But at least as important are the company’s subscriber numbers and guidance, which should give us a much better sense of whether consumers have forgiven/forgotten its missteps of 2011. Netflix has already warned investors that it would lose money through much of 2012, largely because of its international expansion plans.

Q4 Domestic streaming: 22 million subs
Q4 Domestic DVD: 11.17
Q4 International: 1.86 million

Outlook: The company had already warned that it may not turn a profit in 2012, and it is now being more explicit about that, citing expansion costs and diminishing DVD revenue: “We expect modest quarterly losses, as well as losses for the calendar year.

Netflix ended the year with 24.4 million U.S. subscribers. That’s up 25 percent from the previous year, and — crucially — up from the previous quarter’s total of 23.79 million subs. That doesn’t mean its customer base has completely forgiven the company, but at the very least it means it is growing again.

Investors are pleased, and are pushing the stock up 10 percent in after-hours trading.

This is a case where the cheat sheet that Citigroup’s Mark Mahaney provides is particularly useful (click to enlarge).

Here’s a very interesting note on competition from Amazon: Netflix agrees with a New York Post report this morning which says Amazon will offer a standalone video service: “We expect Amazon to continue to offer their video service as a free extra with Prime domestically but also to brand their video subscription offering as a standalone service at a price less than ours.”

Hope to hear more about that from CEO Reed Hastings during the company’s conference call, which starts at 6 pm ET.

Today’s underscore opportunity: A press release announcing that Netflix customers streamed “more than 2 billion hours” of video during the last three months of 2011. CEO Reed Hastings telegraphed this one in December, when he told an investor conference that the company was set to stream “well over” a billion hours for the quarter.

But beyond a boilerplate reference to “more than 20 million streaming members,” Netflix isn’t saying how many customers were watching that video. And it’s not providing any other meaningful metrics until it announces Q4 earnings in about a month. So no need to spend any more time on this one.

Streaming is the future. We’re focused on it. DVD will do whatever it’s going to do. We’re not — we’re going to try to not hurt it, but we’re not putting a lot of time and energy into doing anything particular around it and then we’re focused on, how do we take advantage of this incredible global streaming opportunity.

That was Netflix CEO Reed Hastings, at the UBS media conference earlier this month, reiterating the point that Netflix has been making over and over again for some time: They want out of the DVD business, even though it is generating more than $1 billion a year for them.

Hastings and his team are convinced that even though consumers say that discs are important to them, their usage data shows that few people … use them. “Old fogey discs,” Hastings calls them.

Netflix tried very hard to accelerate the decline of DVDs with the Qwikster fiasco. Since then, Netflix has been careful to tell its subscribers who are still paying for DVDs that it is happy to have them around.

New subscribers are a different story, though. Netflix exclusively pushes its $8-a-month unlimited-streaming option, on its site and in its promotional materials. You have to work very hard to discover that the company still rents DVDs, and that’s by design.

Same deal for former subscribers that Netflix is trying to woo back: Even if you used to get both DVDs and streaming videos from Netflix, the company will only tell you about its streaming plan in its “come back!” emails. (See the screenshot of an email my colleague Tricia Duryee, who quit her hybrid plan this fall, got recently, at the bottom of this post.)

But the message is most clear for people who want to give someone a Netflix subscription as a present: The company no longer allows you to gift a subscription that includes a DVD plan, period.

Go ahead and see for yourself — there’s no way to give Reed Hastings and company an extra $8 a month for a service they’re still providing to some 11 million subscribers.

The one tiny workaround that the company offers (if you look very, very hard — or do what I did, and call up Netflix PR and ask) is the ability to let current subscribers extend their current deal. So, for instance, if you’re currently getting the equivalent of a $16-a-month hybrid disc-and-streaming option, and someone gives you a year-long $8-a-month streaming gift, you can convert that into a six-month hybrid plan.

But, boy, that’s complicated. Easier to just give someone a year of streaming, and then send them a check so they can add the DVD portion on their own. Which is what we just did this morning, here at the AllThingsD Brooklyn outpost.

So to repeat: If you work very, very hard, Netflix will let you give it money, and will let you rent DVDs in return. But it would really prefer that you didn’t.

They’re less happy than they used to be. But they don’t seem to be going anywhere.

That’s the cautiously optimistic conclusion of a new survey Citigroup commissioned over the past few months. It finds existing subscribers still fairly pleased with the service Reed Hastings is offering: 57 percent say they’re either “extremely satisfied” or “very satisfied.” But Hastings’ good will has certainly eroded a bit: In May, a similar survey found 50 percent of his customers in the “extremely satisfied” category. That number is now down to 18 percent.

