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Rapid COVID-19 Growth Cases Gives Netflix a New Audience, Again
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One reason Netflix Inc. (NASDAQ: NFLX) had a period of great success from March to May was that the spread of COVID-19 kept millions of Americans inside their homes. Among the few things they could do was stream movies. Netflix had over 66.6 million paid subscribers in the United States and Canada, as of March 31. It is presumed that figure rose sharply in the two months after. Then more people began to leave their homes. It appears that the spread of the disease will reverse that.
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Did Netflix Subscriber Count Really Rise?
One theory about what would happen to Netflix in May was that subscribers and viewership would plummet. There were estimates that this could knock down its subscriber count by millions. Netflix said it added 16 million subscribers in the first quarter of the year. The company has not said what happened in April when many people were still indoors.
Another trend that favored Netflix was that COVID-19 shut down the filming of new movies that might have been released in the middle of the year. Major releases scheduled by the studios for late winter or spring were pushed back because movie theaters were closed. A surge of people to theaters also might have cut subscriber growth.
Competition From Disney and Amazon
Netflix still has to deal with a major hurdle. The number of competitors it has is large and growing monthly. First among these is Amazon.com Inc.’s (NASDAQ: AMZN) Prime streaming service. While the e-commerce company does not release subscriber counts, it is assumed they are as large as the Netflix figures. Among the several services launched recently, one of the most successful appears to be Walt Disney Co.’s (NYSE: DIS) Disney+. The entertainment company said it had 50 million subscribers as of early April. It did not originally believe it would reach this figure for years.
Netflix has a second opportunity to see a surge in subscribers. Confirmed COVID-19 cases have started to rise by over 60,000 a day. That is about double the rate three weeks ago. People in many states will begin to stay at home once more. In some places, “stay inside” may be an order from state officials again.
Streaming used to be something people tended to do at night, after school or after work. COVID-19 has made the period when people watch a much wider number of hours a day.
Netflix management, like that of most companies that have benefitted from the pandemic, does not want to see America’s misfortune help its revenue. However, the effect of new viewers and those likely to renew the existing service is bound to do just that.
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