READ Personal Finance News from Yahoo! FinanceThe more traditional rental business was too late to the streaming video party.
Constant evolution and increased device support allowed red envelopes to trounce blue snapcases.
At this point, no one would confuse the winner of the 13-year Netflix (Nasdaq: NFLX) versus Blockbuster (NYSE: BBI) war. One continues to grow as the other attempts one last-ditch effort after another. But last week, as Netflix reported its first-quarter earnings and Blockbuster continues to shutter locations and flirt with Chapter 11 -- despite a recent sharp uptick in the market -- the online retailer delivered news indicating that it not only won the war, but it's delivered a flaming bag of Wild Wild West VHS tapes on Blockbuster's doorstep.
Netflix finished up a stupendous quarter, earning $0.59 per share -- topping Wall Street targets by a nickel. The retailer gained a record 1.7 million new subscribers and closed out the three-month period with almost 14 million customers. Revenue for that quarter neared $500 million and represented a 25% year-over-year growth. Churn rate dropped, gross margin grew, and the company projects a stronger second quarter.
In a press release, CEO Reed Hastings referenced one of the main factors to its success. He said, 'It is clear that our performance, and the overall appeal of the Netflix service, is being driven by subscribers watching instantly. On that score, we reached a milestone in the quarter as more than half of all members -- 55% and growing -- enjoyed movies and TV episodes streamed from Netflix over the Internet.'
Yes, 55% of Netflix subscribers have watched more than 15 minutes of content streamed to their computer or Netflix-supported device. And the number of those devices continues to grow. The retailer has only recently added the Nintendo Wii and its 30 million American users to the fray, but its service is also compatible with the Xbox 360 (Nasdaq: MSFT), PlayStation 3 (NYSE: SNE), TiVo (Nasdaq: TIVO), and decks from Panasonic (NYSE: PC), Insignia, and Seagate (Nasdaq: STX). Also, along with the highly anticipated Boxee Box, Netflix aims to add support to Apple (Nasdaq: AAPL), Android, and Windows 7 mobile devices.
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