As Citi analyst Mark Mahaney points out, the survey is a bit skewed, since Netflix subscribers who were most disappointed with the service’s changes — a price hike, an ill-fated attempt to spin off its DVD business into a separate unit, and the loss of programming deal that gives the company access to Sony and Disney movies — have already bailed.

But a different survey question suggests one reason customers are sticking around with Netflix: They don’t see many other options.

While Amazon has been building up its catalog of streaming video, only 9 percent of Netflix customers said they’ve watched movies or TV shows there. And while 15 percent said they’ve used Hulu, that number is down from 19 percent in May. Apple’s iTunes comes in at 8 percent. (Perhaps the reason only 27 percent of Netflix subscribers say they use Netflix is because they’re distinguishing between apps and the site. But that seems like a fairly precise distinction for a large number of people to make, so who knows.)

The very big picture is that Mahaney still assumes Netflix will keep growing. He figures its DVD-only subscribers will drop by 800,000, to 9.9 million, over the next year. But he thinks streaming subscribers will increase 9.9 million, to 30.9 million, and that the company will add a few million more as it expands in Latin America and the U.K. He also thinks Netflix will become profitable again by the end of 2012.

But none of that is going to help anyone who bought Netflix stock earlier this year, when shares had climbed as high as $300. Mahaney has lowered his price target for NFLX, and is now hoping it climbs back to $80.

HBO Go users, who can watch shows like “Game of Thrones” on their iPad, iPhones, and Android devices, watch 30 percent to 50 percent more than non-users*, Time Warner CEO Jeff Bewkes said today at the UBS media conference.

But Bewkes said that the pay channel’s subscriber count had been “stable” in the past year, which would mean it still has about 28 million paying customers.

That makes sense, given that the “TV Everywhere” strategy Bewkes has been pushing isn’t focused on attracting more customers but in keeping the ones he has — especially those tempted to seek out video entertainment via the Web, or services like Netflix.

Meanwhile, Bewkes was careful to note that those viewership bumps may not continue, given that HBO Go is still primarily in the hands of early adopters, though that’s still a decent-sized number. Last month Time Warner announced that the HBO Go app had hit the 5 million download mark for Android and iOS users.

Speaking of Netflix — just in case you didn’t get the message via this weekend’s interview with the Financial Times — Bewkes reiterated his position on the service. He’s happy to sell them stuff he can’t sell anymore. Services like Netflix and Hulu “can definitely add value to all of us, if you’re trying to get that obscure movie that you haven’t seen yet,” he said.

That kind of faint praise may explain why Bewkes’s initial assessment of Reed Hastings’s company today — “Netflix is our friend” — drew laughs from the audience.

*Bewkes didn’t specify whether that 30 to 50 percent increase was for TV viewing, or an aggregate number that includes TV + devices. I’m assuming the latter, but have asked Time Warner reps to clarify. UPDATE: Yup, aggregate.

And if you didn’t understand that one, he offered another metaphor: A “200-pound chimp.”

In the following months, Bewkes cut back on his rhetoric, which may or may not have had anything to do with a lucrative deal to sell reruns of “Gossip Girl” to Netflix. But now that deal has been inked, Netflix stock has been crushed and lots of smart people think the video service may be on a permanent spiral.

So here’s Bewkes again, damning his new partners with very faint praise, this time in the Financial Times instead of the New York Times: Netflix and similar services (read: Hulu and Amazon, for now) can’t get the best stuff anymore, he says, and are stuck showing “archival content that nobody would want in Blockbuster.”

Not that there’s anything wrong with that! Bewkes adds. “It can do certain things and not other things. It can fly, it’s not a submarine. Don’t turn a hamburger into a cow.”

And that is how a pro mixes metaphors and backhanded compliments.

Again, remember that the real purpose of this stuff isn’t to hurt Netflix CEO Reed Hastings’s feelings — Hastings can probably take it — but to make Time Warner shareholders feel better about the company’s cable holdings. Because Time Warner’s cable channels — like TBS and TNT, and its HBO premium channel — are absolutely competing with Netflix for viewer time and dollars, no matter how much either company tries to insist otherwise.

Does this sort of semi-smack-talk entertain you? (It’s okay to admit it. Me, too.) Then you’ll want to check back on Tuesday: Both Bewkes and Hastings are scheduled to present that day at the annual UBS Media/Telecom conference. I’ll be there to record the slings and arrows, and I’ll report back.

That’s when the streaming video company authorized a $300 million stock buyback plan. Netflix has since spent $259 million of that, all of it on shares priced well above the company’s current $75 level. Ouch.

