
     defined below) earned by Netflix from the rental of DVDs of such Rental
     Picture.

8.   "REVENUE SHARING PERIOD": The "Revenue Sharing Period" for each Rental
      ----------------------        ----------------------
     Picture shall be [*]. The Revenue Sharing Period for each applicable
     Rental Picture shall commence on the Street Date for the applicable Rental
     Picture. Netflix shall use commercially reasonable efforts to ensure that
     all DVDs of the Rental Pictures subject to inventory levels and
     month-to-month cycles) remain available for rental during the entire
     Revenue Sharing Period applicable to such Rental Picture.

9.   PROGRAM PRICE: In consideration for the rights granted hereunder, for each
     -------------
     DVD of a Rental Picture ordered by Netflix, Netflix shall pay CTHE a
     "Program Price" as follows:

     a.   [*]; [*] plus
          ---

     b.   Revenue Percentage Payment: A share of Rental Revenue derived from the
          --------------------------
     rental of DVDs ("Revenue Percentage Payment") determined as follows: [*]

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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     [*].

          The [*] and the Revenue Percentage Payment shall be hereinafter
     referred to as the "Program Price."

     c.   Definitions.
          -----------

          i.     A "Rental Transaction" shall mean each and every time DVD is
                    ------------------
          mailed or otherwise delivered to a customer. Netflix shall
          independently determine and charge its customers whatever Rental
          Transaction price it determines is in its own best business interests
          and without agreement with CTHE. CTHE does not suggest any particular
          Rental Transaction price.

          ii.    "Rental Revenues" shall mean the aggregate of all revenues
                  ---------------
          collected in connection with Rental Transactions occurring during the
          Revenue Sharing Period, including any [*] and any amounts [*], but
          specifically excluding [*]. Netflix shall be entitled to [*] from [*].
          For purposes of calculating the Rental Revenues, Netflix will [*].

          Netflix shall be solely obligated to pay all taxes, fees or
     governmental charges required to be paid by Netflix in connection with
     Netflix's activities undertaken pursuant to this Agreement. Netflix shall
     pay all such taxes within the applicable time periods.

10.  [*]: Netflix shall [*] ordered hereunder. At such time as Netflix orders
     ---
     DVDs of a particular Rental Picture pursuant to the terms hereof, CTHE
     shall [*] Notwithstanding the foregoing, Netflix shall discuss each title
     with CTHE [*].

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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11.  ADVANCE: For each Rental Picture hereunder [*], Netflix agrees [*].
     -------
     However, Netflix shall not have any obligation [*].

12.  DELIVERY/SHIPPING: CTHE will cause a third party duplicator/distributor to
     -----------------
     undertake direct distribution of all DVDs ordered by Netflix hereunder to
     [*] distribution centers (which shall be designated in writing by Netflix
     and which may only be changed upon 30 days prior written notice to CTHE).
     CTHE shall determine, in its sole discretion, to deliver DVDs either: [*].
     Netflix shall be solely responsible for making all DVDs "rental ready."
     CTHE will use reasonable, good faith efforts to deliver all DVDS ordered by
     Netflix hereunder to Netflix's distribution centers 7 days prior to the
     applicable Street Date(s) for such DVDs.

13.  PAYMENT: Netflix shall pay: (i) [*] within [*] days following the [*]
     to Netflix; (ii) [*] within [*] days following the [*] by Netflix; and
     (iii) [*] within [*] days following the [*] and [*] within [*] days
     following the [*].

14.  MISSING DVDS: In the event that DVDs of a Rental Picture are sold, stolen
     ------------
     or otherwise unaccounted for during the Revenue Sharing Period for the
     applicable Rental Picture ("Missing DVD"), Netflix shall so inform CTHE and
     shall pay CTHE a sum equal to [*] ("Missing DVD Fees"). Missing DVD Fees
     shall be payable to CTHE [*].

15.  REPORTING OBLIGATIONS: Netflix shall report electronically to CTHE, on a
     ---------------------
     weekly basis, complete and accurate daily information regarding the rental
     of DVDs of the Rental Pictures acquired under this Agreement [*], in such
     format as may be specified by CTHE from time to time. At CTHE's request,
     Netflix shall provide CTHE with a copy of all tracking and other to the
     information obtained by Netflix, insofar as such information relates
     Rental Pictures. Notwithstanding the foregoing, the parties hereby agree to
     work together during the first 90 days of the Term to set up a mutually
     acceptable reporting format; provided, however, that in the event of any
     disagreement,

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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     CTHE's decision shall prevail. As of August 31, 2000, the foregoing
     information shall be provided in a consolidated FTP file.

16.  MARKETING SUPPORT: In lieu of specific marketing support programs and as
     -----------------
     consideration for services to be performed by Netflix hereunder, CTHE
     agrees that Netflix shall [*], an amount equal to [*]. Netflix shall
     [*] for the purpose of advertising and promoting [*].

17.  AUDIT:
     -----

     a.    Netflix grants CTHE the right, from time to time during the period
     commencing on the date hereof and concluding on the date which is 12 months
     after the expiration of the Term, upon not less than 7 business days prior
     notice, but no more than once in any calendar year, to examine and audit
     Netflix's records, invoices, books of account, computer or data base
     information which relate to the rental of DVDs of the Rental Pictures
     and/or the Revenue Sharing Program for the then immediately preceding 12
     month period (including, without limitation, all appropriate information
     provided to Netflix by customers, but which shall not include names,
     addresses and/or any individual identifying data of such customers). All
     such audits shall be conducted by an independent, qualified auditor of
     CTHE's choice. All such audits shall be at CTHE's sole cost and expense;
     provided however, that in the event such audit shall disclose an error or
     errors which in the aggregate equal or exceed 5% of the amounts owed to
     CTHE hereunder for the period being audited, Netflix shall promptly
     reimburse CTHE for all outside costs and expenses actually incurred in
     connection with such audit. CTHE may make copies of or make excerpts from
     only such part of Netflix's records, invoices, books of account, computer
     or data base information which relate to matters and time frames subject to
     examination as herein provided. Such examination shall be at such place
     where the relevant information is maintained and during reasonable business
     hours and in such manner so as not to interfere with Netflix's normal
     business activities. Such examination shall continue for such time as is
     reasonably necessary (but in any event not more the 30 consecutive days,
     provided that CTHE has been provided with the requisite access and
     information) for CTHE to complete the examination. Such right to examine
     hereunder is limited to the financial matters in connection with DVDs of
     Rental Pictures and/or the Revenue Sharing Program (collectively, "CTHE
     Product") and under no circumstances shall CTHE have the right to examine
     records relating to Netflix's business generally or with respect to other
     projects not related to CTHE Product, for purposes of comparison or
     otherwise; provided, however, that where any original income or expense
     document with third parties relates to CTHE Product and videocassettes or
     DVDs of a third party's titles, CTHE shall have the right to examine such
     document; provided, further that any information contained therein which
     does not relate to CTHE Product shall be redacted therefrom. Any amounts
     determined to be due and owing to CTHE following an audit

