Netflix sees record subscriptions during pandemic lockdowns

LOS ANGELES: Netflix reported soaring profits as subscriptions surged by almost 16 million at the streaming television service during lockdowns to slow the spread of the coronavirus pandemic.

Netflix made a profit of $709 million on revenue of $5.8 billion in the first three months of this year, while the number of paid subscribers grew by 15.7 million from the previous quarter to total nearly 183 million, according to earnings figures.

Strict confinement rules are keeping billions of people at home in a bid to curtail the outbreak, effectively providing an enormous captive audience to entertainment giants competing in the streaming market.

“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,” Netflix executives said in a letter to investors. “Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth.”

Netflix will continue to be the media company least impacted by COVID-19 as their business fits a population that is suddenly homebound. However, it expects viewing and membership growth to decline as coronavirus concerns abate and people can move about more freely.

The streaming firm expects a net increase of 7.5 million paid subscriptions in the current quarter to June but said it was speculation given the uncertainty on home confinement timing.

The company said that the long-term effects of job losses due to the coronavirus crisis on Netflix’s revenue remain unclear. “In our 20+ year history, we have never seen a future more uncertain or unsettling,” Netflix executives said.

Another effect has been the shutdown of show production that has postponed expenses. “We’ve paused most of our productions across the world in response to government lockdowns and guidance from local public health officials,” Netflix said.

“No one knows how long it will be until we can safely restart physical production in various countries, and, once we can, what international travel will be possible.”

Netflix has a library with thousands of titles and an array of show launch are ready for release. “Our member satisfaction may be less impacted than our peers by a shortage of new content, but it will take time to tell,” Netflix said.

The major challenge for Netflix and other leading streaming subscription services will be not just attracting new subscribers after lockdown but retaining existing ones.