In the first nine months of this year, Netflix spent $200 million buying back its own shares, at an average price of $222. Almost $40 million of those buys came in August and September, when Netflix shares were headed down on a very steep plunge from $300 this summer. The average price for those purchases was $217 a share.

The company’s last quarterly filing spells it out, if you like rubbing salt in wounds. Here’s the receipt for this year’s first nine months of stock buybacks (click image to enlarge):

And here’s the company’s summer spending spree:

It’s easy to ask: “What were Reed Hastings and company thinking?” And it’s easy to answer: “The same thing they’ve been thinking for years.”

Netflix has consistently been a buyer of its own shares, dating back at least to 2007. The details, via last year’s 10-K:
2007: Netflix bought $100 million worth of shares at an average price of $21.
2008: $100 million at a $26 average, followed by another $100 million at an average of $29.
2009: $175 million at $42, followed by another $149 million at $47.

Map those buys out against most of the NFLX chart for those years, and the Netflix management looks great — just like anyone else who bought NFLX in that time. But that’s the problem with crystal balls — they really tend to work best with hindsight.

J.P. Morgan analyst Doug Anmuth reports back from a recent huddle with Netflix managers, and says he thinks they’re done writing checks for a while: “We believe the vast majority of Netflix’s domestic streaming spend for 2012 … has already been announced or committed. Accordingly, we would not expect Netflix to spend aggressively or announce major new deals until management has better visibility on U.S. subscriber growth.”

Anmuth gives himself some wiggle room in his prediction — it’s possible that CEO Reed Hastings still has some whopper deals he’s signed but hasn’t announced yet — but the winking and nudging seems to indicate that the checkbook has gone away.

Part of the Netflix pitch in recent months has been that it’s going to be spending a lot of money beefing up its streaming video catalog, in part because it won’t be spending it on a Starz deal that gave it access to Disney and Sony movies. And Hastings says that, increasingly, Netflix is going to be paying a premium for stuff you won’t be able to find anywhere else — it’s one of the reasons his content bill is jumping to $3.3 billion, up from $1.2 billion a year ago.

Recent Netflix deals include a new pact to stream DreamWorks Animation movies, which used to run on Time Warner’s HBO, and a deal to grab reruns from the CW, the broadcast joint venture between Turner and CBS. And the company has made one high-profile commitment to original content, via “House of Cards,” the Kevin Spacey/David Fincher miniseries that will run next year.

Are those kind of deals enough to keep Netflix subscribers happy, or to lure new ones back to the service? We may get some hints from Hastings and company in the next few weeks, as they hit the investor-conference circuit. Netflix CFO David Wells will appear at a Credit Suisse gathering on Nov. 29, and Hastings will speak at a UBS conference on Dec. 6.

But Amazon isn’t Netflix, which has to convince investors and consumers that its business isn’t fundamentally broken. Jeff Bezos and company have a much easier story to sell: Profits are down because they’re spending money on expansion.

A lot of the money is going into Amazon’s old business, CFO Thomas Szkutak explained on yesterday’s conference call — the company is building out dozens of new distribution centers to help it ship all the physical stuff its customers still order. And a lot of the money is going into its new digital business — in particular, the new Kindle Fire.

Amazon is ultracautious when providing any details about its business, and Szkutak didn’t break from that tradition yesterday. But he did go out of his way to play up the company’s investments in its new tablets.

And while he didn’t spell it out, he made it quite clear that the company was happy to lose money on the tablets in the short term because it could sell more stuff to Fire owners in the long run.

Here’s a partial transcript from Seeking Alpha; it’s a bit garbled, but much more useful than my chicken-scratch notes from the call. Note the repeated reference to the “lifetime value” of the gadgets [my emphasis added]:

We’re investing in our Kindle and Digital business [and] you’re seeing that reflected in our Q4 guidance as well … if you take a look at our Kindle business, for example, we’ve launched 4 new products at the end of September, and we’re very, very excited about those products. They’re at great prices, and they are certainly premium products … And [when] we think about the economics of the Kindle business, we think about the totality. We think of the lifetime value of those devices. So we’re not just thinking about the economics of the device and the accessories. We think about the content. We are selling quite a bit of Special Offers devices which includes ads. We’re thinking about the advertisements and those Special Offers and those lifetime value[s].

