Making it a Netflix quarter

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The bottom may be falling out of the DVD market for Hollywood, but not at Netflix Inc.

The DVD rental company set a record for subscriber growth — blowing past the 10-million -customers mark — and reported that first-quarter profits skyrocketed almost 70%, compared with the same period a year ago.

Reed Hastings, chief executive of Netflix, attributed the growth to the online video service’s ‘unlimited rental’ deal, which allows movie junkies all-you-can-watch plans for the month. But a weak economy with more families looking for low-budget entertainment probably didn’t hurt either.

Netflix ended the first quarter with 10.3 million subscribers, a 25% gain from first quarter 2008 and posted net income of $22.4 million on revenue of $394.1 million.

Netflix is raking it in on rentals when Hollywood is struggling with its DVD business. Adams Media Research, which tracks the DVD business, estimated a 11.4% drop in consumer spending on DVDs in 2008, a trend that is expected to worsen this year.

Netflix isn’t the only beneficiary of the economy’s and Hollywood’s woes. Redbox, the movie kiosk operator, has also enjoyed a surge in business so strong that it is planning to expand from 12,900 kiosks to 20,000 by the end of the year.

-- Joe Flint

Randi Lynn Beach / For The Times