domestic average number of unique paying subscribers arising from the continuous improvement to our customer experience which in turn, drove consumer awareness of our service benefits. This increase was offset in part by an 8.3% decline in the domestic average monthly revenue per unique paying subscriber, resulting from the continued growth in our lower priced subscription plans. In the fourth quarter of 2010, when we introduced the unlimited streaming plan, over one-third of new subscribers elected this option.

We expect the streaming subscription plans offered both domestically and internationally to continue to grow as a percentage of our total subscriber base. We expect that as a result of the increase in subscriber cancellations and migration of our subscribers towards streaming subscription plans and lower priced DVD-by-mail subscription plans, offset by increases in international revenues, consolidated revenues will be relatively flat in the first quarter of 2012 and will increase at a modest pace sequentially in future quarters.

Cost of Revenues

Cost of revenues consists of cost of subscription revenues and fulfillment expenses.

Cost of subscription revenues consists of expenses related to the acquisition and licensing of content, as well as content delivery costs related to providing streaming content and shipping DVDs to subscribers. Costs related to free-trial periods are allocated to marketing expenses.

Content acquisition and licensing expenses consist primarily of amortization of streaming content licenses, which may or may not be recognized in the streaming content library, as well as amortization of DVD content library and revenue sharing expenses. We obtain content through streaming content license agreements, DVD direct purchases and DVD revenue sharing agreements with studios, distributors and other suppliers. Content agreements are made in the ordinary course of business and our business is not substantially dependent on any particular agreement.

Content delivery expenses consist of the postage costs to mail DVDs to and from our paying subscribers, the packaging and label costs for the mailers and all costs associated with streaming content over the Internet. We utilize third-party content delivery networks to help us efficiently stream content in high volume to our subscribers over the Internet.

Fulfillment expenses represent those expenses incurred in content processing, including operating and staffing our shipping centers, as well as receiving, encoding, inspecting and warehousing our content library. Fulfillment expenses also include operating and staffing our customer service centers and credit card fees.

The $682.5 million increase in cost of revenues was due to the following factors:

 

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Content acquisition and licensing expenses increased by $674.4 million. This increase was primarily attributable to continued investments in streaming content resulting in an increase in the average number of streaming content titles available for viewing to our domestic subscribers as compared to the prior year. The increase is also partially attributed to an increase in streaming content titles available in