Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information [Abstract]

Segment Information

10. Segment Information

In September 2010, the Company began international operations by offering an unlimited streaming plan without DVDs. At that time, the Company began segmenting operating results between Domestic and International. The Company presents the segment information along the same lines that the Company's chief operating decision maker reviews the operating results in assessing performance and allocating resources. The Company's chief operating decision maker reviews revenue and contribution profit for each of the reportable segments. Contribution profit is defined as revenues less cost of revenues and marketing expenses. There are no internal revenue transactions between the Company's reporting segments. In addition, the Company does not identify or allocate its assets by reportable segment and all of the Company's long lived tangible assets are held in the United States.

The Domestic segment derives revenue from monthly subscription services consisting of streaming content and DVD by mail. The Domestic segment operating income (loss) includes direct costs and allocations of "Cost of Revenues" and "Marketing" as well as all "Technology and Development" and "General and Administrative" costs, as these costs are incurred in the United States on the behalf of the consolidated entity.

The International segment derives revenue from monthly subscription services consisting solely of streaming content. The International segment contribution profit (loss) includes direct costs and allocations of "Cost of Revenues" and "Marketing." Because no amount of "Technology and Development or "General and Administrative" costs are included in the International segment, contribution profit (loss) is equal to the International segment operating income (loss.)

Information on reportable segments and reconciliation to consolidated net income is as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
				(in thousands)
Domestic
Streaming subscriptions		21,448
DVD subscriptions		13,928
Total unique subscribers at end of period		23,789			16,800
Revenues	$	799,152		$	553,219		$	2,275,140		$	1,566,703
Cost of revenues and marketing expenses		579,720			423,013			1,655,828			1,194,861
Contribution profit		219,432			130,206			619,312			371,842
Other operating expenses		99,272			58,011			261,710			163,960
Segment operating income	$	120,160		$	72,195		$	357,602		$	207,882
International
Total unique subscribers at end of period		1,480			133
Revenues	$	22,687		$	—		$	53,862		$	—
Cost of revenues and marketing expenses		46,005			2,694			97,268			2,694
Contribution profit (loss)	$	(23,318	)	$	(2,694	)	$	(43,406	)	$	(2,694	)
Consolidated
Total unique subscribers at end of period		25,269			16,933
Revenues	$	821,839		$	553,219		$	2,329,002		$	1,566,703
Cost of revenues and marketing expenses		625,725			425,707			1,753,096			1,197,555
Contribution profit		196,114			127,512			575,906			369,148
Other operating expenses		99,272			58,011			261,710			163,960
Operating income	$	96,842		$	69,501		$	314,196		$	205,188
Other income (expense)		(3,219	)		(4,092	)		(11,509	)		(12,051	)
Provision for income taxes		31,163			27,442			111,780			79,379
Net income	$	62,460		$	37,967		$	190,907		$	113,758