As Netflix announced a record 16 million new subscribers in Q1 of 2020, questions are now being asked if the streaming service can sustain such big numbers post COVID-19.
Netflix added 2.3 million new subscribers in the U.S. and Canada to hit 70 million; and another 6.9 million across Europe, the Middle East and Africa to raise overall subscriber numbers in those territories to 59 million. The company now has 183 million subscribers globally.
In its quarterly letter to shareholders, Netflix admitted the ongoing coronavirus pandemic has had an impact on its subscriber numbers. “[O]ur membership growth has temporarily accelerated due to home confinement,” it said.
Meanwhile, CEO Reed Hastings said the company “doesn’t know anything more than anyone else,” in terms of what the rest of 2020 might hold. “We’re in the same uncertainty that everyone else is. The thing we are certain of is the internet is growing. It’s a bigger part of people’s lives, thankfully. And people want entertainment. They want to be able to escape and connect, whether times are difficult or joyous. We’ve had an increase in subscribers in March that’s essentially a pull-forward of the rest of the year.”
But the question remains, can Netflix sustain such a big increase in subscribers once countries start coming out of lockdown? “It’s always hard to forecast churn based upon changing user behavioral patterns as well as other factors,” tech, media and telco analyst Paolo Pescatore told TVT's sister publication TVBEurope.
“For sure, once social distancing and stay at home rules are lifted, then Netflix will see an impact and a slowdown in new subscribers signing up. But the lifting of restrictions will be a gradual process. Therefore, a service to entertain the entire household will still be needed.”
As to whether the launch of Disney+ in Western Europe at the end of March is likely to have had any impact of Netflix’s subscriber numbers, Pescatore said: “A surge in subs for both Netflix and Disney+ underline the popularity for these services.
“They are complementary in terms of offerings rather than compete directly. The launch of Disney+ raised the awareness of streaming video and has benefited both companies.”
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