Szkutak hit the same points a few minutes later. Remember that Amazon is disciplined at saying very little on these calls. So when Szkutak hits these talking points repeatedly, it’s not an accident:

We have learned a lot over the past couple of years … since launching Kindle. … what we’re seeing certainly is that once customers purchase a Kindle and are carrying around this really massive selection at their fingertips, they’re buying more content. We’ve talked a lot about that on previous calls. But again as we think about the lifetime value … we look at the total economics which include the device, the accessories, the content, as well as any ad-based revenue and Special Offers. So those are the things that we’re looking at, as we think about the lifetime value of the device. And we like what we see. And so certainly as you think about Q4 and you think about the guidance that we’re giving, certainly we’re going to have a — we expect to have a record quarter in terms of device sales. And because of the back-end loading of it, you should assume that the content would, obviously, trail that device sale. The ad revenue would trail those device sales as well as the Special Offers.. But we’re extremely excited about both our electronic ink and fire devices … and we think that those will be great for share owners over time.

As long as we’re parsing the call, it’s worth noting that Szkutak repeatedly points out the value of advertising on its tablets. I’d previously assumed that the company thought of ads — several of the Kindle base models now come with “special offers” as the default option — as a way to defray the Kindle’s costs, so it could get more of them in customers’ hands. But it seems Amazon has bigger ambitions.

Again, it’s important to stress that Amazon’s gadget model is the opposite of Apple’s: Tim Cook sells media so he can sell iPads and iPhones; Bezos sells Kindles so he can sell books and videos and music and even advertising.

Apple has already established that its model works. Now we get to see Amazon’s theory really put to the test.

You’ll forgive both groups if they’re a tad skeptical.

But if you feel like extending Reed Hastings the benefit of the doubt once more, then pay attention to the shareholder letter he published yesterday — in particular, the part where he explains the company’s content strategy.

In the end, if Hastings does deliver, this is the plan that will let him do it. And it’s a change from the company’s original content strategy, which means some folks haven’t figured it out yet.

Short version: When Netflix was a DVD company, it could afford to offer just about every movie or TV show every made. Now that it’s a streaming video company, it has to pick and choose.

So Hastings is trying to build an $8-a-month version of HBO — a network you pay for in addition to your regular TV package, not one that replaces it. And to make that work, he doesn’t have to have everything — but he has to have stuff you can’t get anywhere else.

Here’s an extended excerpt from his letter:

In television… the networks (ABC, FX, etc.) have long relied upon exclusive content to differentiate among themselves. As video moves online, so too has this practice of exclusive content. HBO has an exclusive license to recent Universal movies that includes its online HBO GO, for example. Netflix has signed exclusive licenses for DreamWorks Animation, for Relativity, and others. In episodic television, exclusives are also the norm. Netflix doesn’t license “Deadwood” from HBO because they see strategic value in keeping it exclusive. Netflix licenses “Mad Men” and “House of Cards” exclusively for much the same reason.

…We don’t have to “beat” Starz or other networks to succeed…We won’t have every movie or TV series; but we do provide enough value that consumers also want to subscribe to Netflix.

Any given consumer will have only one of DirecTV or Comcast, say, for their video service. That is classic either‐or competition. But with premium television networks like Netflix, the more good experiences there are, the more consumers are willing to spend to have multiple channels from which to get enjoyment.

Simple, right? The complicated part is the execution, of course. Hastings and his team have to figure out what their customers, and future customers, will value, and how much Hastings and his team can afford to pay for it.

And if they make the wrong calls — if it turns out that “House of Cards” isn’t interesting to anyone besides Kevin Spacey, or if the DreamWorks movies don’t satisfy people who used to watch the Pixar movies Netflix used to have — then Netflix really is toast.

But Hastings still has some 25 million subscribers, which means he still has plenty of money to keep betting — during his earnings call yesterday, he said the company’s content bill had shot up to $3.3 billion, up from $1.2 billion just a year ago. That’s not enough to pay for an unlimited supply of videos. But it should be enough to build a decent pay TV channel.

This did not make it onto “Saturday Night Live” last weekend, but it is still very funny — a mock interview by Charlie Rose of Facebook’s Mark Zuckerberg, the Huffington Post’s Arianna Huffington, Reed Hastings of Netflix and the world’s oldest “mean girl,” Rupert Murdoch of News Corp., all talking about Apple’s Steve Jobs.

Heh:

Next up — the crucial subscriber and guidance numbers. Netflix has broken its subscriber totals into streaming-only and DVD-only totals, which will make it a little harder to square with Wall Street expectations.

But here’s the important part: Netflix ended Q3 with 23.8 million total subscribers — a little lower than the 24 million guidance it offered last month. And it thinks that number won’t move much in the next three months: “we do anticipate that total U.S. unique subscribers will be slightly up in Q4.”

Investors hate the news, and are hammering the stock after hours. It’s down more than 20 percent, to around $94 a share. Recall that at one point this summer NFLX touched $300.

