Netflix announced its latest quarterly results today, highlighting significant subscriber gains over the past three months. While this was somewhat to be expected, considering the increase in Netflix activity recently, the gains are none the less impressive.
Since the coronavirus outbreak took hold, many have found themselves subjected to a stay-at-home order. This has resulted in many people having to take to online services to connect with each other, to stay up to date on what’s happening, and as a means to occupy their their free time. For some, there’s suddenly an uncomfortable amount of free time to occupy, and services like Netflix have been the ones benefiting.
During its first quarter results, Netflix confirmed that it now has just over 182 million subscribers. This effectively sees the streaming service having gained almost 16 million during the first three months of the year, marking an astonishing level of growth in such a short space of time.
However, Netflix is aware that this is not organic and is now forecasting that it expects to see the numbers fall again throughout later quarters in the year. Even suggesting, the fall might be much greater than normal, simply due to the market readjusting one way, after having to already readjust in the way that it has.
How impressive was the Netflix growth?
With everyone suddenly stuck at home and watching the TV more often, services like Netflix were always going to reap the reward. Furthermore, with Netflix already being a dominant force in the industry, it specifically was always going to reap even more of the reward.
However, the increase announced is far more substantial than that. To put it into perspective, prior to the effects of COVID-19 taking place, Netflix had forecast that it would see roughly seven million subscribers added during the first quarter. That was Netflix’s prediction in January of this year.
Again, while many would have expected an increase, going from seven million to almost sixteen can hardly be considered just an increase. Doubling what the company itself expected is almost unheard of, and testament to just how many people have turned to Netflix during this time. In addition to also acting as yet another reminder of the extraordinary times we are now living in.
Netflix could still suffer a negative coronavirus effect
What was also interesting from Netflix’s announcement was the tone the company took. While it was always going to be respectful, Netflix appeared to acutely believe that although it hasn’t been negatively affected by coronavirus yet, its impact is coming. Not necessarily as a direct impact, but possibly as a reaction to the impact, and that’s possible.
Essentially, with such a high rise, there’s always going to be the chance of an equally greater fall. As this is not organic growth, the company is going to see a drop in subscribers once some sense of normality returns. The question is, with such a forced increase in interest in Netflix content now, will a boomerang effect take place later, where in a similar way to how people have flocked to the service recently, far more will run away once lockdown orders are lifted, and they are no longer forced to watch the TV?
In the same sense that today’s question was always how much of an increase and not whether they would be an increase, the question will inevitably now turn to not whether Netflix will eventually see a quarterly decline, but by how much will it decline?
Although, if the last weeks and months have taught us anything, it is that right now is not the time to be making predictions.