Netflix CEO Reed Hastings  (Source:
The company also ended with 24.4 million subscribers

Despite the turbulent year much of 2011 turned out to be for Netflix, the video streaming giant reported impressive fourth-quarter earnings with a nearly 50 percent revenue increase since Q4 2010. 

In the three months ended December 2011, Netflix posted a revenue of $876 million, which was a 47 percent increase from Q4 2010, and was $19 million higher than analyst predictions. The company made $40.7 million, or 73 cents per share compared to $47.1 million, or 87 cents per share in Q4 2010.

Netflix finished 2011 with 24.4 million subscribers, which was an increase from 23.8 million at the end of September. There was a total of 21.7 million streaming subscribers in the U.S. ending 2011.

The DVD-by-mail aspect of Netflix is on a constant decline, with only 11.2 million DVD subscriptions in December 2011. About 8.4 million customers subscribe to both video streaming and DVD-by-mail. Netflix predicts that the 11.2 million number of DVD subscribers from December will drop to 9.7 million in March 2012.

"We expect DVD subscribers to decline every quarter forever," said Reed Hastings, Netflix CEO.

For 2012, Netflix expects to produce an annual loss for the first time in 10 years. It predicts a Q1 2012 loss of 16 cents to 49 cents per share. Analysts expect a first-quarter loss of 29 cents per share.

Netflix believes its Q1 2012 revenue will be between $842 million and $877 million. Analysts see an $849 million revenue in the coming months.

Netflix was booming with popularity early in 2011, but when July came around, the company decided to raise prices and change plans. The video streaming and DVD-by-mail services were separated for $7.99 a piece, or customers could choose to continue receiving both for $15.98 instead of the old price of $9.99. Netflix explained that it had to raise prices in order to pay for the increased costs of streaming rights.

The price increase outraged customers, but the changes didn't stop there. Netflix went on create a DVD spinoff company called Qwikster, where subscribers would be forced to have a separate account with separate billing if they wanted to use the DVD-by-mail option. Less than a month later, after receiving loads of criticism, Netflix killed the Qwikster idea.

A few other unfavorable instances occurred as well, such as the loss of Starz content (come February) when it refused to renew its distribution deal with Netflix, and the limitation of one stream per subscriber. In September 2011, Netflix lowered its Q3 U.S. subscriber forecasts from 25 million to 24 million, and in October, the company reported a loss of 810,000 U.S. customers during that time.

Despite these troubles, the latest Q4 earnings report shows that Netflix is picking itself up and dusting off the troubles of mid 2011. It will likely take a little more time for the company to heal entirely from the blows of 2011, but this is a start. The company has some fresh beginnings in the works for customers, such as the launch of original programming in February, where Netflix will premiere "Lilyhammer."

After the release of the Q4 2011 report, Netflix shares skyrocketed 16 percent, or $15.08, to $110.12 in after-hours trading. It ended regular trading with a 2.6 percent increase, or $2.37, to $95.04.

Source: Netflix

"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay

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