Here’s the company’s Q4 guidance — remember that many U.S. subscribers are both DVD and streaming customers:

Netflix says its subscriber problems don’t stem from its Qwikster misstep, but from its summer price hike, which it isn’t backing away from. “Our primary issue is many of our long‐term members felt shocked by the pricing changes, and more of them have expressed that by cancelling Netflix than we expected.”

DVD numbers dropped sharply last quarter, and streaming numbers won’t start growing again until December, the company says.

Okay. So what about all the competition that’s cropping up around Netflix? Are consumers going there? Netflix doesn’t seem to think so. For the first time that I can remember, it makes a point of denigrating Amazon’s streaming video content selection — “we have essentially all of this content on Netflix, and that content contributes a small fraction of Netflix viewing” — and says it doesn’t think many people are using it, period: “This low content selection explains why we have not seen much usage of Amazon Prime in our research.”

And what about Hulu and its Hulu Plus subscription service? Apples and oranges, the company says: “We think most Hulu Plus subs are paying to get current season TV content, which Netflix does not carry, such as this week’s SNL clips … In this sense, Hulu Plus current season TV is just a complementary content model to us, like sports or news subscriptions.”

Netflix also spends time in its shareholder letter explaining the value of exclusive content in online video, indicating that it’s going to continue to spend more on licenses it won’t share with others. That may work out well for the company in the long run but for now Wall Street is going to be hard to placate. Hastings can start trying tonight, during an earnings call that starts at 6 ET.

Here again is Mark Mahaney’s cheatsheet to help you interpret the numbers yourself:

But now we’ll get Reed Hastings’s own report card, when Netflix announces its quarterly earnings this afternoon.

As Citigroup’s Mark Mahaney notes, the key numbers to look for aren’t the Q3 metrics — the company has already preannounced that its subscriber numbers are going to be lower than it initially thought — but its guidance for the rest of the year.

That’s where we’ll be able to see the impact of its many stumbles — the price hike, the broken Starz deal, Qwikster’s New Coke moment — or at least what Netflix thinks the impact will be. If Netflix subscribers are really bailing out — and not just threatening to do so on Hastings’s Facebook page — you should be able to see that reflected in its expectations for the next three months.

Remember that shortly after Netflix dropped its first bomb this summer — a 60 percent price hike for many of its customers — management predicted that it would suffer a subscriber blip in Q3, but would recover by Q4. Let’s see if they’ve hung on to that confidence.

Here are Mahaney’s best guesses for Netflix’s Q3 results and Q4 guidance, along with Wall Street’s estimates (click image to enlarge). I’ll be covering the results live at 4 pm ET.

We need to take a few deep breaths and not move quite as quickly. But we also don’t want to overcorrect and start moving stodgily.

— Netflix CEO Reed Hastings, reflecting on a very rough couple months, to the New York Times Magazine’s Andrew Goldman. “It’s causing, as you would expect, an internal reflectiveness.”

The video rental company has a new licensing deal for shows from the teen-centric CW network, which is jointly owned by CBS and Time Warner’s Warner Bros. studio.

This one has been in the works for quite some time, despite the fact that Time Warner CEO Jeff Bewkes had made a point of belittling Netflix as “the Albanian Army” last year. But last spring, as the two companies continued to talk about distribution deals, Bewkes softened his rhetoric and explained that he would be quite happy to sell his reruns to the service.

Like other Netflix deals, this will be for reruns that are at least one season old — the company has stayed away from licensing “in-season” content. But if you want to watch last year’s “Gossip Girl” or “Vampire Diaries,” you’ll be able to stream those starting this Friday.

And like other recent Netflix deals, this is an “output” deal, which means Netflix gets the right to run shows that haven’t aired yet; the company has locked in everything the network will air through the 2014-2015 season. Netflix executives are increasingly pointing to this part of their content deals as a differentiator between their service and Amazon, which has been licensing much older shows for its streaming content deals.

The deal isn’t exclusive, though. Warner Bros. and CBS can still sell the shows via traditional distributors and other digital providers, with some restrictions.

Reminder: Netflix, which has lost about 60 percent of its market cap since this summer, reports Q3 earnings Oct. 24.

Netflix CEO Reed Hastings delivered the news via a blog post this morning, reversing a decision he announced via a blog post three weeks ago. Though the Web site for Qwikster, the would-be DVD-only service, said Sunday night that it was “launching soon,” it will never launch at all. The URL now directs visitors to the main Netflix site.

While Netflix had to use some strained logic to explain its decision last month, this one is straightforward: It’s not going to force customers to use two different services to rent DVDs and streaming video, because customers hated that idea.

