Netflix adds record 15.77m subs

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Netflix’s Q1 figures show that the SVoD service has benefitted from the coronavirus pandemic, adding a net 15.77 million paid streaming customers in the first quarter of 2020, marking a record for quarterly gains.

Netflix reported 182.9 million paid subscribers globally as of the end of Q1, an increase of 22.8 per cent over the previous year. In its quarterly shareholder letter, Netflix explained that membership growth had “temporarily accelerated due to home confinement”.

Paolo Pescatore, TMT analyst at PP Foresight, described the figures as “an exceptional set of a results” in which is typically Netflix’s strongest quarter, suggesting that the surge in subs was notable and would have a positive impact on revenue over subsequent quarters.

“Unsurprising, engagement is going through the roof and will proliferate over coming months,” he predicted. “Expect to see users think twice about how much they spend with their current TV provider and may cut back/substitute in preference for online video streaming services,” he added.

“For now the future of SVoD remains rosy. Any new online video service relying on an ad-funded model will struggle, given the market slump,” he warned.

“However, during these uncertain times, Netflix and its rivals (including traditional broadcasters) are not immune to the current challenges of filming new shows due to social distancing and stay at home rules,” he advised. “This will have a knock-on effect on all video subscription players later in the year. Arguably, Netflix should fare much better with its broad catalogue. While others have a limited content offering and may struggle to retain subscribers. Disney was smart to offer an exclusive annual subscription ahead of its launch,” he noted.

“So far, the company has weathered the storm and has not seen a significant dent with the arrival of new entrants. Netflix remains a dominant force in entertaining users, but spiralling costs remain an ongoing concern. All eyes are now on the results from giants including Comcast, Disney and others who will most likely see a greater impact due to the pandemic,” he concluded.

In further analysis shared with advanced-television.com’s Chris Forrester and Colin Mann, on the subject of Netflix, Dave Castell, General Manager & Partnership/EMEA at The Trade desk says that: “In these uncertain times, TV has truly returned to its place at the heart of British homes, with the nation coming together – albeit virtually on Netflix Party – over Joe Exotic’s crazy antics in Tiger King and risky romance in Love is Blind. With the vast majority of the population stuck at home, people are turning to TV streaming in their droves for distraction from the outside world, providing an invaluable opportunity for brands to connect with audiences.”

“Netflix’s results demonstrate that this trend is undoubtedly good news for the company in the short term, but will this boon only last as long as the lockdown,” he questions. It is vital that Netflix considers its long-term strategy if it’s to retain its dominant market position against an ever-growing number of competitors.”

“And with economic uncertainty leading to the tightening of many consumers’ purse strings, Netflix will need to work hard and fast to top up its library with new, quality programming to convince viewers of its ongoing value as life returns to normal. The cost of doing this will be significant, and nothing offers Netflix the same monetary potential as advertising, whilst also offering cash-strapped consumers the possibility of accessing content at a reduced rate – or even for free,” he says.

Mark Inskip, CEO UK & Ireland at Kantar Media, stated: “Streaming services are proliferating, but despite fierce competition, Netflix’s latest results show that they are still on top. Naturally, the global lockdown has meant more people than ever are tuning in to TV content and taking out streaming subscriptions. It’s likely due to both its heritage as a platform and breadth of content on offer that Netflix is taking a large slice of that new subscriber base.

“Our TGI data shows that most consumers who pay for online streaming don’t pay for more than two or three subscriptions, and Netflix remains the most popular option. But as we emerge from the COVID-19 pandemic, and advertising budgets rise again, subscription platforms will need to foster strong USPs so as not to lose a percentage of their audience to ad-funded challengers. For Netflix, their wealth of content and the success of shows like Tiger King no doubt provide that attraction now, but they will need to continue to closely monitor and understand what interests and excites their users to retain – and grow – their subscriber base through an economic downturn,” he concludes.

 

 

 


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