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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        shall be paid to CTHE [*].

 b.     Netflix grants CTHE the right to conduct, or to engage an auditor to
        conduct, upon 48 hours notice, on location audits for purposes of
        "spot-checking" transaction information relating to the CTHE Product;
        provided; that CTHE shall not conduct such audits more than [*] at any
        one warehouse or geographical location and shall not interfere with
        the on-going business such that CTHE's activity would  require Netflix
        to shut down its operations at such location.

18.     NOTICE: Any notice or communications provided for hereunder must be in
        ------
        writing and delivered either personally, by messenger, overnight
        courier, registered mail, postage prepaid, or facsimile upon proper
        confirmation of receipt to the following addresses (or to such other
        address as specified by like notice):

                For Netflix:
                  Netflix, Inc.
                  970 University Avenue
                  Suite 100
                  Los Gatos, CA 95032-7606
                  Attention:  Ted Sarandos, Vice President, Content Acquisition

                For CTHE:
                  Columbia TriStar Home Entertainment, Inc.
                  10202 West Washington Boulevard, 8th Floor
                  Culver City, CA 90232
                  Attention:  Robin Russell, Senior Executive Vice President
                  Facsimile: (310) 244-1289

19.     REPRESENTATIONS AND WARRANTIES:
        ------------------------------

        a.     CTHE warrants and represents that it is a corporation duly
        organized and validly existing in good standing under the laws of the
        state of Delaware and has the full right, power, legal capacity and
        authority to enter into and carry out the terms of this Agreement.

        b.     Netflix warrants and represents that it is a corporation duly
        organized and validly existing in good standing under the laws of the
        state of Delaware and has the full right, power, legal capacity and
        authority to enter into and carry out the terms of this Agreement.

20.     INDEMNIFICATION:
        ---------------

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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a.      Netflix agrees to indemnify and hold CTHE, its parent, subsidiary and
affiliated companies (including any future parent entity) and their respective
officers, agents, directors and employees, harmless from any and all claims,
damages, liabilities, costs and expenses (including reasonable attorneys fees)
arising out of the breach by Netflix of any warranty, representation or other
term or provision of this Agreement. CTHE shall promptly notify Netflix in
writing of any third party claim or litigation to which this indemnification
applies, and Netflix shall assume the defense of any such claim or litigation
(and CTHE shall have the right to engage separate counsel of its choice and
participate in the defense, negotiation and settlement of such action or
proceeding, but shall bear the fees and expenses of such separate counsel
retained by CTHE and CTHE shall cooperate with Netflix in the defense of such
claim at no cost or charge to Netflix, other than for performing such acts as
Netflix shall request). If, for any reason, Netflix shall fail to appoint
counsel on a timely basis or otherwise fails timely to confirm its assumption of
the defense of any applicable claim, CTHE may engage its own counsel and the
reasonable costs and expenses made in connection therewith shall be paid by
Netflix. Netflix shall have the right to approve or disapprove the settlement or
disposition of any such claim or litigation proposed by CTHE, which right shall
expire 20 business days following Netflix's receipt of written notice with
respect thereto. Netflix shall not have the right to enter into any settlement
or compromise unless, in connection therewith, it shall obtain from the
claimants a full release of all related claims against CTHE.

b.      CTHE shall indemnify and hold Netflix, its subsidiary and affiliated
companies and their respective officers, agents, directors and employees,
harmless from any and all claims, damages, liabilities, costs and expenses
(including reasonable attorneys fees) arising out of the breach by CTHE of any
warranty, representation or other term or provision of this Agreement Netflix
shall promptly notify CTHE in writing of any third party claim or litigation to
which this indemnification applies, and CTHE shall assume the defense of any
such claim or litigation (and Netflix shall have the right to engage separate
counsel of its choice and participate in the defense, negotiation and settlement
of such action or proceeding but shall bear the fees and expenses of such
separate counsel retained by Netflix and Netflix shall cooperate with CTHE in
the defense of such claim at no cost or charge to CTHE, other than for
performing such acts as CTHE shall request). If, for any reason, CTHE shall fail
to appoint counsel on a timely basis or otherwise fails timely to confirm its
assumption of the defense of any applicable claim, Netflix may engage its own
counsel and the reasonable costs and expenses made in connection therewith shall
be paid by CTHE. CTHE shall have the right to approve or disapprove the
settlement or disposition of any such claim or litigation proposed by Netflix,
which right shall expire 20 business days following CTHE's receipt of written
notice with respect thereto. CTHE shall not have the right to enter into any
settlement or compromise unless, in connection therewith, it shall obtain from
the claimants a full release of all related claims against Netflix.

c.      Notwithstanding the provisions of Paragraph 20. hereof, Netflix hereby
indemnifies, defends and holds harmless CTHE and its successors, permitted
assigns, employees, officers and directors from and against any and all claims
(and any liability, loss, damage, cost and expense, including, without
limitation, reasonable outside attorneys' fees arising out of such claims)
brought by shareholders or potential shareholders of Netflix arising out of any
reference to this Agreement or

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     the terms hereof; Sony Pictures Entertainment, CTHE or any affiliated
     entity in any of Netflix's disclosure documents.