Wall Street didn’t like it, either. After Netflix unveiled its Qwikster plans, its stock, which had been tumbling since July, fell another 25 percent — from $155 on Sept. 16 to $117 last Friday.

So presumably today’s announcement will appease at least some disgruntled customers and/or investors.

But not all of them: Netflix still hasn’t changed the pricing plans it announced this summer, which amount to a 60 percent price hike for about half of its customer base. And that price hike is what kicked off the company’s tumble from a peak of $300 a share.

Stock moves aside, the about-face — three weeks after an announcement that itself seemed rushed* — is a little hard to square with the aura that used to surround Netflix, and Hastings in particular: Super smart, able to see around corners, not afraid to run against the herd.

Because if Netflix really thought that “over time, both DVD and streaming will be much better, because they’re separate,” as Hastings put it in a much-unloved video message last month, why reverse the decision after some squawking?

Just a week ago, Ted Sarandos, Netflix’s man in Hollywood, told an industry conference that he was “very convinced” the split was “good for the long-term health of the business. And the long-term clarity of the brand.”

“But,” he added, “we also hear our customers, and we want to make sure we react to that,” promising that Netflix would have some news on the Qwikster front soon. (Thanks to Rich Greenfield for spotting; registration required at BTIG Research site.)

If you want to let your mind drift to dark thoughts, you could theorize that the reaction to the Qwikster announcement was so forceful that Netflix could see the results in its subscriber numbers.

If that’s the case, we might be able to see the effect in the Q3 subscriber numbers Netflix releases Oct. 24. Those numbers will include two weeks of operations post-Qwikster announcement, so the reaction would have to be quite severe to show up. But we’ll see.

Bear in mind that a few days before the Qwikster announcement, Netflix had already cut its Q3 guidance, citing reaction to the price hike.

The positive spin is that Hastings gets credit for recognizing a bad decision and fixing it before he caused more damage. You won’t be able to lump Qwikster in with New Coke and other bad-idea brands that never should have made it to market.

Again, here’s a reminder of how difficult it was for Hastings to pitch Qwikster last month:

*For the record, Jason Castillo, who owns the @Qwikster Twitter handle, wants the world to know that just because his avatar used to feature a pot-smoking Elmo, he’s not stoned himself. Left unanswered: Why couldn’t the Netflix guys find a brand name that someone hadn’t already claimed?

[Image credit: Konmesa/Shutterstock]

But here’s a reason to be bullish (or just less bearish) about Netflix: Amazon’s new tablet is also going to promote Netflix.

The video service is one of four big developers — along with Pandora, Facebook and Twitter — that should have apps ready for the Kindle Fire at launch, Amazon has said over and over again.

Here, in this Bloomberg Businessweek curtain-raiser, for instance. And throughout yesterday’s press event, like during my interview with Kindle content boss Russ Grandinetti.

Why would Amazon welcome Netflix when it’s building a competing video service? That one’s easy: Because even after all the blowback, lots of people like Netflix.

Reed Hastings and company should have 24 million customers at the end of this quarter, and 22 million of them will be streaming video. If you’re trying to sell a new gadget, you want to make sure you can include those folks as potential customers, by making sure they can use the service they like after they give you $200.

There’s also a larger question about how directly the Amazon video service will end up competing with Netflix, anyway. The two services seem similar enough at first glance, but lots of smart folks seem to think Amazon is most interested in using its service as an incentive to sign up for Amazon Prime, its express shipping service.

That is: Amazon wants to use digital video to sell physical goods, while Netflix wants to be in the digital video business, period.

In the video industry, Amazon has a rep for being unwilling to pay top dollar for content. For now, at least, it seems instead satisfied to fill its virtual shelves with not just old stuff, but very old stuff — stuff that’s from shows that don’t appear on TV at all anymore.

Netflix has plenty of that stuff, too, but it has has recently made a point of paying up for much fresher stuff — like episodes of “Mad Men” — and stuff that’s so fresh it hasn’t aired yet, like Kevin Spacey’s “House of Cards.”

To be fair, Amazon’s aims could change. It could happen over time, as it cobbles together enough assets and subscribers to make a real run at Netflix. Or it could be overnight: The company is one of the handful of serious bidders still looking at Hulu, and if it landed that service, things could get very interesting very fast.

But for now, Amazon is going to have enough work convincing people who’ve spent a lot of time and money on Apple’s platform to switch to its own cloud service. No reason to make it harder by pissing off millions of Netflix customers, too.

The company held a 40-minute press conference in San Francisco to unveil its new Blockbuster branded service, and by the end, many folks, including myself, were left scratching their heads.

