NFLX bounces back as Netflix gains subscribers, DVDs not so much

SAN FRANCISCO, CA - OCTOBER 24: A U.S. Postal worker holds a stack of Netflix envelopes at the U.S. Post Office sort facility on October 24, 2011 in San Francisco, California. Online movie rental company Netflix reported third quarter earnings of $62.5 million, or $1.16, per share compared to $38 million, or 70 cents per share one year ago. (Photo by Justin Sullivan/Getty Images)
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(CBS) - Netflix (NASDAQ: NFLX) released promising fourth-quarter numbers Wednesday.

After a series of fumbles in 2011, the video streaming services makes a comeback.

Netflix reported December saw 24.4 million subscribers in the U.S., up from 23.79 million in the third-quarter. That number is almost back at the 24.59 million in the second-quarter, before controversy caused customers to cancel service in droves.

Full coverage of Netflix at Tech Talk

The company was on an upward trajectory until changes to the pricing structure, to the tune of 59 percent. In protest, customers jumped ship and stock prices dropped.

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News of fourth-quarter earnings also inspired investors. Shares climbed nearly 16 percent on Wednesday, closing at $95.04. Netflix stocks continue to climb Thursday morning, hovering around $118 per share.

Netflix continues to lose DVD mail-in subscribers, however. The company is phasing out the service due to evolving technology and the move toward a disc-less future.

"We expect DVD subscribers to decline every quarter forever," Netflix chief executive officer Reed Hastings said during a conference call Wednesday.

The move toward everything in the cloud has been at the heart of Netflix's issues.

Analysts have speculated that Netflix faces steep price hikes for content licensing for streaming video. According to a CNN source, "Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012."

While there is plenty of completion in the video streaming market, Netflix has a far reach that is convenient for customers. The service is available online, through streaming players, mobile devices and video game consoles.