21.  CONFIDENTIALITY: Other than as may be required (i) by applicable law,
     ---------------
     governmental order or regulation or securities laws or by order or decree
     of any court of competent jurisdiction, (ii) as part of its normal
     reporting requirements or review procedures to its parent company,
     auditors, attorneys or other advisors, (iii) in connection with a possible
     sale, merger or other consolidation transaction involving it or its parent
     company or (iv) in the case of CTHE, as may be disclosed to third party
     "profit" participants in connection with the Rental Pictures: neither party
     hereto (nor any agent acting on behalf of any party hereto) shall divulge
     or disclose to any third party any of the material terms and conditions of
     this Agreement (including, without limitation, the existence of this
     Agreement or any reference to Sony Pictures Entertainment, CTHE, or any
     affiliated entity), or any non-public information concerning the business
     or operations of a party (including information concerning Netflix obtained
     pursuant to Section 17 hereof) without the prior written consent of the
     other party hereto. In the event that disclosure is required pursuant to
     clause (i) above, the party so making disclosure shall so notify the other
     party (if possible, prior to making such disclosure and in any event as
     promptly as practical) and shall use its commercially reasonable efforts to
     seek confidential treatment of such information. The initial press release
     regarding the parties entering into this Agreement (if any) shall require
     the mutual written approval of both parties. Notwithstanding anything to
     the contrary contained herein, CTHE hereby acknowledges and agrees that
     Netflix may be required to share financial and other reporting information
     with respect to the Rental Pictures with the owner/operator of Netflix's
     computer program system and certain data information services in order to
     allow such owner/operator and/or such data information service to monitor,
     update and approve their program and/or service. In the event Netflix is
     required to share such information, Netflix shall so inform CTHE and shall,
     at CTHE's request, obtain a confidentially agreement, in a form approved by
     CTHE, signed on behalf of such owner/operator and/or data information
     service. Without limiting the generality of its obligations this Paragraph,
     Netflix agrees that it will not share with any third party any financial or
     other reporting information with respect to the Rental Pictures which is
     kept, maintained or compiled as part of the Revenue Sharing Program, except
     as set forth in this Paragraph 21.

22.  ASSIGNMENT/CHANGE OF CONTROL:
     ----------------------------

     a.  Assignment: CTHE shall be free to assign this Agreement and its rights
         ----------
     hereunder, and to delegate its duties at any time and from time to time, in
     whole or in part, to any person or entity; provided, however, that CTHE
     shall be released from its obligations under this Agreement only if such
     assignment is (i) to a person or entity into which CTHE merges or is
     consolidated or (ii) to a person or entity which acquires all or
     substantially all of CTHE's business and assets or (iii) to a person or
     entity which is controlled by, under common control with, or controls CTHE
     or (iv) with Netflix's prior written consent. Netflix shall not assign this
     Agreement nor its rights hereunder, nor delegate its duties under this
     Agreement in whole or in part, without CTHE's prior written consent (not to
     be unreasonably withheld); provided, however, that an assignment pursuant
     to or resulting from a sale, exchange or transfer of all or substantially
     all of Netflix's business and assets to any person or persons or any other
     form of business combination, including, without limitation, a

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     reorganization, merger, consolidation or a sale to the public, shall not
     require such consent so long as such assignment is not to a Competing Major
     Studio, such party is a financially responsible party capable of performing
     all of Netflix's obligations under this Agreement, such party orders DVD's
     hereunder solely for the purpose of a rental-by-mail business and which
     such party assumes in writing all of Netflix's rights and obligations
     hereunder. In the event that Netflix or CTHE assigns its rights or interest
     in or to this Agreement pursuant to the terms hereof, in whole or in part,
     the assigning party will nevertheless continue to remain fully and
     primarily responsible and liable to the other party for prompt, full,
     complete and faithful performance of all terms and conditions of this
     Agreement. For purposes of this Agreement, a "Competing Major Studio" shall
     mean Universal Studios, Inc., Warner Bros., a division of Time Warner
     Entertainment Company, L.P., MGM, Twentieth Century Fox Film Corporation,
     The Walt Disney Company, or Paramount Pictures Corporation, Inc., or any
     division of any of the foregoing, or any entity which controls, is
     controlled by or is under common control with any of the foregoing.

     b.   Change of Control: For purposes of subparagraph 20.a. hereof, a
          -----------------
     "change-of-control" of Netflix shall be deemed to be an assignment and
     shall be subject to the provisions of subparagraph 23.a. For purposes of
     this Agreement, a "change-of-control" of Netflix shall be deemed to have
     occurred, if, following the applicable transaction: a Competing Major
     Studio acquires 25% or more of the equity interests in Netflix.

23.  REMEDIES:  Subject to Paragraph 4.b. hereof, in addition to any and all
     --------
     other rights and remedies available to it at law or in equity, a non-
     defaulting party shall have the right to terminate this Agreement for any
     material breach by a defaulting party (a "Material Breach") and/or in the
                                               ---------------
     event of bankruptcy, insolvency, reorganization, assignment for the benefit
     of creditors or any such similar proceeding on the part of either party,
     or appointment of a receiver (or similar proceeding) for any of such
     party's property (each, an "Insolvency Event"). Notwithstanding the
                                 ----------------
     foregoing, in the event of a Material Breach, the non-defaulting party
     shall notify the defaulting party of such Material Breach in writing and
     the defaulting party shall have 30 days to cure such Material Breach;
     provided, that in the event of Netflix's failure to timely report to CTHE
     pursuant to Paragraph 15 hereof or to pay (CTHE sums due under this
     Agreement, Netflix shall have 14 days to cure such Material Breach. The
     non-defaulting party shall have the right to terminate this Agreement for
     any such Material Breach that shall remain uncured for 30 (or, if
     applicable, 14) days following such notice and/or for any Insolvency Event;
     provided, that in the event that such Material Breach (other than
     nonpayment) is of a nature that reasonably requires more than 30 (or, if
     applicable, 14) days to cure, and the defaulting party is diligently in the
     process of such cure, the non-defaulting party will not terminate this
     Agreement unless the cure cannot be accomplished, or otherwise is not
     accomplished, in 60 days.

