This week, the California-based rental company, Netflix, reported that its Q4 profits were up 45% while the rest of the world watches its revenue shrink.

Netflix CFO Barry McCarthy during a financial conference call says that they have a perspective to see more growth We continue to see strong momentum in our business, quarter to date. Netflix shares jumped seven percent in after hours trading yesterday, and currently sit at $34.82 a share.

The unexpected growth was so much for the slowing demand in its movie rentals that Netflix predicted after profits rose 30% last quarter and the company had 8.7 million subscribers.

Based on the outcome of growing Netflix's users CEO Reed Hastings revealed that people are now switching from DVDs to Online streaming, We are seeing early signs of less DVD usage with some subscribers who are also watching instantly as compared to subscribers who only receive DVDs. Time will tell whether this substitution effect is an attribute of early adopters or a mainstream behavior, Hastings said.

The Netflix library contains more than 100,000 titles and with $4.99 monthly subscription customers can select what they want online - chosen titles will arrive in the mail with a postage-paid return envelope and for a higher monthly fee users can rent multiple titles at the same time or download and stream their favorite flicks.

Hastings told Fortune magazine about how he came up with the idea for the company and gives some tips on how to ensure business success - target a specific niche, stay flexible, never underestimate the competition and there are no shortcuts.

California Netflix Video Streaming