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		11
		Item 3.     Quantitative and Qualitative Disclosure About Market Risk		20
		Item 4.     Controls and Procedures		20
Part II.		Other Information
		Item 1.     Legal Proceedings		21
		Item 2.     Changes in Securities and Use of Proceeds		21
		Item 6.     Exhibits and Reports on Form 8-K		22
Signatures				24
Certifications				25
Exhibit Index				27

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2001				2002				2001				2002
Revenues:
Subscription		$	18,444			$	40,163			$	52,893			$	105,840
Sales			434				568				1,401				1,778
Total revenues			18,878				40,731				54,294				107,618
Cost of revenues:
Subscription			9,667				21,147				38,620				53,798
Sales			176				349				622				948
Total cost of revenues			9,843				21,496				39,242				54,746
Gross profit			9,035				19,235				15,052				52,872
Operating expenses:
Fulfillment *			3,283				4,908				10,485				13,917
Technology and development *			4,463				3,966				14,833				10,665
Marketing *			3,444				9,299				14,187				25,291
General and administrative *			1,003				1,870				3,548				4,817
Restructuring charges			671				—				671				—
Stock-based compensation			1,220				1,467				4,699				7,053
Total operating expenses			14,084				21,510				48,423				61,743
Operating loss			(5,049	)			(2,275	)			(33,371	)			(8,871	)
Interest and other income (expense), net			(505	)			580				(782	)			(10,761	)
Net loss		$	(5,554	)		$	(1,695	)		$	(34,153	)		$	(19,632	)
Net loss per share:
Basic and diluted		$	(2.94	)		$	(0.08	)		$	(19.12	)		$	(1.72	)
Weighted average shares outstanding:
Basic and diluted			1,891				21,922				1,786				11,395
* Amortization of stock-based compensation not included in expense line-item:
Fulfillment		$	276			$	119			$	995			$	867
Technology and development			423				503				1,643				2,780
Marketing			285				299				1,134				1,790
General and administrative			236				546				927				1,616
		$	1,220			$	1,467			$	4,699			$	7,053

		As of
		December 31, 2001(1)				September 30, 2002
Assets
Current assets:
Cash and cash equivalents		$	16,131			$	54,321
Short-term investments			—				43,217
Prepaid expenses			1,019				1,807
Prepaid revenue sharing expenses			732				379
Other current assets			1,670				1,551
Total current assets			19,552				101,275
DVD library, net			3,633				7,070
Intangible assets, net			7,917				6,902
Property and equipment, net			8,205				5,870
Deposits			1,677				1,185
Other assets			646				605
Total assets		$	41,630			$	122,907
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable		$	13,715			$	18,148
Accrued expenses			4,544				8,108
Deferred revenue			4,937				7,179
Current portion of capital lease obligations			1,345				1,482
Notes payable			1,667				—
Total current liabilities			26,208				34,917
Deferred rent			240				285
Capital lease obligations, less current portion			1,057				394
Subordinated notes payable			2,799				—
Total liabilities			30,304				35,596
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 September 30, 2002, respectively; aggregate liquidation preference of $2,222 at December 31, 2001 and $0 at September 30, 2002			6				—
Common stock, $0.001 par value; 100,000,000 and 150,000,000 shares authorized at December 31, 2001 and September 30, 2002, respectively; 2,161,855 and 22,069,068 issued and outstanding at December 31, 2001 and September 30, 2002, respectively			2				22
Additional paid-in capital			52,479				257,339
Deferred stock-based compensation			(5,725	)			(13,755	)
Accumulated other comprehensive income			—				603
Accumulated deficit			(137,266	)			(156,898	)
Total stockholders’ (deficit) equity			(90,504	)			87,311
Total liabilities and stockholders’ (deficit) equity		$	41,630			$	122,907