But best as I can tell, this is a service that might appeal to some Dish satellite TV customers who are paying for Netflix and want to save some money — they can get more or less what Netflix offers, at the price Netflix used to charge before its 60 percent price hike.

That’s not a terrible thing for Dish to offer. And if it does cost Reed Hastings and company some subscribers, then that’s certainly not a good thing for Netflix.

But Netflix — and its investors — have known for a long time that they’d be fighting new entrants in the streaming video game. If this is as tough as the competition gets, they’ll be quite happy.

Though Dish is trying mightily to differentiate between the two, they seem quite comparable, except that:

1) The service is only available to Dish customers, and only to a subset of the satellite service’s 14 million subscribers, those who have the correct boxes/tech connecting their sets.
2) The Dish service will give people the ability to pick up movies directly from a Blockbuster store instead of waiting to get it in the mail box.
3) Dish will offer a much smaller selection of titles for on-demand streaming than Netflix: 3,000 movies available for streaming to TVs, and 4,000 for streaming to PCs; Netflix has roughly 20,000 movie and TV titles.
4) The service will include videogame rentals via mail, which Netflix doesn’t offer yet but plans to roll out via its new/old Qwikster spin-off.
5) It costs $10 a month. That’s $6 less than a comparable Netflix disc + DVD combo, but $2 more than the Netflix streaming-only package. (Like DirecTV and its Sunday ticket package, Dish will also use the service as a promotional freebie for new sign-ups.)

I think as we have a little more time to delve into this, we’ll get a better sense of how the services really stack up: Does Dish/Blockbuster have access to the same kind of “long tail” content that Netflix says its customers value? What about Apple and Android apps? Etc.

But so far, at least, investors have taken a look at what Dish has to offer and shrugged: NFLX shares up 1.73 percent for the day.

[Image via rick seeney / Shutterstock.com]

You don’t have to be terribly perceptive to see this one coming.

For instance: The company’s invitations for today’s event (you can watch a livestream here) tease that Dish and Blockbuster will be offering a “stream come true.”

Meanwhile, everyone — including Netflix CEO Reed Hastings — assumed a new streaming service was the reason Dish paid $320 million to buy Blockbuster out of bankruptcy back in April.

And then there’s the fact that Dish itself has said, on the record, that it wants to launch a Netflix-streaming competitor.

So that mystery is just about solved. Real question: What will it mean for Netflix?

We’ll have to wait until we see crucial details about pricing and catalog. [UPDATE: Here we go. Verdict: A not-bad but not-exciting service that's only available to Dish customers, for now. Most definitely not a Netflix-killer.]

The obvious play would be to offer more titles for the same $8 a month that Netflix charges, or less. But that isn’t a given.

For one thing, while lots of folks like to gripe about the relatively limited selection that the Netflix streaming service offers to its customers, it’s still a whole lot more extensive than anything else out there.

Netflix has some 20,000 titles; Amazon, its next-biggest subscription rival, has a mere 9,000. It would be quite tough for Dish to acquire anything close to Netflix from the very start.

And the Hollywood studios that Dish is counting on to help it battle Netflix aren’t going to be that psyched about another $8 all-you-can-eat plan. They feel that kind of pricing undervalues their movies and discourages customers from buying or renting their films as one-offs.

Recall that many people believe the reason Netflix hasn’t been able to renew its Starz deal is because the cable network insisted that Netflix create a new, more expensive tier for its stuff.

If the Blockbuster service includes Starz movies, as Bloomberg reports, then it’s hard to imagine it working without a premium tier.

So we’ll see. The good news — if there is any — for Hastings and Netflix is that Dish/Blockbuster isn’t creeping up on anyone, so that should (theoretically) cushion any blow. We’ll come back this afternoon once we hear the full details.

That simplicity is supposed to be a core part of the service’s appeal. And CEO Reed Hastings has said, over and over, that he doesn’t want to monkey with it.

Which is why it was weird to read that Netflix CFO David Wells told an investor conference yesterday that actually, he can see Netflix monkeying with it.

Perhaps, he seemed to suggest, it could sell one-off rentals — video-on-demand, like Apple and Amazon and the cable companies all offer — for titles that it couldn’t include in its regular streaming package because of licensing issues.

Here’s a transcript of Wells’s comments at the Goldman Sachs “Communacopia” conference Wednesday, via Splatf’s Dan Frommer:

You know, traditionally what we said about VOD was it’s a low-margin business, we weren’t that interested in it because it sort of complicated the simplicity of the offering.