24.  GOVERNING LAW/ALTERNATIVE DISPUTE RESOLUTION:
     --------------------------------------------

     a.  Governing Law. THE INTERNAL SUBSTANTIVE LAWS (AS DISTINGUISHED FROM THE
         -------------
     CHOICE OF LAW RULES) OF THE STATE OF CALIFORNIA AND THE UNITED STATES OF
     AMERICA APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY IN CALIFORNIA
     SHALL GOVERN (i) THE VALIDITY AND

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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     INTERPRETATION OF THIS AGREEMENT, (ii) THE PERFORMANCE BY THE PARTIES OF
     THEIR RESPECTIVE OBLIGATIONS HEREUNDER, AND (iii) ALL OTHER CAUSES OF
     ACTION (WHETHER SOUNDING IN CONTRACT OR IN TORT) ARISING OUT OF OR RELATING
     TO THIS AGREEMENT OR THE TERMINATION OF THIS AGREEMENT.

     b.  Legal Proceedings. The parties hereto agree that any dispute or
         -----------------
     controversy relating to any of the matters referred to in clauses (i), (ii)
     and/or (iii) of subparagraph 25.a., above, shall be decided by a
     Rent-A-Judge, manually selected by the parties (or, if they cannot agree,
     by the Presiding Judge of the Los Angeles Superior Court) appointed in
     accordance with California Code of Civil Procedure Section 638, sitting
     without a jury, in Los Angeles County, California, and the parties hereby
     submit to the jurisdiction of such court. All such proceedings shall be
     closed to the public and confidential and all records thereto shall be
     permanently sealed.

25   MISCELLANEOUS:
     -------------

     a. Nothing contained herein shall be deemed to create a relationship of
     partnership, joint venture, agency, fiduciary or employment between the
     parties.

     b. This Agreement sets forth the entire understanding of the parties
     regarding the subject matter hereof and supersedes all prior oral or
     written agreements between them.

     c. No waiver of any default or breach of this Agreement by either party
     shall be deemed a continuing waiver or a waiver of any other breach or
     default, no matter how similar.

     d. This Agreement may not be changed, modified, amended or supplemented,
     except in a writing signed by both parties.

     e. Paragraph headings are inserted herein for convenience only and do not
     constitute a part of this Agreement.

     f. Netflix and CTHE shall execute, acknowledge and deliver any and all
     further documents that are necessary, expedient or proper to implement,
     administer and effectuate the purpose and intent of this Agreement.

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     g.   If any term or provision of this Agreement shall be found to be void
     or contrary to law, such term or provision shall, but only to the extent
     necessary to bring this Agreement within the requirements of law, be deemed
     to be severable from the other terms and provisions of this Agreement, and
     the remainder of this Agreement shall be given effect as if the parties had
     not included the severed term herein.

     Please confirm your agreement with the foregoing by signing below, and
return both copies to the undersigned, after which we will return a fully
executed copy to you.

                                Very truly yours,

                                COLUMBIA TRISTAR HOME ENTERTAINMENT, INC.

                                By: /s/ Robin Russell
                                    --------------------------------------
                                Title: ROBIN RUSSELL
                                       -----------------------------------
                                       Senior Executive Vice President
                                       Columbia TriStar Home Entertainment

AGREED TO AND ACCEPTED THIS 4 DAY OF March, 2002.
                            -        -----

NETFLIX

By: /s/ Ted Sarandos
    ------------------------------
Title: VP Content Acquisition
       ---------------------------

                                       12

<PAGE>

                                   Schedule A

Revenue Per Rental Picture Calculation

Scenario I - [*]

[*]  (1)

[*]  Week Cash Flow:
                                         Calculation 1: [*]   Calculation 2: [*]
                                         ------------------   ------------------
                                                [*]                  [*]

Monthly Customer Fee

Month NetFlix Fee from Customers
[*]

Net Monthly Fee from Customers(2)

Transaction Assumptions
[*]

Monthly Rental Revenue [*]

Total Revenue Share Copies
[*] (3)

Total Program Price Per Copy
[*] (4)

Total [*] Week CTHE Revenue (5)

Footnotes:
---------
(1)  [*]
(2)  [*]
(3)  [*]
(4)  [*]
(5)  [*]

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

<PAGE>

                                   Schedule A

Revenue Per Rental Picture Calculation

Scenario II - [*]

[*]  (1)

[*]  Week Cash Flow:
                                         Calculation 1: [*]   Calculation 2: [*]
                                         ------------------   ------------------
                                                [*]                  [*]

Monthly Customer Fee

Month NetFlix Fee from Customers
[*]

Net Monthly Fee from Customers(2)

Transaction Assumptions
[*]

Monthly Rental Revenue [*]

Total Revenue Share Copies
[*] (3)

Total Program Price Per Copy
[*] (4)

Total [*] Week CTHE Revenue (5)

Footnotes:
---------
(1)  [*]
(2)  [*]
(3)  [*]
(4)  [*]
(5)  [*]

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

<PAGE>

                                   Schedule A

Revenue Per Rental Picture Calculation

Scenario III - [*]

[*]  (1)

[*]  Week Cash Flow:
                                         Calculation 1: [*]   Calculation 2: [*]
                                         ------------------   ------------------
                                                [*]                  [*]

Monthly Customer Fee

Month NetFlix Fee from Customers
[*]

Net Monthly Fee from Customers(2)

Transaction Assumptions
[*]

Monthly Rental Revenue [*]

Total Revenue Share Copies
[*]  (3)

Total Program Price Per Copy
[*]  (4)

Total [*] Week CTHE Revenue(5)

Footnotes:
---------
(1)  [*]
(2)  [*]
(3)  [*]
(4)  [*]
(5)  [*]

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

<PAGE>

                                   EXHIBIT A

                                DVD EVENT TITLES
                                ----------------

[*]

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.<PAGE>

                                                                   Exhibit 10.13

                                REVENUE SHARING
                              OUTPUT LICENSE TERMS
                                   (RETAILER)

As of June____, 2000

The following (the "Agreement") sets forth the terms of the license agreement
(the "License") between Warner Home Video ("WHV"), a division of Time Warner
Entertainment Company, L.P. and Netflix.com (the "Retailer") for revenue sharing
on WHV's Rental Picture output (as defined below).

1.   TERM: Five (5) year period commencing upon the "Street Date" of the first
     ----
"Rental Picture" (as such terms are defined below) released by WHV on or after
date of execution of this Agreement.

2.   TERRITORY: United States and its territories and possessions only.
     ---------

3.   DEFINITIONS:
     -----------

     a.   "Licensed Units" shall mean the total number of DVD units licensed to
           --------------
          Retailer hereunder.

     b.   "Month" shall be defined as each calendar month, and each Month shall
           -----
          end on the last day of such month.

     c.   "Picture Term" means for each Rental Picture the [*](as defined below)
           ------------
          of a title in DVD format.

     d.   "Rental Picture" means [*], provided, however, that product controlled
           --------------
          by third parties who do not approve of the terms hereof shall be
          specifically excluded from Rental Pictures. "New Release" refers to
          the initial release of a title in the DVD format. WHV reserves its
          right, upon notice to Retailer, prospectively to withdraw any Rental
          Picture or distributed line from the terms hereof in the event WHV
          ceases to own or control homevideo distribution in the Territory with
          respect thereto.

