OMG, What Happened To Netflix In 2012?

We had come across quite a few articles on Netflix after their Q4 earnings, mostly along the lines of 'They are back'. We were analyzing some numbers from the earnings report from Netflix - when we realized that 2012 overall has been a disaster of a year for Netflix. Here are some numbers (we have made all comparisons between the Twelve Months Ended Dec 31, 2012 and the Twelve Months Ended Dec 31, 2011).

1. (This is probably the most shocking of all) For an additional revenue of $404.7 Million in 2012, the Cost of Revenue has gone up in 2012 by $585.97 Million. Read that sentence again - are we missing something here? What is Netflix up to? We had spotted cost of revenue issues with Facebook as well - but this one beats everything else.

2. Marketing costs are up 20.3 percent. Some of this might have to do with Splitgate. But a warning bell for sure.

3. Technology and Development costs are up 27 Percent. This is a strategy shift, and will take a couple of years to play out.

4. Operating Income down 86.7 percent in 2012 compared to 2011.

5. Earnings Per Share down by 92.75 percent in 2012 compared to 2011.

Look at those 5 points again. What needs to be up is down, and what needs to be down is up. Is it too early to say that this train is headed in the wrong direction?