While Netflix saw its net income take a hit in the fourth quarter, the news wasn't all-bad.

The company beat estimates and more importantly saw its streaming business grow, despite a series of events in 2011 that were one PR disaster after the next.

The company reports it added 220,000 new domestic streaming customers during the period, bringing the total to 21.67 million. Internationally, it netted 380,000 new customers, bringing that total to 1.86 million.

The outlook for the first quarter of 2012 is rosy as well, with the company projecting a 1.7 million customer increase in its streaming operations.

DVD subscriptions continue to suffer, though, with 2.76 million people canceling their service with the company. At present, 11.17 million people are still subscribing to the DVD by mail program.

Outspoken Wedbush Securities analyst Michael Pachter has downgraded Netflix to "underperform," calling the film rental service "broken" and saying there may be no bottom to the company's 2012 losses.

Pachter says the price increases of earlier this year were handled in a haphazard fashion that cost the company dearly – and notes the fallout from it is still continuing months later

"It is clear that a price increase was necessary, and equally clear in hindsight that a 60 percent increase on the hybrid customer was too much," he wrote. "While we think that the company would have seen some customer defections and trade-downs at any price point, it is clear to us that the defections and trade-downs would have been less dramatic had the price increases been smaller."

Pachter, who has historically been a bit bearish on Netflix, added he was also particularly concerned with rising content costs and felt the focus on international expansion would be a significant cash drain on the company for an extended period. 

"We think that the company’s pricing structure is wrong, and its business model is broken," he said. "At current prices, we expect Netflix to continue to lose more hybrid customers than it adds, and those who remain will not be particularly profitable. ... Unless the company changes its strategy, we do not see upside to our $45 price target, and we see meaningful downside. In order to prompt a strategy change, company management must first admit that the current strategy is unsound, and we have seen no indication of that over the last several months."

The continuing customer backlash at Netflix is taking on staggering proportions. The company (whose stock, by the way, is down another 7 percent in trading this morning) has lost a quarter of its value in the past month.

Things don't look to be slowing down, either – and competitors are viewing that as a golden opportunity to swoop in and steal some of those disgruntled customers.

Leading that pack is Blockbuster, which has called a press conference for Friday where it says it will unveil "the most comprehensive home entertainment package ever." That's corporate hyperbole at its best, of course, but the upshot appears to be the Blockbuster streaming service is about to become official.

The Dish Network property has been expected to jump into the streaming market for a while now – but has played its cards close to its vest. There have been rumors, though, that it might be offered free to Dish Network subscribers. Other whispers indicate it will include content from Starz, whose current relationship with Netflix is set to end on Feb. 28.

And just to ensure it reaches as many people as possible with its news, Blockbuster plans to stream its announcement online via Ustream.

Netflix saw its problems begin in July, when it announced plans to separate subscription fees for its streaming and DVD rental service, effectively raising the rates for people who subscribed to both by 60 percent. That resulted in the company being forced to lower third-quarter subscription estimates by 1 million.

Late Sunday, it angered people again by announcing plans to separate its streaming and rental-by-mail businesses into separate divisions, eliminating much of the convenience the site has been famous for. Starting in a few weeks, the DVD delivery service will be called Qwikster.

Looks like Dish Network could be looking to tackle Netflix on its own turf – and it's bringing a surprise player to the game.

Bloomberg reports the satellite service plans to offer a standalone subscription streaming service that will capitalize on the Blockbuster brand. And, to rub salt in Netflix's wounds: It might include titles from Starz.

The service could launch as early as next month, according to Bloomberg. Pricing has yet to be set, though it could be offered in conjuction with Blockbuster's DVD by mail and in-store rentals. That would likely be meant to capitalize on Netflix's recent price hike and separation of those services.

Starz, of course, said it had halted negotiations about renewing the online streaming deal with Netflix yesterday. Some analysts, including Wedbush Securities' Michael Pachter, believe that was a negotiating ploy, meant to coincide with the price hike that went into effect yesterday and feel the two companies will reach a compromise before the current deal expires in February.

If they don't, however, and if the Bloomberg report is correct, it could propel Blockbuster into a much more viable competitor in the space.

Amazon has been the perennial bridesmaid to Netflix in the streaming video space for a while now. That hasn't changed – but the company has hit a notable landmark.

The online retailer's Instant Video service now has 100,000 movies and TV shows in its library of streaming and downloadable content.

Most of those are video-on-demand options, but in building the service, the company has also nearly doubled the offerings in its all-you-can-eat streaming service, which it offers free to Amazon Prime members. Launched in February with 5,000 titles, the service now has over 9,000 – which is still far short of the tens of thousands Amazon offers.

"We are focused on offering our customers the very best selection and are always working to expand our already extensive list of great video content," said Steve Oliver, director of video at Amazon in a statement.

Amazon has been striking deals with several new providers in recent months, most recently adding NBCUniversal Domestic TV Distribution (and titles such as "Eternal Sunshine of the Spotless Mind," "Elizabeth," and "Gosford Park") late last month

There's plenty of talk about cord cutting these days – the idea that people can cancel their cable subscriptions and still view most (or all) of their favorite programming. There's not a lot of talk, though, on where it's taking place.

The answer, it seems, is Dallas, Texas.

Bundle.com, a compiler of spending and savings data, has put together a pretty thorough look at the cord cutting movement – and finds that folks <clap clap clap clap> deep in the heart of Texas are the ones spending the most on rentals and digital media from sites like Netflix, iTunes and Hulu.

In fact, three of the top 10 cities are located in the state. (Click the chart to the right of this column to view the full infographic.)  

Media hub New York came in third – and Los Angeles didn't make the list.

