Brain Twister

News for nerds

Netflix added 15.8 million subscribers in Q1 2020

Netflix finished the first quarter of 2020 as a cash flow positive company, thanks to a significant increase in viewership and having to halt physical content production. CEO Reed Hastings says he doesn’t expect more than 7.5 million new subscribers in Q2 2020, as predictions about what will happen once countries come out of lockdown are hard to make at this point. He also doesn’t know when the company will resume physical production.
One of the strongest effects of stay-at-home orders has been that many more people are streaming music and video for their entertainment needs. This means that some companies like Magic Leap are forced to downsize their workforce to cope with the new reality, while others like Netflix and Disney are having a hard time keeping up with the added demand for their streaming services.

Netflix posted impressive financial results in its Q1 2020 report, with revenues of $5.8 billion – that’s a healthy 27.6 percent year-over-year growth. And while Wall Street expected to see around 7 to 8 million new subscribers in the three months ending in March, the company actually added 15.8 million, sending shared up more than 10 percent in after-hours trading.

This brings the total subscriber count close to the 183 million mark, while Disney recently passing the 50 million subscriber milestone. Netflix is currently worth more than Disney in terms of market capitalization, but that could easily change in the coming months, as the latter has had a much better growth trajectory when compared to the rest of the streaming industry.

During the investor call, Chief Content Officer Ted Sarandos noted the company was able to quickly adapt to a remote workflow. He explained that “within a few days of the shutdowns, we had production up and running remotely, post-production up and running remotely, animation up and running remotely, pitch meetings happening virtually, writers rooms assembling virtually.”

Netflix also created a $100 million fund to help workers that were hit the hardest. Even as it had to halt filming around the world, the company has continued to pay production crews. That said, CEO Reed Hastings told investors that Netflix will use the cash that it isn’t spending on delayed releases to focus on meaningful features like improved parental controls.