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Netflix Q3: 42 Percent of Subs Streaming, and What’s the Mystery Box?

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Netflixbox_360Netflix (s NFLX) announced its 2009 third quarter results today, and gave a whopper of an earnings call with our first official stats on how many people are streaming Netflix, thoughts on the company’s kiosk and cable competition, a mystery new CE partner, and its first international moves.

But first here are the numbers: Netflix ended the third quarter with 11.1 million subscribers (up 28 percent year-over-year, and up 5 percent from the end of the second quarter). Revenue for the third quarter was $423 million (up 24 percent year-over-year, and up 4 percent from the second quarter).

While expectations were even higher — the stock dipped 2 percent in after hours trading — perhaps the market has gotten too used to Netflix blowing out earnings. Meanwhile, CEO Reed Hastings doled out some sweet info nuggets that make it look like we’ll be busy writing about Netflix in the fourth quarter. Here’s the breakdown:

Streaming Stats: Hastings said 42 percent of Netflix subscribers streamed at least 15 minutes of one TV episode or movie during the third quarter. This is up from 22 percent (of a smaller base) who streamed as much during the same period last year.

Kiosk Competition: While he didn’t come out and say it directly, Hastings seemed to be taking Hollywood’s side in the studios v. Redbox battle that is brewing. Hastings said that if the studios chose to create a “sales only” window with no rentals and a low-enough price for delayed rentals, the situation could be “a win for everyone,” especially since most Netflix rentals are library titles, not new releases.

Cable competition: Hastings conceded that his company’s over-the-top streaming could be seen as a threat to the cable companies’ video business, but said it’s a killer app for driving cable’s broadband business that could boost cable’s overall profits. Hastings said he envisions Netflix doing co-promotional deals with cable providers. Hastings also didn’t think that the streaming service would not be competitive with the cable cos TV Everywhere initiatives.

Big mystery CE Device: Particularly enticing was the news dropped during the call that Netflix would be partnering with another CE device later this year with a “material installed base,” big enough that the company revised its fourth quarter guidance upwards. Earlier in the call, Hastings mentioned that more CE companies want to include Netflix service and he specifically said “game consoles.” Could this mean that Netflix’s exclusivity with the Xbox will end and the service will pop up on Sony PlayStation 3 (s SNE) or the Nintendo Wii?

International: Netflix will be expanding internationally starting in 2010. International efforts will be streaming only and will start off small. You heard that right — no DVDs. Hastings commented on the complexities of postal systems abroad, so the international move would be Netflix’s first streaming only plan.

Looks like we’ll have plenty of topics to touch on during Reed Hastings fireside chat with Om at our upcoming NewTeeVee Live conference on Nov. 12. You won’t want to miss it, get your tickets today!

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