Netflix gets twice as many subscribers in Q1 than expected, but a decline may be looming ahead

Netflix gets twice as many subscribers in Q1 than expected, but a decline may be looming ahead
As the COVID-19 pandemic takes its toll on many businesses, there are those few, such as online streaming services, who are actually enjoying a boost in revenue.

Due to most people staying at home and turning to online entertainment, Netflix has gained 15.8 million subscribers in the first quarter of 2020, over twice than the 7.2 million the company expected. Revenue for Q1 is also slightly higher than predicted, at $5.77 billion against $5.76. The streaming service now has 182 million subscribers around the world.

It's not all as peachy as it appears, however. A letter Netflix sent to shareholders reads: "At Netflix, 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 in the short to medium term. Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth. In our case, this is offset by a sharply stronger US dollar, depressing our international revenue, resulting in revenue-as-forecast. We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon."

The letter also notes that in March, a $100 million fund was started by the company to help the industry, particularly workers on its productions, towards whom Netflix feels the greatest responsibility.

As we reported earlier, most streaming services, including Disney, HBO and Netflix, but notably excluding AppleTV+, have been seeing their subscription rates skyrocketing since the coronavirus pandemic took over.

In addition, early this month, a brand new streaming service called Quibi launched, with a focus on bite-sized content, to be viewed on smartphones, and on the go. Despite not having a flagship show or a recognizable brand name, it offers a generous 90-day trial, and was downloaded over 1.7 million times in its first week. It's too early to speculate if Quibi caught the perfect time to launch, or by the time those free trials expire and people get to choose whether to subscribe for it or leave, streaming services would have begun experiencing the predicted decline in viewership.


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