As companies all over the world are straining to keep afloat due to the Coronavirus pandemic, Netflix subscriber base is exploding due to millions of users who are staying at home, seemingly watching movies all day to keep themselves busy.
The video streaming giant has recorded an additional 15.8 million paying streaming subscribers in the first quarter of 2020, more than double the 7 million forecasted in January, before the outbreak of Coronavirus. By the end of the first quarter, the company said they had recorded 182.9 million subscribers globally.
“Membership growth has temporarily accelerated due to home confinement. We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon” Netflix said in its quarterly shareholder letter.
The company also said that due to the shutdown of content production in Hollywood, an advantage is that “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’s quarantine bump is estimated to range between $7 to $10 million (approximately between Ksh700 million to ksh1 billion). Its shares have surged up by about 35 percent this year.
“After record subscriber additions, Netflix is and will continue to be the media company least impacted by COVID-19,” said emarketer analyst Eric Haggstrom. “Their business is a near perfect fit to a population that is suddenly housebound. Virus related lockdowns have reaccelerated Netflix’s subscriber growth around the world.”
Despite the lockdown in many countries, Haggstrom said,”Netflix is facing headwinds moving forward from a poor economic environment, but a significant chunk of consumer entertainment budgets have been opened up from the closures of movie theatres, sporting events, restaurants and bars.” He said it is unlikely the company will face any negative impacts in the future.
Netflix said it is expecting to add about 7 .5 million subscribers in the second quarter although analysts estimate an addition of 3.8 million subscribers.
During the first quarter, Netflix had its net income more than double to $709 million (Approcximately Ksh71 billion) in contrast to $344 million (Ksh34.4 billion) a year ago.The total revenue has jumped to $5.77 billion (Ksh577 billion) from $4.52 billion (Ksh452 billion) a year earlier.