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       1

<PAGE>

     e.   "Revenue" means all consumer-generated video rental revenue, plus [*]
          ---------
          (collectively, "Fees") per rental transaction [*] and net of [*]. In
          the case of customer subscriptions (each, a "Subscription"), Revenue
          shall be determined [*]. The parties agree that Retailer's calculation
          of [*] shall be subject to review and verification by WHV.

          (i)   "Bad Debt" shall mean, for purposes hereof [*].
                ----------

          (ii)  "Taxes" shall mean any and all sales, excise, value added or
                -------
                other taxes which meet the following qualifications: (A) the
                taxes are separately stated, (B) the taxes are required by law
                to be collected from Retailer's customers, and (C) the taxes are
                actually paid by Retailer to taxing authorities.

     f.   "Street Date" means the first day Retailer is permitted by WHV to make
          -------------
          a title available for rental to consumers.

     g.   "Turn" shall mean [*].
          ------

4.   LICENSED RIGHTS:
     ----------------

     a.   Homevideo Distribution License: WHV licenses to Retailer on a limited
          -------------------------------
          and nonexclusive basis homevideo distribution rights to the Rental
          Pictures in the DVD format only for rental only in the retail market
          in the Territory during the Term, subject to the terms hereunder and
          subject to Retailer's agreement to [*] subject to Paragraph 5(a)
          below.

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       2

<PAGE>

     b.   Credit Worthiness: WHV and Retailer agree that this License is and
          ------------------
          shall during the Term be conditioned upon and subject to timely
          payments by Retailer to WHV in accordance with the terms and
          provisions of Paragraphs 5 through 8 below.

     c.   Reservation of Title: Legal title to, and risk of loss of, the
          ---------------------
          Licensed Units hereunder shall remain vested in WHV, subject to
          disposition of Licensed Units pursuant to Paragraph 8 below. Retailer
          shall not permit any encumbrance to attach to any Licensed Units
          delivered pursuant to this Agreement.

     d.   Limitations on Bundling: In the event Retailer elects to bundle Rental
          ------------------------
          Pictures with any other of Retailer's products, the effective retail
          price of the Rental Picture(s) shall be proportionate to the effective
          rental and/or retail price of each of the other products in the
          bundle, subject to WHV's [*], pursuant to Paragraph
          6.a. below.

5.   INITIAL PAYMENT TO WHV:
     -----------------------

     a.   Initial Payment: For each Rental Picture licensed hereunder, Retailer
          ---------------
          shall [*] aggregate amount (the "Initial Payment") as follows:

          (i)    [*] or

          (ii)   [*]

     b.   Payment Terms. For each Rental Picture, the Initial Payment shall be
          -------------
          due and payable by Retailer [*].

     c.   [*]: Retailer shall [*] each [*] from WHV's Revenue Share on a [*]
          ---
          basis. No Initial Payment or any other amount due or owing on any
          Rental Picture shall be cross-collateralized with the Initial Payment
          or any other amount due or owing on any other Rental Picture(s).
          Retailer shall not [*] Initial Payments.

6.   REVENUE SHARING: For each Rental Picture, subject to Paragraph 5.c. above,
     ---------------
     WHV's share of the Revenue shall be calculated as follows:

     a.   During the Picture Term: During the Picture Term, [*] WHV's Revenue
          -----------------------
          Share shall equal [*], as defined in Paragraph 3.e. above.

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       3

<PAGE>

          For purposes of clarification, the parties agree that WHV's share of
          Revenue per Subscription shall be calculated as: [*];

          [*]
          ---

          [*]

     b.   Post-Picture Term: After the Picture Term, [*],  subject to Paragraphs
          -----------------
          8.a. and b. below.

7.   STATEMENTS AND PAYMENTS:
     -----------------------

     a.   Statements: On a Monthly basis, within ten (10) business days after
          ----------
          the Month, for each Rental Picture, Retailer shall provide to WHV, in
          the formats reasonably requested and as periodically amended by WHV,
          a statement (the "Statement") which reflects the rental and related
          activities for such Month, including, without limitation, [*].

     b.   Payments: For each [*], to the extent any amounts are due
          --------
          pursuant to the Statements, such amounts shall be due and payable
          within [*].

8.   TREATMENT OF LICENSED UNITS DURING AND AFTER PICTURE TERM:
     ---------------------------------------------------------

     a.   [*]: The parties agree that in the event a customer of Retailer fails
          ---
          or refuses to return any Licensed Unit to Retailer, Retailer shall
          [*] pursuant to the terms of Paragraph 7 above.

     b.   Retailer's Rental Inventory: For each Rental Picture, at the
          ---------------------------
          expiration of the Picture Term, Retailer may elect [*] subject to
          Paragraph 8.d. below. In such event, Retailer agrees that [*]. The
          parties agree that any sale by Retailer of Rental Inventory [*].
          In the event a customer of Retailer fails or refuses to return any
          Rental Inventory unit to Retailer, [*] pursuant to the terms of
          Paragraph 7 above. The parties agree that such amount shall be [*].

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       4

<PAGE>

     c.   Rental Inventory Payment: For each Licensed Unit retained as "Rental
          ------------------------
          Inventory" within [*] business days after the end of the Picture
          Term, Retailer shall pay to WHV [*].

     d.   Effect of Non-Compliance; Penalty: The parties agree that failure by
          ---------------------------------
          Retailer to comply with this Paragraph 8 shall constitute a material
          breach of this Agreement. In such case, Retailer shall pay a penalty
          (the "Penalty") equal to [*], due to WHV pursuant to the terms of
          Paragraph 7 above.

9.   MARKETING/PROMOTION: Retailer agrees (i) to keep all Rental Pictures in
     -------------------
     a "new release" section for, at minimum, [*] and (ii) to develop, create,
     install and maintain in consultation with WHV a WHV-dedicated web page on
     Retailer's website with a direct link from Retailer's home page. Retailer
     agrees that WHV's positioning (as set forth above) shall be no worse than
     the positioning for the video product of any other Studio (as defined
     below). Both parties agree to review Retailer's marketing/promotion of
     WHV's product on an on-going basis during the Term.

