both retaining our existing subscribers and attracting new subscribers, our churn will likely increase and our business will be adversely affected.

The following table presents our ending subscriber information:

Subscription

The increase in cost of subscription for 2005 as compared to 2004 was primarily attributable to the following factors:

	•	 	The number of DVDs mailed to paying subscribers increased 53 percent, which was driven by a 59 percent increase in the number of average paying subscribers offset by a slight decline in monthly movie rentals per average paying subscriber.

	•	 	Postage and packaging expenses increased by 52 percent. This increase was primarily attributable to the increase in the number of average paying subscribers and the number of DVDs mailed to paying subscribers.

	•	 	DVD amortization increased by 23 percent primarily due to increased acquisitions for our DVD library partially offset by the impact in the current year of $7.8 million related to the change in estimate of useful life of our back-catalogue DVD library made in the third quarter of 2004.

	•	 	Revenue sharing expenses increased by 54 percent. This increase was primarily attributable to the increase in the number of average paying subscribers coupled with a slight increase in the percentage of DVDs subject to revenue sharing agreements mailed to paying subscribers.

The increase in cost of subscription in 2004 as compared to 2003 was primarily attributable to the following factors:

	•	 	The number of DVDs mailed to paying subscribers increased 102 percent, which was driven by a 78 percent increase in the number of average paying subscribers coupled with a 13 percent increase in monthly movie rentals per average paying subscriber.

	•	 	Postage and packaging expenses increased by 93 percent. This increase was primarily attributable to the increase in the number of average paying subscribers and the number of DVDs mailed to paying subscribers, partially offset by a decrease in the per-unit postage and packaging cost.

	•	 	DVD amortization increased by 87 percent. This increase was primarily attributable to increased acquisitions for our DVD library partially offset by a reduction in amortization of $10.9 million as a result of the change in estimate related to back-catalogue useful lives.

	•	 	Revenue sharing expenses increased by 80 percent. This increase was primarily attributable to the increase in the number of average paying subscribers and the number of DVDs mailed to paying subscribers, partially offset by a decrease in the percentage of DVDs subject to revenue sharing agreements mailed to paying subscribers.

Fulfillment expenses

The increase in fulfillment expenses in absolute dollars in 2005 as compared to 2004 was primarily attributable to an increase in credit card fees as a result of the increase in subscriptions, an increase in personnel-related costs resulting from the higher volume of activities in our customer service and shipping centers and an increase in facility-related costs resulting from expansion of certain of our shipping centers and the addition of new ones.

The increase in fulfillment expenses in absolute dollars in