Netflix kicked off the first quarter of 2009 by adding 920,000 new subscribers, more than any other three-month period in the company's history, though faces several uncertainties in 2009.
Netflix now has more than 10.3 million subscribers -- a drastic increase from 9.4 million it had at the end of last year. The company admitted that its service hasn't drastically changed, it's just a great value consumers are looking for during a struggling economy.
The service has expanded into the living room via streaming technologies, which the company has poured a large amount of money into. In fact, analysts who previously predicted impressive profit numbers learned that Netflix's profit ratings weren't high largely in part of the costs to expand and improve streaming services.
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Even though Netflix now has more than 10 million subscribers, it also is feeling the pressure from $1 rental kiosks that are popping up in shopping malls and grocery stores across the country.
"In exit surveys of canceling Netflix subscribers, kiosk is more and more frequently named as where they will go now for movies," he said. "By the end of the year, kiosks will likely be our number one competitor as video stores fall inversely," according to Netflix CEO Reed Hastings said, also saying the "long-term effects of ubiquitous $1 new release DVD rental are not positive for us or the industry as a whole."
Hollywood movie studios also have had strong opinions regarding Redbox and similar DVD kiosks, saying it undercuts other DVD retailers by offering $1 movie rentals.
Netflix will have to shift gears and focus on selection and better promoting its streaming services, which rental kiosks obviously cannot offer. I expect the company to be able to battle the kiosks and slumping economy by continuing to expand its streaming movie catalog, which remains rather unimpressive right now.
