The COVID-19 lockdown handed streaming service Netflix one of its most successful quarters ever, with the company adding 10 million new subscribers.
The surge in new subscribers means Netflix has already added 26 million new subscribers in 2020, compared to 28 million added in all of 2019.
The 10 million new subscribers added this quarter was a Q2 record for the company and beat the 7.5 million that was forecast.
However, the company is now predicting the strong first half od 2020 to result in a slower end to the year.
“We forecast 2.5m paid net adds for Q3’20 vs. 6.8m in the prior year quarter,” Netflix said in a note to shareholders.
“As we indicated in our Q1’20 letter, we’re expecting paid net adds will be down year over year in the second half as our strong first-half performance likely pulled forward some demand from the second half of the year.”
In terms of revenue, growth was 25 per cent year over year. Netflix missed its revenue goals for the quarter, however.
Netflix also announced it would stop billing customers who have not watched anything on the platform in the past two years, leading to a slight dip in revenue.
However, Netflix believes “pro-consumer policies like this are the right thing to do and that the long term benefits will outweigh the short term costs”.
And while lockdown might have meant viewers had more time to tune in to their favourite shows, it also caused some production problems.
Pauses in production mean Netflix is already flagging some gaps in the future.
“For 2021, based on our current plan, we expect the paused productions will lead to a more second-half weighted content slate in terms of our big titles, although we anticipate the total number of originals for the full year will still be higher than 2020,” Netflix said.
When Disney+ entered the streaming market late last year some predicted Netflix to take a hit in subscribers.
The strong Q2 results led Netflix to claim there is room for plenty of players in the streaming space.
“All of the major entertainment companies like WarnerMedia, Disney and NBCUniversal are pushing their own streaming services and two of the most valuable companies in the world, Apple and Amazon, are growing their investment in premium content.
“In addition, TikTok’s growth is astounding, showing the fluidity of internet entertainment. Instead of worrying about all these competitors, we continue to stick to our strategy of trying to improve our service and content every quarter faster than our peers.
“Our continued strong growth is a testament to this approach and the size of the entertainment market.”
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