Netflix has seen a surge in new subscribers during the first three months of 2020 due to lockdowns around the world, leaving people with the need to be entertained.
The firm said almost 16 million people created accounts in the first three months of the year, which is almost double the new sign-ups it saw in the final months of 2019.
This has helped the streaming giant cement its status as one of the world’s most essential services in times of isolation or crisis.
The numbers — released Tuesday as part of Netflix’s first-quarter earnings report — support a growing belief that video streaming is likely to thrive even as the overall U.S. economy sinks into its first recession in more than a decade.
Netflix in a statement said;
We’re acutely aware that we are fortunate to have a service that is even more meaningful to people confined at home, and which we can operate remotely with minimal disruption.
The first quarter spanned the beginning of stay-at-home orders in the U.S. and around the world, a response to the coronavirus pandemic that apparently led millions to latch onto Netflix for entertainment and comfort when most had nowhere to be but home, WTHR reports.
It was the biggest three-month gain in the 13-year history of Netflix’s streaming service.
However, the streaming service, which is behind some multi-million dollar productions, said shutdowns have halted “almost all” filming around the world.
And sharp declines in the value of many currencies has meant new subscribers outside of the US, where Netflix is based, are not worth as much to the company as they would have been before the crisis. And that has hurt its international revenue growth, BBC reports.
Nevertheless, the home-entertainment giant’s share price has climbed more than 30% this year as investors bet on its ability to benefit from people spending more time indoors.
eMarketer analyst Eric Haggstrom stated that;
Netflix is and will continue to be the media company least impacted by Covid-19. Their business is a near perfect fit to a population that is suddenly housebound.
Demand for streaming has been so high that Netflix last month said it would reduce the quality of its videos in Europe to ease strain on internet service providers.
The firm also hired an additional 2,000 customer support staff to handle the increased interest.
Netflix stated that some 85 million people had watched its original movie, Spenser Confidential, for at least two minutes – the cut-off it uses for viewing figures. Meanwhile, the documentary series ‘Tiger King‘ reached 64 million households.
The firm said it expects to add another 7.5 million members in the three months to the end of June – above analyst expectations.
But it warned investors that viewers and growth would decline as governments lift lockdowns around the world saying; “Given the uncertainty on home confinement timing this is mostly guesswork.”
Netflix said it expects to stick to its release schedule through June and has been acquiring other movies to keep its offering fresh. But it said future membership growth could be hurt by delays to upcoming seasons and shows.
Paolo Pescatore, analyst at PP Foresight, said;
Production delays would hurt subscriber growth at all streaming companies in coming months. Arguably, Netflix should fare much better with its broad catalogue.
However a question arising is if Netflix can retain paying customers after Covid-19 lockdown measures are eased.
The company is facing increasing competition from the likes of Disney Plus and Amazon Prime, which both boast of large archives of content to attract new subscribers.
Europe, the Middle East and Africa accounted for the largest number of new members with almost 7 million new subscribers.
Growth in the US and Canada, which has lagged in recent quarters, also jumped, with 2.3 million new members joining the service, compared to just 550,000 in the final months of 2019.
The firm now has more than 182 million subscribers worldwide, all thanks to an increase due to lockdowns around the world.
