Netflix: Kiosks Will Be No.1 Competitor, Future of Video Is Social

Netflix (s NFLX) ended the first quarter of 2009 with a bang, meeting the high end of its guidance with 10.3 million total subscribers and $394.1 million in quarterly revenue, the company announced today.

Netflix added more than 920,000 net subscribers during the quarter, compared with 764,000 during the first quarter of 2008. Netflix added 600,000 of those new first-quarter 2009 subscribers in the first half of the quarter. CEO Reed Hastings said this front-loading of new subscribers fell in line historical patterns for the company.

Here are some of the highlights from the earnings call:

DVD: Hastings reinforced the company’s commitment to DVDs and Blu-ray and said he believes there is still a lot of growth in its rental by mail business. Rental kiosks and their $1 new release movies are expected to be Netflix’s No. 1 competition by the end of the year.

STREAMING: No specific stats on usage provided here, though Hastings said the streaming service was energizing the company’s growth. When asked about the possibility of a streaming-only subscription service, Hastings replied (rough transcription) “Streaming only is something we look at from time to time. When we talk to subscribers, they are focused on the hybrid [streaming/DVD] of what we do.” The company doesn’t believe that a streaming-only subscription would drive as big a shift away from DVDs as people think.

SOCIAL: Hastings said the future of video watching is not linear channels, it’s “closer to Facebook and YouTube (s GOOG)” than it is to a standard grid view (presumably he means the way you scroll through TV channels now), and it will cater to the Internet generation.

PARTNERSHIPS: Netflix has a “tremendous number” of partnerships with consumer electronics manufacturers in the pipeline.

ONLINE VIDEO COMPETITION: Hastings said Netflix’s subscriptions, the ad-supported Hulu (s GE) and pay-per-view from Apple (s APPL) and Amazon (s AMZN) are like “three drops of water in an ocean,” given how much regular TV viewing people are consuming. Taking a rather Zen-like approach, it wasn’t as much about beating his competitors, but more about how the online video players right now are just trying to figure out what fraction of this giant ocean of TV viewing they can capture.