Domestic and International streaming segments are lower than for our Domestic DVD segment. Investments in content and marketing associated with the International streaming segment will continue to fluctuate dependent upon the number of International territories in which our streaming service is offered and the timing of the launch of new territories.



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As we grow our streaming segments, we continue to shift spending away from the Domestic DVD segment to invest more in streaming content and marketing for our streaming services.



2013 Segment Results



Domestic Streaming Segment

In the Domestic streaming segment, we derive revenues from monthly membership fees for services consisting solely of streaming content offered through a membership plan. Our Domestic streaming membership plans are priced primarily at $7.99 per month. In 2013, we introduced membership plans priced at $11.99 per month under which members can stream content on up to four devices concurrently. New member additions and revenue related to $11.99 membership plans were not material for the year ended December 31, 2013. The $566.5 million increase in our domestic streaming revenues was due to the 26% growth in the average number of paid memberships.

The $290.3 million increase in domestic streaming cost of revenues was primarily due to the $226.3 million increase in content licensing expenses resulting from continued investments in existing and new streaming content including more exclusive and original programming. In addition, content delivery expenses increased by $31.0 million and other costs, such as payment processing fees and customer service call centers, increased $33.0 million due to our growing member base.

Marketing expenses increased $22.5 million primarily due to an increase in advertising partially offset by a decrease in payments to affiliates in the U.S.

Our Domestic streaming segment had a contribution margin of 23% for the year ended December 31, 2013, which increased as compared to the contribution margin of 17% for the year ended December 31, 2012, as a result of growing memberships and revenue faster than content and marketing spending.



International Streaming Segment

In the International streaming segment, we derive revenues from monthly membership fees for services consisting solely of streaming content offered through a membership plan priced at the equivalent of USD $7 to $14 per month. We launched our streaming service in Canada in September 2010 and have continuously expanded our services internationally with launches in Latin America in September 2011, the U.K. and Ireland in January 2012, Finland, Denmark, Sweden and Norway in October 2012 and most recently the Netherlands in September 2013. We plan to continue to expand our services internationally and expect a substantial European expansion in 2014.

The $424.8 million increase in our international revenues was primarily due to the 134% growth in the average number of paid international memberships. International streaming memberships account for 25% of total streaming memberships at the end of 2013.

The $299.2 million increase in international cost of revenues was primarily due