service to Latin America and the Caribbean. In January 2012, we launched our streaming service in the UK and Ireland. We anticipate significant contribution losses in the International streaming segment in 2012. Until we reach our goal of global profitability, we do not intend to launch additional international markets.

As a result of the changes to our pricing and plan structure, we no longer offer a single subscription plan including both DVD-by-mail and streaming in the US. Domestic subscribers who wish to receive DVDs-by-mail and watch streaming content must elect both a DVD-by-mail subscription plan and a streaming subscription plan. Accordingly, beginning with the third quarter of 2011, management views the number of paid subscriptions as the key driver of revenues. The following metrics reflect these changes.

As we evolve our focus from our DVD to streaming service, we will be slightly changing how we treat our domestic subscribers so that they are in line with our international subscribers. Beginning in the first quarter of 2012, domestic members who are on payment holds will no longer be counted as unique subscribers nor will they be included in our subscription metrics. Members who cancel mid-period will continue to receive service until the end of the period and will accordingly be counted as subscribers and in our subscription metrics until the end of the period. These changes may impact our subscription metrics but we do not expect such impacts to be material. There is no effect on revenue from these changes.



Due to the announcement of changes to our domestic plan offerings, pricing, and branding in the third quarter of 2011, we experienced an increase in the number of subscriber cancellations, resulting in a net loss of unique domestic subscribers in the third quarter of 2011. However, unique domestic subscribers returned to growth in the fourth quarter of 2011 driven by the continued popularity of domestic streaming subscriptions. The subscriber cancellations in the second half of 2011, coupled with slower growth in the number of new subscribers joining our service, resulted in a 32.3% decrease in unique domestic net subscriber additions for the year ended December 31, 2011 as compared to the year ended December 31, 2010. The year-over-year increase in ending unique domestic subscribers was the primary driver in the 48.2% increase in consolidated revenues for the year ended December 31, 2011 as compared to the year ended December 31, 2010.

Domestic streaming subscriptions increased in the fourth quarter of 2011 as compared to the third quarter of 2011 when we first began tracking such subscriptions separately. Due to strength in both acquisitions and retention, we expect continued growth in this segment. Our contribution margin target for domestic streaming is 11% for the first quarter of 2012 with further margin expansion over the next twelve months.

In 2011, our International streaming segment reported a contribution 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