Delaware		77-0467272
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

Part I.		Financial Information
		Item 1.     Financial Statements		3
		Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
		Item 3.     Quantitative and Qualitative Disclosure About Market Risk		25
Part II.		Other Information
		Item 1.     Legal Proceedings		26
		Item 2.     Changes in Securities and Use of Proceeds		26
		Item 4.     Submission of Matters to a Vote of Security Holders		28
		Item 6.     Exhibits and Reports on Form 8-K		28
Signatures				30
Exhibit Index				31

		Page
Statements of Operations for the three and six months ended June 30, 2001 and 2002 (Unaudited)		4
Balance Sheets as of December 31, 2001 and June 30, 2002 (Unaudited)		5
Statements of Cash Flows for the six months ended June 30, 2001 and 2002 (Unaudited)		6
Notes to Financial Statements		7

		Three Months Ended June 30,								Six Months Ended June 30,
		2001				2002				2001				2002
Revenues:
Subscription		$	17,392			$	35,608			$	34,449			$	65,677
Sales			967				752				967				1,210
Total revenues			18,359				36,360				35,416				66,887
Cost of revenues:
Subscription			10,776				17,779				28,953				32,651
Sales			446				313				446				599
Total cost of revenues			11,222				18,092				29,399				33,250
Gross profit			7,137				18,268				6,017				33,637
Operating expenses:
Fulfillment *			3,589				4,854				7,202				9,009
Technology and development *			4,896				3,518				10,370				6,699
Marketing *			4,090				8,054				10,743				15,992
General and administrative *			1,031				1,638				2,545				2,947
Stock-based compensation			1,436				2,746				3,479				5,586
Total operating expenses			15,042				20,810				34,339				40,233
Operating loss			(7,905	)			(2,542	)			(28,322	)			(6,596	)
Interest and other income (expense), net			(96	)			(10,887	)			(277	)			(11,341	)
Net loss		$	(8,001	)		$	(13,429	)		$	(28,599	)		$	(17,937	)
Net loss per share:
Basic and Diluted		$	(4.48	)		$	(1.31	)		$	(16.49	)		$	(2.93	)
Weighted average shares outstanding:
Basic and Diluted			1,787				10,216				1,734				6,132
* Amortization of stock-based compensation not included in expense line-item:
Fulfillment		$	290			$	356			$	719			$	748
Technology and development			496				1,069				1,220				2,277
Marketing			351				649				849				1,491
General and administrative			299				672				691				1,070
		$	1,436			$	2,746			$	3,479			$	5,586

		As of
		December 31, 2001 (1)				June 30, 2002
Assets
Current assets:
Cash and cash equivalents		$	16,131			$	49,759
Short-term investments			—				42,040
Prepaid expenses			1,019				2,168
Prepaid revenue sharing expenses			732				299
Other current assets			1,670				765
Total current assets			19,552				95,031
DVD library, net			3,633				6,116
Intangible assets, net			7,917				7,710
Property and equipment, net			8,205				6,727
Deposits			1,677				1,696
Other assets			646				618
Total assets		$	41,630			$	117,898
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable		$	13,715			$	13,371
Accrued expenses			4,544				7,819
Deferred revenue			4,937				7,066
Current portion of capital lease obligations			1,345				1,493
Notes payable			1,667				417
Total current liabilities			26,208				30,166
Deferred rent			240				269
Capital lease obligations, less current portion			1,057				765
Subordinated notes payable			2,799				—
Total liabilities			30,304				31,200
Commitments and contingency
Redeemable convertible preferred stock			101,830				—
Stockholders’ (deficit) equity:
Convertible preferred stock, $0.001 par value; 8,500,000 shares authorized; 6,157,499 and no shares issued and outstanding at December 31, 2001 and June 30, 2002, respectively; aggregate liquidation preference of $2,222			6				—
Common stock, $0.001 par value; 100,000,000 and 150,000,000 shares authorized at December 31, 2001 and June 30, 2002, respectively; 2,161,855 and 21,588,300 issued and outstanding at December 31, 2001 and June 30, 2002, respectively			2				21
Additional paid-in capital			52,479				261,011
Deferred stock-based compensation			(5,725	)			(19,024	)
Accumulated other comprehensive loss			—				(107	)
Accumulated deficit			(137,266	)			(155,203	)
Total stockholders’ (deficit) equity			(90,504	)			86,698
Total liabilities and stockholders’ (deficit) equity		$	41,630			$	117,898

		Six Months Ended June 30,
		2001				2002
Cash flows from operating activities: