loss of $103.1 million and we expect that our expansion to the UK and Ireland in January 2012 will result in further contribution losses as our investments to build our business there, especially our investments in content licensing, will exceed the revenues we are likely to generate.

DVD subscriptions, which we also began tracking separately in the second half of 2011, are declining as subscribers migrate from hybrid plans towards lower priced streaming only subscription plans. We expect continued decreases in DVD subscriptions which will reduce domestic and consolidated revenues by approximately the same amount of the increase expected from streaming subscription growth. Domestic DVD contribution margins are expected to remain healthy due to the primarily variable cost model and mature state of the business.

Consolidated revenues for the first quarter of 2012 are expected to be flat as compared to the fourth quarter of 2011 and we may experience slower growth in consolidated revenue for the year ending December 31, 2012 as compared to the year ending December 31, 2011. As a result of the negative impact on revenue growth associated with a decline in domestic DVD subscriptions coupled with the increasing investment in our International streaming segment, we expect to incur consolidated net losses for the year ended December 31, 2012.

Free cash flow for the year ended December 31, 2011 increased as compared to the year ended December 31, 2010 to $186.6 million. Free cash flow was $39.6 million lower than net income of $226.1 million, largely due to the excess streaming and DVD content payments over expense. The excess streaming and DVD content payments over expense will continue to fluctuate over time based on new content licenses domestically and internationally. We expect that free cash flow in future periods will be negatively impacted by our expected consolidated net losses and that we may use cash in 2012.

As a result of the expected net losses and potential use of cash in 2012, we decided to strengthen our balance sheet by raising $400 million of additional capital. In November 2011, we issued $200.0 million of our zero coupon senior convertible notes due in 2018 (the “Convertible Notes”) and raised an additional $200.0 million through a public offering of common stock.

Results of Operations

The following table sets forth, for the periods presented, the line items in our Consolidated Statements of Operations as a percentage of total revenues. The information contained in the table below should be read in conjunction with the financial statements and notes thereto included in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Revenues

We derive our revenues from monthly subscription fees and recognize subscription revenues ratably over each subscriber’s monthly subscription period. We currently generate substantially all of our revenues in the United States.

In the Domestic streaming segment, we derive revenues from services consisting solely of streaming content offered through a subscription plan priced at $7.99 per month. In the Domestic DVD segment, we derive revenues from our