Of the folks who stream on Netflix, TV shows are the most popular offering – gobbling up nearly 66 percent of the bandwidth, soundly trouncing any film category.

And while it's not directly related to cord cutting, the time spent watching streaming programming has got to be a worry to network executives. In 2003, the average person consumed 134 hours per year of streaming media. Two years ago (the most recent figures available), that number had climbed to 184 hours – and that was in the very early days of Hulu and long before Netflix began streaming on the Wii and PlayStation 3.

Between those two platforms, Netflix sees 38 percent of its streaming traffic.

Amazon Prime's streaming catalog isn't as big as the one at Netflix, but it's working hard to catch up.

The retail giant has struck a deal with NBCUniversal Domestic TV Distribution that will add select Universal Pictures films to the Prime Instant Video collection. The deal will bring the total number of streamable videos to 9,000.

Among the new titles are Oscar winners "Eternal Sunshine of the Spotless Mind," "Elizabeth," and "Gosford Park" as well as "Babe," "Notting Hill," "Being John Malkovich", "Fletch," and "Billy Elliott."

"We are very excited to offer Prime members popular Universal films at no additional cost," said Cameron Janes, director of Amazon Instant Video. "Our customers love movies and now we offer them more than 2,000 movies to choose from with Prime Instant Video."

Prime Instant Video is a streaming service the company offers to members of its Amazon Prime service. Members pay $79 per year for free two-day shipping as well as the free video. Even if they never take advantage of that once, the monthly cost for this streaming service works out to $6.50 per month, $1.50 less than Netflix’s least expensive service.

When it comes to audience reach, Netflix owes a debt of gratitude to the video game industry.

A new Nielsen Co. study finds that Netflix users are primarily streaming content to television sets – with half of those customers streaming the service through their Wii, PlayStation 3 or Xbox 360.

Meanwhile, Hulu watchers are bypassing watching shows on their TV, with a whopping 89 percent streaming video to their computers – more than double the number of Netflix customers who watch via their PC.

The study found that 25 percent of Netflix subscribers currently use the Wii to stream video content. Among PS3 owners that number falls to 13 percent – and among Xbox 360 users (who have to pay a $60 annual fee on top of Netflix charges) it's just 12 percent.

Only 5 percent of Hulu users watch via the PS3 and Xbox.

The news follows a Nintendo announcement from earlier this month that 1.5 million per day use Netflix on the Wii.

Given the pending sale of Hulu and the customer anger surrounding Netflix's new pricing plan, it will be interesting to see how these numbers shift in the course of the next year.

Netflix rolled the dice two weeks ago, announcing a significant change – and price increase – to its members. Now, it looks like a lot of those members may be planning to cut their ties with the service and embrace the competition.

A new survey from Wedbush Securities of 1,098 people finds that 22 percent of Netflix subscribers say they plan to discontinue their subscription with the company, and substitute its content with a combination of services, including Redbox, Hulu, Amazon's streaming video initiative and traditional cable pay-per-view.

Among the other expected results of the price hike, according to the survey:

* A 78% increase in $7.99/month streaming-only plan subscriptions 

• A 73% decrease in combination plan subscriptions

• 20% of subscribers will switch to unlimited DVDs by mail plans

Among those who say they plan to drop Netflix, the majority – 57 percent – say they plan to give their business to Redbox. Hulu is the next biggest potential beneficiary at 37 percent, followed by cable providers at 33 percent.

In other words, one of the leaders of the cord cutting movement could be driving users back to cable.

Of course, this is just a survey – and people often threaten to stop doing business with a company and fail to follow through. Should the results reflect actual behavior, however, Netflix would see a 21 percent decrease in its annual revenue run rate, says Wedbush.

But even Wedbush believes a fair number of people answered the questions purely from an emotional point of view.

"We expect defections at perhaps half the rate indicated by the survey, and expect no more than half of the 5.5 million current subscribers who said they would discontinue Netflix service to actually do so," said Wedbush analyst Michael Pachter. "With that said, we can only surmise the reason for the price increase, given that it is unlikely to generate higher overall revenues for Netflix, accompanied by a loss of goodwill for a company that has enjoyed one of the highest customer satisfaction ratings over the last decade."

Having established partnerships with both Netflix and Hulu on the Xbox 360, Microsoft might be gearing up to compete with them.

The company is reportedly planning to roll out a streaming video service of its own under the Zune brand later this year.

The Daily – Rupert Murdoch's daily iPad newspaper – reports that Microsoft is tired of seeing other subscription services earning money that it could potentially pocket, which is prompting the move. But it's a little light on details – such as whether the service will carry an additional charge or be folded into the current Zune monthly fee of $15.

It's also possible it could be folded into the annual Xbox Live service fee. Microsoft did recently raise that from $50 to $60, giving it a little more wiggle room to add features.

Microsoft declined comment, based on its policy of not commenting on "rumors or speculation”.

At present, Xbox Live users can download videos from the Zune service for an a la carte fee to watch them – something fewer and fewer people are doing, as streaming becomes more widely adopted.

40 percent of all Xbox activity is spent on activities other than games. The average console is used 30 hours per week for streamed video and audio programming – and the number is growing fast.

At E3 this year, Microsoft announced plans to begin streaming Live TV through the Xbox 360, but failed to give many details – including who it planned to target as partners.

"We're reaching out across the board with everyone," says Dennis Durkin, chief operating officer and chief financial officer for Microsoft's Interactive Entertainment Business. "Content partners have seen what we've done with Canal Plus and they want to see how they can leverage our infrastructure. … We'd like to see more live TV and local TV. We're doing everything we can to strike those partnerships."