10.  DELIVERY: WHV, at its cost, shall use its good faith reasonable efforts
     --------
     to deliver product to distribution centers designated by Retailer not less
     than [*] business days prior to Street Date for each Rental Picture,
     subject to timely placement of purchase orders by Retailer (i.e., by
     standard order due date).

11.  INFORMATION TO BE PROVIDED BY RETAILER: To the extent reasonably
     --------------------------------------
     available to Retailer and with respect to WHV product only, Retailer agrees
     to provide the following information to WHV at Retailer's expense:

     a.   Revenue Share Reporting: On a [*], no later than [*] for activity
          -----------------------
          through the [*], Retailer shall deliver to WHV, via EDI or as
          reasonably requested by WHV, reports detailing the number of copies,
          the number of [*], in each instance, by format, by warehouse, provided
          that for the first ninety (90) days of the Term, the parties will work
          together to establish an appropriate reporting system for Retailer.

     b.   Other Information: Retailer and WHV shall mutually agree on other
          -----------------
          information, reporting formats and/or tracking or information formats
          and systems to be provided to each other.

12.  FAVORED NATIONS:
     ---------------

     a.   Retailer's Warranty: Retailer agrees that in the event Retailer has
          -------------------
          heretofore [*] into any third party revenue sharing agreement with
          respect to [*] products (each, a "Third Party Agreement") in which

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                       5

<PAGE>

          Retailer grants to a third party (each, a "Third Party") terms or
          conditions which [*].

      b.  WHV's Representation and Warranty: WHV represents and warrants that
          ---------------------------------
          the material terms and conditions relating to Term, Revenue splits,
          Initial Payments, Rental Inventory payments and/or payment terms as
          set forth in this Agreement are [*], Retailer conveys to WHV a
          percentage of Retailer's total equity, on a fully diluted basis
          immediately prior to the Effective Date (as defined below), comparable
          to that percentage granted to WHV by any such other internet retailer.

13. AUDIT RIGHTS: Upon not less than seven (7) days advance written notice to
    ------------
    Retailer, WHV, or its representatives or designees, shall have the right
    during normal business hours but not more than one (1) time per year during
    the Term and all the Picture Terms and two (2) times after the expiration of
    the Term and all the Picture Terms to inspect, audit and make extracts of
    the books and records of Retailer insofar as said books and records relate
    to the calculation or determination by Retailer of (a) Revenue, (b) WHV's
    Revenue Share, (c) Bad Debt, (d) customer freight charges, (e) the rights
    licensed hereunder, and (f) Favored Nations compliance and any and all other
    obligations of Retailer under this Agreement throughout the duration Term
    and all Picture Terms. Such rights of audit shall continue for a period of
    one (1) year following the expiration of the last Picture Term, as provided
    for under this Agreement. For purposes of clarification, there shall be no
    more than one (1) audit per year during the auditable period. The parties
    agree that Retailer shall have the right reasonably to approve independent
    auditors hired by WHV to conduct an audit, provided that the internal
    auditors of WHV and/or Time Warner and the accounting firm of Ernst & Young
    or WHV's then existing auditors shall be deemed pre-approved for any and all
    audits conducted pursuant hereto.

14. EQUITY POSITION: In partial consideration for the rights granted hereunder,
    ---------------
    Retailer agrees to grant to WHV or its designee on the date hereof
    ___________ shares of Retailer's Series F Non-Voting Convertible Preferred
    Stock (the "Shares") representing 1.204% of Retailer's outstanding equity
    on a fully diluted basis as of the date hereof; provided, however,

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                      6

<PAGE>

       that in the event the Shares represent less than 1.204% of Retailer's
       outstanding equity on a fully diluted basis at any time prior to the
       effective date of Retailer's registration statement filed under the
       Securities Act of 1933 in connection with an initial public offering of
       Retailer's shares (the "Effective Date"), then Retailer shall grant
       additional equity to WHV for no additional consideration, as necessary,
       to maintain WHV's equity position at such percentage. In addition, WHV
       shall be entitled to the same information and registration rights with
       respect to the Shares, and the Shares will be subject to the same
       restrictions related to such rights, as provided in Retailer's Amended
       and Restated Stockholders' Rights Agreement dated as of April 13, 2000 to
       Holders (as defined therein). Retailer represents and warrants that the
       charter documents of Retailer or other documents setting forth the rights
       and preferences of the Shares will provide that the Shares are
       convertible to common stock of Retailer with full voting rights at any
       time that WHV elects to sell or transfer the Shares to a non-affiliated
       third party in a registered sale or a private transaction. The parties
       agree to execute and deliver in a timely manner all documentation
       required to effect the foregoing.

15.    CONFIDENTIALITY: Each of WHV and Retailer acknowledges that (i) the terms
       ---------------
       and conditions of this Agreement, and (ii) all information and data
       (including, without limitation, rental and revenue forecasts, projections
       and estimates and actual results, in whatever form or medium)
       (collectively, the "Confidential Information") provided by each party to
       the other under this Agreement are highly proprietary and confidential.
       Each of WHV and Retailer agrees that it shall not use Confidential
       Information (other than in connection with the performance of its
       obligations under this Agreement or the exercise of its rights under this
       Agreement) or disclose Confidential Information to any person (other than
       its officers, employees, agents, representative and licensors and
       licensees on a need-to-know basis only and who agree to be bound by the
       confidentiality obligations hereunder) or unless compelled by subpoena or
       court order or state or federal securities laws to disclose any such
       Confidential Information. This Paragraph 15 shall survive expiration or
       earlier termination of this Agreement.

16.    INDEMNIFICATION:
       ---------------

       a.    Indemnification by Retailer: Except as otherwise provided in
             ---------------------------
             Paragraph 16.b. below, Retailer shall defend, indemnify and hold
             WHV, its parent company, their affiliates and subsidiaries, and the
             officers, directors, agents and employees of each, free and
             harmless from all suits, claims, demands and other liabilities and
             expenses (including reasonable attorneys' fees) (each, a "Claim")
             which may arise directly or indirectly out of or by reason of (i)
             the unauthorized use by Retailer of any patented invention, or of
             any copyrighted material provided by WHV, (ii) a Claim from a
             customer arising out of Retailer's rental or retail practices or
             course of dealing with respect to such customer, and/or (iii) a
             breach or violation of this Agreement or any obligation, covenant,
             representation or warranty made hereunder by Retailer.