I think in today’s sort of evolving and changing world, we’d look at a number of different options. In terms of making it convenient for folks to find that content rather than going to a competitor, to another site, we certainly would look at it.

I wouldn’t expect us, for that to be, sort of, our reaction right now, but certainly in the evolving competitive set and the evolving market, we would look at other things as well.

As Frommer notes — he has tempered his original post to emphasize this — this doesn’t mean Wells is saying Netflix will offer VOD any time soon. But it sure sounds like one of its most powerful executives is at least opening the door to the concept.

But even that may be too much. After reading Frommer’s post, I reached out to Netflix PR to see if they could provide some context for Wells’s remarks.

Instead, spokesman Steve Swasey sent me this quote: “We have been very clear, Netflix is a subscription service. Our core competency we offer to consumers is unlimited movies and TV shows for one low monthly price. I am not aware of any deviations in this strategy.”

So there you go: Not happening!

And if I can read into that just a bit — things that also aren’t happening could include a new tier of service for certain kinds of content, which was supposedly a key condition that Starz had demanded in its renewal negotiations with Netflix.

Still. If earlier this year you’d have asked Netflix to tell you about its plans to raise prices by 60 percent and turn its popular DVD offering into a standalone service with a not-great name, I don’t think the company would have told you about its plans then, either.

You can take the Netflix CEO at face value, and read his explanation — and his introduction to Qwikster, his new DVD-only business. You can and should also read Benchmark VC Bill Gurley’s explanation about the company’s licensing deals with Hollywood, and how the move may give Netflix more money/breathing room.

(Gurley’s explanation is particularly resonant in the wake of Netflix’s Sony outage this summer, where the studio was able to pull its movies off the service because Netflix’s subscriber totals had hit a certain level. Perhaps this move solves that problem — temporarily, though, because Netflix will lose access to Sony movies again if/when its Starz deal expires in February.)

Many Netflix users don’t care about the rationale, and flocked to the company’s blog post to vent. When they did, they found … Reed Hastings, waiting for them in the comments section, fielding many of their questions/complaints/rants.

The Internet figured out right away that Netflix doesn’t own the rights to the Qwikster Twitter handle (Meet Jason Castillo, world! He is tired and/or high). But the fact that Hastings is engaging directly with (some of) his audience via Facebook (where he’s now a board member) seems at least as interesting to me.

Definitely worth scrolling through some of Hastings’s back-and-forth with users. (Note that, because it’s Facebook, he can at least be reasonably sure they are who they say they are, as opposed to a random Internet commenter or Twitter troll.)

Some of the exchanges show Hastings earning a couple points of goodwill for wading into the scrum. Many more of them show the limits of public outreach — Hastings can engage with users all they want, but he can’t tell them what they want to hear.

And there’s at least one comment from Hastings that tells you, whether he meant to do so or not, what he really thinks about Qwikster, its service and its branding: “Old Fogey discs will last a long time. Part of the reason we setup Qwikster was so it last a long time too, focused on DVD.”

He is, however, renaming his DVD rental business: Anyone want to subscribe to “Qwikster”?

Hastings says that instead of backing down from his decision to split off the company’s DVD business and charge extra for it, he’s going to double down and make it even clearer that Netflix is getting out of the disc business: DVD rental customers will soon get their stuff from a separate Netflix unit, with a separate name. One small bit of news: The new/old disc service will begin to offer videogame rentals, as well.

In this video, Hastings and soon-to-be Qwikster head Andy Rendich try to explain their reasoning, and what it will mean for customers.

Hastings’ message to subscribers — and investors — is an interesting mix: On the one hand, he steps up and says he erred — by not communicating his reasoning behind a recent price hike for customers who want both streaming video and DVDs by mail.

On the other hand, he explains that he didn’t really make a mistake — he just didn’t speak clearly enough.

It’s a bit like like the apologies that certain celebrities and athletes make after a gaffe. “I’m sorry if I offended anyone” is quite different than “I’m sorry I screwed up.” (Note, though, that Hasting’s first sentence is indeed “I messed up.” He gets the difference, too — he just can’t say he’s sorry for something he’s truly not sorry about.)

As far as I can tell, Hastings’ argument/explanation about his reasoning hasn’t changed a bit from the messaging he’s previously sent out. It’s just that he’s saying it with a bit more force. That is:

• Netflix is getting out of the DVD business sooner than later; and
• Netflix says its streaming video business is going to become more attractive, not less. And that will also happen soon: “The additional streaming content we have coming in the next few months is substantial.”

Will that be enough to appease angry customers and disappointed investors? We’ll get an answer for the second group in a few hours, when NFLX shares, which once hit the $300 level, start trading again. Right now they’re at $155.