Netflix has turn out to be one of many nation’s all-around distractions, performing as each a supercharged nanny and a nightly balm in the course of the coronavirus disaster.
It’s not exhausting to think about why. With an virtually bottomless nicely of flicks and serials that may be watched on virtually any system, it’s the form of service that will be dreamed up by somebody stranded on a desert island — or caught at residence throughout a pandemic.
More than 15.7 million folks signed up for Netflix in the primary three months of the 12 months, when the coronavirus began to disrupt day by day life around the globe. That was a file for the streamer, in keeping with its first quarter earnings announcement on Tuesday.
Netflix has 182.eight million subscribers, making it one of many world’s largest leisure providers. It added 2.three million in the United States and Canada in the primary quarter for a whole of 69.9 million, and added 13.5 million internationally.
The outcomes provide a vivid snapshot of how the coronavirus has affected the streaming business, signifying the primary actual take a look at of how sturdy on-line video has been in the course of the pandemic. Streaming has additionally turn out to be one in every of Hollywood’s few lifelines at a time when the leisure business is at a digital standstill.
The firm’s letter to shareholders is generally a dry word about quarterly achievements, however this time it struck an emotional tone.
“We have never seen a future more uncertain or unsettling,” it learn. “The coronavirus has reached every corner of the world and, in the absence of a widespread treatment or vaccine, no one knows how or when this terrible crisis will end.”
The firm, led by Reed Hastings, acknowledged that it had fared nicely in the course of the disaster, however stated it anticipated the expansion to sluggish.
“We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon,” the corporate stated.
It hasn’t been a straightforward time for the business as a entire. Broadcast and cable networks have been starved of their most important programming: sports. Advertisers have cut back on television spending by as much as $12 billion, according to the research firm eMarketer. And movie studios haven’t been able to sell tickets ever since stay-at-home orders were put in place.
But Netflix has benefited. It doesn’t have sports programming. It doesn’t have commercials. It doesn’t need movie theaters. Mostly. Hollywood studios have changed tack to release films on streaming services to reach their audiences. On Tuesday, Netflix announced that it had bought the rights to “Enola Holmes,” a period film set in the Sherlock Holmes universe that features Millie Bobbie Brown, the star of the Netflix hit “Stranger Things.” Legendary Entertainment, the studio behind the film, was originally considering a theatrical release.
Netflix’s original programming continued to draw audiences. More than 29 million households tuned into the third season of “Ozark,” a crime drama starring Jason Bateman. The reality show “Love Is Blind” drew 30 million watchers. But the surprise hit was “Tiger King,” a wildly popular documentary series about a tiger breeder and zookeeper in Oklahoma who ultimately landed in prison. The surreal saga was viewed by 64 million subscribers.
Netflix faces a slew of deep-pocketed competitors. The Walt Disney Company unveiled Disney Plus in November and has already racked up over 50 million subscribers. Comcast’s NBCUniversal division launched Peacock last week to more than 15 million Comcast customers before making it widely available this summer. On Tuesday, AT&T announced that HBO Max, its long-awaited, multi-billion-dollar effort, would finally roll out on May 27.
Netflix said on Tuesday that it expected the current quarter, which ends in June, to slow down a bit. The company has forecast 7.5 million new subscribers and about $6 billion in sales and $820 million in profit.
As production companies have remained idle, a widening gap has opened up in the industry’s content lineup. Netflix has also put productions on hold, but it is continuing to pay staff out of a $100 million fund it created to shore up the Hollywood economy.
It might be a short-term blessing. Netflix normally burns through a ton of cash to fund its content slate. Because the company pays for all of its productions up front — before they are available to be watched — it does not account for those costs until later, sometimes a year or more after it has spent the money.
That allows Netflix to claim a profit despite spending more than comes in. The accounting practice is legal and is employed by every media company; Netflix just does it on a much bigger scale.
Because of the slowdown in Hollywood, Netflix saw a temporary bright spot here. The company had positive cash flow of about $162 million during the first quarter. On a yearly basis, the company burns through as much as $3 billion in cash, but it anticipates that figure could go down to $1 billion this year.
Revenue for the quarter reached $5.7 billion and profit was $709 million, which was below estimates.