The COVID-19 coronavirus crisis has had a major impact on businesses across the nation. However, some have been able to capitalize on the situation. With huge swaths of people struggling to stay sane during the quarantine, it is no surprise that Netflix has benefited from the pandemic.
Once the quarantines and lockdowns were underway, Netflix saw a major uptick in subscriptions. By the end of the first quarter of their fiscal year, the streaming giant doubled their forecasts by gaining 15.8 million new subscribers. Netflix acknowledged the benefits that the pandemic offers them in a letter to shareholders, before warning against reading too much into the numbers.
“At Netflix, we’re acutely aware that we are fortunate to have a service that is even more meaningful to people confined at home … Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth,” the letter reads. “We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon.”
Wall Street seems to have the same concerns as Netflix. Investors are hesitant to jump on the stock in spite of the fact that it has been performing well during the extreme volatility of the stock market. An analyst for Raymond James has been quoted as saying, “While we continue to view NFLX as a long-term winner in DTC video, we believe potential for positive estimate revisions and multiple expansion are limited until we observe post-COVID-19 retention rates.”
What About the Content, Though?
Thankfully for everyone stuck at home in quarantine, Netflix is currently enjoying an abundance of content. Although, in their letter to share holders, they do acknowledge that they are still impacted by the global pandemic.
“While our productions are largely paused around the world, we benefit from a large pipeline of content that was either complete and ready for launch or in post-production when filming stopped … So, while we’re certainly impacted by the global production pause, we expect to continue to be able to provide a terrific variety of new titles throughout 2020 and 2021.”
It has yet to be seen how production pauses will impact the $20 billion Netflix planned on investing in original content this year. Ideally, the growth in subscribers would allow the company to take some more chances with the goal of making high quality content. Perhaps the next award-worthy series or film will be born out of the COVID-19 induced production pause.
Producing even more high quality content is a sure fire way that Netflix can maximize the boost they are experiencing due the quarantine. As the company noted themselves in their letter, “the person who didn’t join Netflix during the entire confinement is not likely to join soon after the confinement.”
If you are not one of the hold outs that Netflix alluded to, check out our streaming guide so you can discover some new, high quality content!