Netflix recently revealed it gained a record 15.77 million subscribers during the first quarter of 2020, in large part because of the coronavirus outbreak. Bloomberg reports the streaming service received the bulk of its sign-ups in March after government lockdown orders prompted millions of employees and students to begin working remotely. The company’s COVID-19 related viewership surge translated to $5.768 billion in sales, up 27.6 percent year-over-year.
Homebound Consumers Love Netflix
Although the United States is Netflix’s biggest market, the subscription video-on-demand (SVOD) platform’s new subscribers mainly came from other regions. In the first quarter, 7 million people in Europe, the Middle East, and Africa joined the streaming platform. Indeed, European Union officials asked the provider to lower its bit rate to preserve the area’s bandwidth availability last month.
The platform also added 2.3 million U.S. and Canadian subscribers in the period ending March 31, more than it did in the previous three quarters.
The SVOD’s influx of new subscribers bolstered its bottom line; it earned $709 million in income or $1.57 per share. Netflix also reported its first positive cash flow since 2014 due to the worldwide shutdown of TV and film production. In Q1 2019, the company had a negative cash flow of $460 million because of its lavish spending on content.
The corporation also disclosed which of its programs are driving the public to sign-up for its service. The firm noted 65 million people had watched its true-crime documentary series “Tiger King: Murder, Mayhem and Madness.” Also, 30 million desperate souls checked out its unconventional dating show “Love is Blind,” while 85 million undiscriminating individuals spent 111 minutes digesting the Mark Wahlberg action-comedy, “Spencer Confidential.”
Cloudy Skies Ahead?
For the second quarter, Netflix offered guidance that it will generate $6.04 billion in revenue and add 7.5 million subscribers. However, the corporation predicts its recent paid membership gains, and therefore sales will fall once self-quarantine mandates end. In addition, the SVOD believes its third-quarter numbers will be down year-over-year as it debuted new seasons of megahits “Stranger Things and “Money Heist” in Q3 2019.
However, Netflix’s cloudy forecast, while understandably cautious given current global conditions, is perhaps a bit too pessimistic.
To start, the SVOD will not be facing traditional competition from movie theaters as summer blockbuster season has been canceled. Besides, conventional TV networks probably will not have new seasons of their highest-rated shows ready to air this fall. On the other hand, Netflix chief content officer Ted Sarandos recently said: “Our 2020 slate of series and films are largely shot.”
The company’s ability to provide new content throughout the year will likely ensure its subscribership remains robust in the medium-term.
Furthermore, Netflix experienced a record surge in membership numbers even though its rivals also did brisk business. Disney Plus added 21.4 million subscribers in February and March, making it one of North America’s biggest SVODs. Similarly, HBO Now saw a 90 percent spike in new sign-ups in the second week of March. As such, it seems consumers are adding new streaming services rather than replacing their old favorite.
While Netflix’s recent success is good news for those who have come to depend on it, it does suggest a “Spencer Confidential” sequel is tragically inevitable.