                                       7

<PAGE>

         b. Indemnification by WHV. Except as otherwise provided in Paragraph
            ----------------------
            16.a. above, WHV shall defend, indemnify and hold Retailer, its
            parent company, their affiliates, subsidiaries, and franchisees, and
            the officers, directors, agents, and employees of each, free and
            harmless from all Claims (including reasonable attorneys' fees)
            which may arise directly or indirectly out of or by reason of (i)
            copyright or trademark infringement by, or other third party Claim
            against, WHV or Retailer with respect to the content of any Rental
            Picture, provided such Claim or infringement is not the result of
            the negligence of Retailer or any employee or agent of Retailer,
            (ii) a physical defect in any Licensed Unit provided to Retailer
            hereunder by WHV, provided such defect was not caused by the
            negligence of Retailer or any employee or agent of Retailer, and/or
            (iii) a breach or violation of this Agreement or any obligation,
            covenant, representation or warranty made hereunder by WHV.

17.      REMEDIES:
         --------

         a. General: Each of WHV and Retailer acknowledge and agree that a
            -------
            material breach by either party of any of its obligations under this
            Agreement, gives the other party the right to terminate this
            Agreement upon thirty (30) days prior written notice; provided that
            in the event the breaching party cures such breach within the notice
            period, the termination notice shall be void with respect to such
            cured breach only. Retailer acknowledges that (i) a failure by
            Retailer to pay WHV in accordance with the provisions of Paragraphs
            5-8 above and (ii) the failure by Retailer validly to issue the
            Shares to WHV and to grant certain rights with respect to such
            Shares as set forth in Paragraph 14 above in accordance with all
            applicable securities laws and regulations shall constitute a
            material breach of this Agreement. Retailer waives any rights to
            seek injunctive relief with respect to the sale, license and/or
            other distribution of any Rental Picture, provided that Retailer
            does not waive any right it may have to seek specific performance
            under this Agreement with respect to any Rental Picture being
            distributed by WHV in the rental retail marketplace. The termination
            of this Agreement shall not relieve the parties of any obligations
            incurred prior to such termination.

         b. Cap on Damages: Retailer specifically waives whatever rights it may
            --------------
            have to seek consequential or punitive damages and/or lost profits
            resulting from a breach by WHV of its obligations under this
            Agreement; provided, however that this provision shall not limit
            Retailer's right to seek and/or obtain actual or direct damages
            suffered as a result of any breach by WHV of its obligations under
            this Agreement.

18.  REPRESENTATIONS AND WARRANTIES:
     ------------------------------

                                      8

<PAGE>

     a.   Representations and Warranties of Retailer:
          ------------------------------------------

          (i)   Authority: Retailer hereby agrees, warrants and represents that
                ---------
                Retailer has full authority, capacity and ability to execute
                this Agreement and to perform all of its obligations hereunder.

          (ii)  Equity: Retailer hereby agrees, warrants and represents that
                ------
                Retailer has not and shall not grant to any Studio (as defined
                below) as consideration for entering into a revenue sharing
                arrangement (for a term of five (5) years or less) an equity
                position larger than that held by WHV at the time of such grant.

     b.   Representations and Warranties of WHV: WHV hereby agrees, warrants and
          -------------------------------------
          represents that WHV has full authority, capacity, ability and right to
          execute this Agreement, to perform all of its obligations hereunder
          and to license the rights to Retailer hereunder pursuant to Paragraph
          4 above.

19.  TRADEMARKS:
     ----------

     a.   NetFlix Trademarks: WHV acknowledges that the Retailer's trademarks
          ------------------
          (the "NetFlix Trademarks") belong to Retailer and that WHV shall have
          no rights in such NetFlix Trademarks except for the purposes set forth
          in this Agreement. WHV shall not use the NetFlix Trademarks in any
          manner that is disparaging or that otherwise portrays Retailer in a
          negative light. WHV may not alter, modify or change the NetFlix
          Trademarks. Any goodwill arising out of the use of the NetFlix
          Trademarks hereunder shall inure to the benefit of Retailer. At no
          time during or after the term of this Agreement will WHV challenge or
          assist others to challenge the NetFlix Trademarks or the registration
          thereof or attempt to register any trademarks, marks or trade names
          confusingly similar to those Trademarks established as of the
          execution or during the term of this Agreement. At Retailer's
          reasonable request, all depictions of the NetFlix Trademarks that WHV
          intends to use will be submitted to Retailer for approval of design,
          color, or other details or will be exact copies of those used by
          Retailer. In the event Retailer does not approve of such depiction,
          WHV shall cease using such depiction upon reasonable notice.

     b.   WHV Trademarks: Retailer acknowledges that WHV's trademarks (the "WHV
          --------------
          Trademarks") belong to WHV and that Retailer shall have no rights in
          such WHV Trademarks. Retailer shall not use the WHV Trademarks in any
          manner that is disparaging or that otherwise portrays WHV in a
          negative light. Retailer may not alter, modify or change the WHV
          Trademarks. Any goodwill arising out of the use of the WHV Trademarks
          hereunder shall inure to the benefit of WHV. At no time during or
          after term of this Agreement will Retailer challenge or assist others
          to challenge the WHV Trademarks or the registration thereof or attempt
          to register any trademarks, marks or trade names confusingly similar
          to those Trademarks established as of the execution or during the term
          of this Agreement. At WHV's reasonable

                                       9

<PAGE>

         request, all depictions of the WHV Trademarks that Retailer intends to
         use will be submitted to WHV for approval of design, color, or other
         details or will be exact copies of those used by WHV. In the event WHV
         does not approve of such depiction, Retailer shall cease using such
         depiction upon reasonable notice.

