Netflix saw a slowed level of subscriber growth during the third quarter of 2020. However, the company also said the slowing down was in line with expectations, following the sudden spike the service encountered during the first half of the year.
While the COVID-19 pandemic has caused issues for many businesses and markets, some areas saw an uptick, thanks to the number of people at home and using online services more often. Netflix was one of them, with the company seeing record levels of new customers in the early quarters of the year. At the time, Netflix said although it was doing better than expected, it was anticipating a slowing effect sooner or later.
In its third quarter financial results released today, Netflix confirmed that it only added 2.2 million paid net ads in Q3. While that’s still a significant number of new subscribers, Netflix explained how it compares to 6.8 million for the same quarter in 2019, highlighting the year-over-year decrease. Netflix anticipates this trend will continue with its latest projection for the fourth quarter being 6 million paid net ads, compared to 8.8 million in the fourth quarter of 2019.
In spite of the drop in new users compared to the same quarter the year before, Netflix stated that actual subscriber engagement “was up solidly” compared to 2019’s third quarter. A metric which would seem to indicate that Netflix remains an option people are turning to while they continue to limit the time spent outside.
A strange year for everyone, including Netflix
The way 2020 has played out so far, it is difficult to make any assumptions, based on any numbers and stats. For example, while Netflix is clearly having a bad quarter (by its own standards), and expects to see slowed growth next quarter as well, the year overall will show positive growth for the streaming service. In fact, Netflix already has.
Further highlighting just how much of an inconsistent year it has been, Netflix explained that in the first two quarters of 2020, the service added 28.1 million subscribers. For comparison, Netflix added 27.8 million during the entirety of 2019. Again, the 28.1 million is excluding the 2.2 million it added in the third quarter and the 6 million it expects to add in the fourth.
Overall, Netflix closed out the third quarter with just over 195 million paid subscribers, and if the company’s fourth-quarter predictions are correct, it will pass the 200 million mark by the end of this year. After adding more than 34 million subscribers during the twelve months, 2020 will mark a record annual high for the company.
Whichever way any individual quarter of this year is interpreted, that’s a healthy Netflix user base going into 2021.