Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Segment Information

10. Segment Information

Effective in the fourth quarter of 2011, the Company has three operating segments: Domestic streaming, International streaming and Domestic DVD. Segment information is presented 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 and International streaming segments derive revenue from monthly subscription services consisting solely of streaming content. The Domestic DVD segment derives revenue from monthly subscription services consisting solely of DVD-by-mail.

Between the fourth quarter of 2010 and the third quarter of 2011, the Company had two operating segments: Domestic and International. During this time, the Company's domestic streaming content and DVD-by-mail operations were combined. Subscribers in the United States were able to receive both streaming content and DVDs under a single hybrid plan. Accordingly, revenues were generated and marketing expenses were incurred in connection with the subscription offerings as a whole. Therefore, it is impracticable to allocate revenues or marketing expenses or present discrete segment information for the Domestic streaming and Domestic DVD segments for periods prior to the fourth quarter of 2011.

In the third quarter of 2011, the Company made certain changes to its domestic pricing and plan structure which require subscribers who wish to receive both DVDs-by-mail and streaming content to have two separate subscription plans. Following this change, beginning in the fourth quarter of 2011, the Company was able to generate discrete financial information for its Domestic DVD and Domestic streaming operations and began reporting this information to the chief operating decision maker for review.

Prior to the fourth quarter of 2010, the Company had a single segment as international operations had not yet commenced.

The following table represents segment information for the fourth quarter of 2011:

	As of/Three Months ended December 31, 2011
	Domestic Streaming		International Streaming			Domestic DVD		Consolidated
	(in thousands)
Total subscriptions at end of period		21,671		1,858			11,165		—
Revenues	$	476,334	$	28,988		$	370,253	$	875,575
Cost of revenues and marketing expense		424,224		88,731			176,488		689,443
Contribution profit (loss)	$	52,110	$	(59,743	)	$	193,765		186,132
Other operating expenses									124,260
Operating income									61,872
Other income (expense)									(5,037	)
Provision for income taxes									21,616
Net income								$	35,219

The following tables represent the Company's segment information for the years ended December 31, 2011 and 2010 based on the Company's segment reporting prior to the fourth quarter of 2011:

	As of/Year ended December 31, 2011
	Domestic		International			Consolidated
	(in thousands)
Total unique subscribers at end of period		24,395		1,858			26,253
Revenues	$	3,121,727	$	82,850		$	3,204,577
Cost of revenues and marketing expense		2,256,540		185,999			2,442,539
Contribution profit (loss)	$	865,187	$	(103,149	)		762,038
Other operating expenses							385,970
Operating income							376,068
Other income (expense)							(16,546	)
Provision for income taxes							133,396
Net income						$	226,126

	As of/Year ended December 31, 2010
	Domestic		International			Consolidated
	(in thousands)
Total unique subscribers at end of period		19,501		509			20,010
Revenues	$	2,159,008	$	3,617		$	2,162,625
Cost of revenues and marketing expense		1,635,459		15,735			1,651,194
Contribution profit (loss)	$	523,549	$	(12,118	)		511,431
Other operating expenses							227,790
Operating income							283,641
Other income (expense)							(15,945	)
Provision for income taxes							106,843
Net income						$	160,853