20.  MISCELLANEOUS:
     --------------

     a.  Amendment and Waiver. Except as otherwise provided herein, no
         --------------------
         modification, amendment or waiver of any provision of this Agreement
         shall be effective against any party unless such modification,
         amendment or waiver is approved in writing by both Retailer and WHV.
         The failure of any party to enforce any of the provisions of this
         Agreement shall in no way be construed as a waiver of such provisions
         and shall not affect the right of such party thereafter to enforce each
         and every provision of this Agreement in accordance with its terms.

     b.  Severability. Whenever possible, each provision of this Agreement shall
         ------------
         be interpreted in such manner as to be effective and valid under
         applicable law, but if any provision of this Agreement is held to be
         invalid, illegal or unenforceable in any respect under any applicable
         law or rule in any jurisdiction, such invalidity, illegality or
         unenforceability shall not affect any other provision or any other
         jurisdiction, but this Agreement shall be reformed, construed and
         enforced in such jurisdiction as if such invalid, illegal or
         unenforceable provision had never been contained herein.

     c.  Entire Agreement. Except as otherwise expressly set forth herein, this
         ----------------
         document embodies the complete agreement and understanding between the
         parties hereto with respect to the subject matter hereof and supersedes
         and preempts any prior understandings, agreements or representations by
         or between the parties, written or oral, which may have related to the
         subject matter hereof in any way.

     d.  Assignment:
         ----------

         (i)   Retailer Assignment: This Letter Agreement shall not be assigned
               -------------------
               by Retailer without the prior written consent of WHV, which
               consent shall not be unreasonably withheld or delayed, provided
               that WHV has the right not to approve an assignment in the event
               of a sale of Retailer to a Studio (as defined below) or to a
               Third Party Retailer (as defined below).

         (ii)  WHV Assignment: This Letter Agreement shall not be assigned by
               --------------
               WHV without the prior written consent of Retailer, except to any
               corporation or entity which controls, is controlled by, or under
               common control with WHV.

         (iii) Purchase of Retailer by a Studio or Third Party Retailer.
               --------------------------------------------------------

                                       10

<PAGE>

      (A) Purchase by Studio: In the event [*] enters into an agreement to
          ------------------
          acquire Retailer, WHV shall be given prompt notice of such agreement
          and shall have the option to terminate this Agreement immediately upon
          written notice to Retailer. Promptly following such notice of
          acquisition agreement, Retailer, in consultation with WHV, shall
          undertake to provide adequate assurance in writing to WHV that
          proprietary and confidential information of WHV shall not be disclosed
          to, or otherwise made accessible to, the management or other employees
          of such Studio following such acquisition. As used in this Paragraph
          20.d.(iii)(A), the term "Studio" shall also include, without
          limitation, the respective affiliated corporations which control, are
          controlled by, or are under common control with, any such Studio. The
          term "control" shall refer to the ownership of at least fifty percent
          (50%) of the outstanding voting power of the corporation or entity
          which is subject to such "control".

      (B) Purchase by/of Third Party Retailer: Subject to Paragraph 20.d.(i)
          -----------------------------------
          above, in the event a third party retailer (a "Third Party Retailer")
          enters into an agreement to acquire Retailer, or Retailer enters into
          an agreement to acquire Retailer, or Retailers enters into an
          agreement to acquire a Third Party Retailer, then WHV and Retailer
          agree that in such event, the terms of this Agreement shall apply only
          to Retailer, unless and until WHV approves in writing inclusion of
          such Third Party Retailer hereunder.

      (C) Definition of "Purchase": For purposes of this Subparagraph 20.d.(iii)
          ------------------------
          the term "Purchase" shall include acquisition, merger and/or other
          consolidation.

e. Counterparts. This Agreement may be executed in separate counterparts each of
   ------------
   which shall be an original and all of which taken together shall constitute
   one and the same agreement.

f. Due Authorization. Each of WHV and Retailer represents and warrants that the
   -----------------
   officer executing this Agreement has been duly authorized and that this
   Agreement when executed and delivered shall be valid and binding and
   enforceable in accordance with its terms.

* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
                                       11

<PAGE>

g.  Notices. All notices provided for in this Agreement shall be in writing
    -------
    and shall be either personally delivered, or mailed first class mail
    (postage prepaid) or sent by reputable overnight courier service (charges
    prepaid) to the parties as follows:

    If to Retailer:

    NetFlix.com, Inc.
    750 University Avenue
    Los Gatos, CA 95032
    Facsimile: (408) 399-3737
    Attention: W. Barry McCarthy, Jr., C.F.O.

    with a copy to: Robert Sanchez
                    Wilson, Sonsini, Goodrich & Rosati
                    Facsimile: (650) 493-6811

    If to WHV:

    Warner Home Video
    4000 Warner Boulevard
    Burbank, CA 91522
    Attention:  Jim Cardwell, Executive Vice President
                North American Operations
                Beth Baier, Senior Vice President, Business and Legal Affairs
                              and General Counsel

h.  Governing Law. This Agreement and all matters or issues material thereto
    -------------
    shall be governed by the laws of the State of California, applicable to
    contracts performed entirely therein.

i.  Descriptive Headings. The descriptive headings of this Agreement are
    --------------------
    inserted for convenience only and do not constitute a part of this
    Agreement.

j.  Relationship of Parties. Nothing contained herein shall constitute a
    -----------------------
    partnership, joint venture, association or principal and agent relationship
    or be construed to evidence the intention of the parties to constitute such.
    Retailer and WHV are independent contractors and neither has any authority
    to act on the other's behalf or to bind the other in any way.

k.  Force Majeure. Whenever performance by any party of its obligations under
    -------------
    this Agreement, other than any of Retailer's payment obligations hereunder,
    is substantially prevented by reason of any act of God, strike, lock-out, or
    other industrial or transportational disturbance, fire, lack of materials,
    law, regulation or

                                       12

<PAGE>

        ordinance, war or war conditions, or by reason of any other matter
        beyond such party's reasonable control, then such performance shall be
        excused and this Agreement shall be deemed suspended during the
        continuation of such prevention, and the term shall be extended for a
        period equal to the time of such suspension.

   l.   Third Parties. None of the provisions of this Agreement is intended for
        -------------
        the benefit of or shall be enforceable by any third parties, including
        creditors of Retailer or WHV.

   m.   Survival: The rights, licenses and obligations in the Agreement of
        --------
        Sections 7, 8.a. and b., 13, 15, 17 and 19 shall survive and continue
        after termination or expiration of this Agreement and shall remain in
        full force and effect and shall bind the parties hereto and their legal
        representatives, successors, heirs and assigns.

In WITNESS WHEREOF, this Agreement was executed by the parties on the date
first written above.

Netflix.com, Inc.                            WARNER HOME VIDEO, a division of
                                             Time Warner Entertainment Company,
                                             L.P. ("WHV")
By:     /s/ Ted Sarandos                     By:    /s/ [ILLEGIBLE]
      -----------------------------               -----------------------------

Its:   Ted Sarandos                          Its:   S.V.P Sales
      -----------------------------               -----------------------------
       VP of Content ACQ.

                                       13

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