After creating the much-admired model of an Internet mail-order rental business, shipping about two million DVDs a day, Netflix has been aggressively pursuing the next generation of distribution channels -- web streaming, game consoles, and other connected devices. About half of its 11 million subscribers have used the "watch instantly" feature -- movies and shows without commercials. More than 12,000 titles are available for streaming, and more are coming as Netflix signs on more studio and network partners.
Here's how the plotlines of Netflix and Hollywood's other high-profile disruptor, Hulu  (#11), are converging:
Hulu Topped 43 million monthly viewers. Has streamed 6.7 billion videos since 2008 site launch.
Netflix Topped 11 million subscribers. Has delivered 2.5 billion DVDs, Blu-ray discs, and video streams since 1999 launch.
Hulu CEO Jason Kilar , 38, a Harvard MBA and Amazon vet. Quirk: monitors Hulu feedback 20-plus times a day on Twitter.
Netflix CEO Reed Hastings , 49, who earned a master's in computer science from Stanford. Quirk: doesn't have an office.
NEW CAST MEMBER
Hulu ABC, which joined the NBC-Fox joint venture, adding episodes of shows such as Lost .
Netflix ABC, which lets Netflix's streaming service deliver previous seasons of shows such as, well, Lost .
Hulu Boxee , which streamed Hulu content directly to TVs until Hulu's parent companies objected.
Netflix Redbox , which offers same-day DVD rentals for $1 at 19,000 locations.
Hulu YouTube, which now shows clips of current ABC shows and episodes of TV classics.
Netflix YouTube, which struck a deal with Lionsgate and others to stream some of their movies for free. Also testing rentals with Sundance.
Hulu Launches Hulu Desktop  -- think TiVo with endless memory -- to simulate the TV experience on a computer, including remote control.
Hulu Developing a Web-only reality series with American Idol creator Simon Fuller.
Netflix Crowns winner of Netflix Prize, a $1 million award for improving its recommendation engine.
Hulu Next Issue Media is the "Hulu for magazines"; Epix is the "Hulu of movies"; Vevo  is the "Hulu of music."
Netflix Rent the Runway  is the "Netflix of high fashion"; DeepDyve is the "Netflix of scientific and technical journals."
TRICKY PLOT TURN
Hulu Can Hulu increase revenue (estimated at $140 million in 2009) and keep impatient parent companies at bay?
Netflix Can Netflix procure newer titles such as The Blind Side for streaming to match its DVD library, without getting gouged by rights fees?
Hulu Nagging rumor: no more freebies. It'll become a pay-only site.
Netflix Nagging rumor: Amazon  will buy it.
Hulu What will Comcast do with Hulu after acquiring NBC Universal? More ads? A pay tier? Fold it into Fancast Xfinity TV?
Netflix What happens if partners like Xbox strike content deals directly with studios, cutting out Netflix?
Los Gatos, CA
| NUMBER OF
total revenues for most recent fiscal year
what the company is most famous for
Its DVD-by-mail service and ubiquitous red envelope.
why it's innovative
For aggressively evolving its model in a volatile space, adding instant streaming service and new stream-to-TV partners, such as Tivo and Xbox.