Netflix’s new Quarter 1 earnings report shows a massive rise in new subscribers so far this year — about 15.77 million new customers on the platform, according to a report by Variety. The company seems to be getting a big boost in business because of the coronavirus pandemic, as thousands of people around the world are sheltering in place at home. Netflix is well ahead of its own expectations for 2020 gains.
Netflix now boasts 182.9 million paid subscribers globally, with a 22.8 percent gain in users from this time last year. The company had modestly anticipated gaining 7 million new subscribers in the first quarter of 2020, but that was before the COVID-19 outbreak went worldwide. Netflix’s letter to shareholders makes note of this fact, but does not celebrate it — acknowledging that the virus is a tragedy of historic proportions.
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“[O]ur membership growth has temporarily accelerated due to home confinement,” the letter said. The report caused a sharp rise in Netflix’s stock price on Tuesday, jumping up by about 4.8 percent to finish at $454.80 per share.
Still, it is not all good for Netflix this quarter. The company noted that, like many other studios, it has shut down production on some of its most lucrative productions, and “some cash spending on content will be delayed, improving our free cash flow, and some title releases will be delayed, typically by a quarter.”
Netflix also noted that the “sharply stronger U.S. dollar” has diminished its international revenue. Finally, the company acknowledged that it suffered from a serious disruption in customer support this quarter as it transitioned many roles to work-from-home status.
All in all, the “quarantine bump” Netflix got this quarter has not changed its plans much going forward. The company reportedly projected another 7.5 million new subscribers in the second quarter of this year. The letter even expressed the hope that social distancing protocols would be lifted soon, in spite of the boon they have been to business.
“Hopefully, progress against the virus will allow governments to lift the home confinement soon,” it said. “As that happens, we expect viewing and growth to decline.”
By the next quarterly report, Netflix will be facing new competition in the form of HBO Max, the long-awaited streaming service from WarnerMedia and its subsidiary companies. The service has a slate of beloved IPs and promising original content, and is sure to stir the pot quite a bit in the ongoing “streaming wars.” HBO Max will be available on Wednesday, May 27.
