Netfix shares took an 11.9 percent fall this week, with shareholders dumping their stock after Netflix missed their projections during its earnings call last night. That’s the most Netflix has fallen in nearly two years, landing stock prices at $107.45 early this morning.

With second-quarter sales rising 27% to $519.8 million, Netflix was $5.6 million below analysts’ estimates at Bloomberg.

Not all was bad on the earnings call. Netflix’s net income rose 34% to 80 cents a share, 10 cents higher than estimates. Subscribers also grew, reaching 15 million last month thanks to a 42% increase over the past year. That’s almost 8% higher than Netflix’s first quarter, exceeding expectations as well. From Bloomberg,

The company spent more on acquiring new customers, $24.37 through June 30, compared to $23.88 the same period a year ago and $21.54 in the first quarter.

Hastings is funneling cash into Netflix’s “Watch Instantly” service as competition heats up with Coinstar Inc.’s Redbox movie-rental vending machines and alternatives such as pay-per-view on cable. Netflix service starts at $8.99 a month for streaming and one DVD at a time. The company said this week that it plans a video-streaming service in Canada, its first foray outside the U.S.

Seeing Netflix’s current woes, one can’t help but to wonder how much of this has to do with the growing competition. Hulu in particular is looking to become a major player in the on-demand streaming space, launching premium service Hulu Plus across several mobile devices and game consoles. Redbox is looking to contend with Netflix as well, announcing its plans for adding streaming services to its kiosk rental service.

That doesn’t mean Netflix will be taking things lying down. According to CNET, Netflix is in talks with Sony for an updated PS3 interface. It won’t require a disc, and will probably work like the Netflix app for Xbox 360. And as far as Hulu goes, Netflix doesn’t seem all that concerned.