NFLX stock jumps, as Netflix audience returns

Amazon.com Inc. is rapidly expanding a streaming service it started last year while many analysts are expecting Verizon Communications to get into video streaming later this year, possibly in a partnership with Coinstar Inc.'s Redbox, whose kiosks already compete against Netflix in DVD rentals. Google Inc.'s YouTube also is supplementing the amateur video on its site with more content from movie and TV studios.

Netflix, which is based in Los Gatos, Calif., also must navigate an international expansion that will saddle the company with a loss this year.

Those losses can be pared if Netflix can keep accelerating its customer growth.

The company forecast that it will add 1.7 million U.S. subscribers to its Internet video streaming service. That would be in line with how many streaming subscribers signed up in last year's first quarter.

Netflix ended 2011 with 21.7 million streaming subscribers in the U.S. and another 1.9 million in Canada and Latin America. This month, Netflixintroduced streaming plans in the United Kingdom and Ireland, too.

Most of the streaming gains will be offset by cancellations of DVD-by-mail rental plans, which Netflix is gradually phasing out. Hastings believes discs are becoming increasingly antiquated as technology advances. Netflix predicted its DVD subscriptions will fall from 11.2 million in December to 9.7 million in March. The company lost 2.8 million DVD subscribers in the fourth quarter.

"We expect DVD subscribers to decline every quarter forever," Hastings told analysts during a Wednesday conference call.

About 8.4 million Netflix customers subscribe to both Internet streaming and DVD rentals.

While Netflix sees its emphasis on streaming as a smart long-term strategy, the DVD attrition will hurt the company's full-year performance because Netflix's recent price increases made delivering discs through the mail more profitable — for now.

Netflix is paying higher fees for the streaming rights to exclusive programming, as well as video already available in other outlets and formats. At the end of December, its video licensing commitments totaled $3.9 billion.

Netflix expects to produce an annual loss this year, for the first time in a decade. The company gave the first inkling of how big the setback will be with its projection for a first-quarter loss of 16 cents to 49 cents per share.

Analysts on average expect a first-quarter loss of 29 cents per share.

Netflix projected first-quarter revenue of $842 million to $877 million, compared with a forecast for $849 million from analysts.

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