Netflix reports huge rise in Q1 subs

Joe Exotic, the subject of Netflix docuseries sensation Tiger King

Netflix attracted more than double its projected number of new subscribers for first three months of the year as more users joined the service amid the Covid-19 crisis.

The global streamer had expected to add seven million new subscribers around the world in the first quarter of 2020, but revealed yesterday that the actual figure was 15.77 million.

Netflix’s launch of new originals such as docuseries Tiger King: Murder, Mayhem & Madness and relationship format Love is Blind coincided with multiple countries’ entire populations being told to stay at home to limit the spread of the coronavirus.

Around 64 million subscribers viewed Tiger King, which tells the story of Joseph Maldonado-Passage, aka Joe Exotic, a tiger breeder who ran a roadside animal park in Oklahoma, and the murder-for-hire plot that led to his arrest.

The streaming giant referenced the unique circumstances behind its recent quarterly results in a statement, which read: “In our 20+ year history, we have never seen a future more uncertain or unsettling. 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.

“At Netflix, we’re acutely aware that we are fortunate to have a service that is even more meaningful to people confined at home, and which we can operate remotely with minimal disruption in the short to medium term. Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth.”

During a video chat following the release of the streamer’s first-quarter earnings, Netflix chief content officer Ted Sarandos said that while the majority of its productions had shut down, it has been able to keep cameras rolling in Iceland and South Korea, attributing this to the high level of coronavirus testing both countries have implemented.

In response to the crisis, Netflix is helping TV and film workers by pledging US$100m to support creative sector staff.

Ted Sarandos

The majority of this will go towards supporting Netflix productions through the crisis, while US$15m has been set aside for emergency funds in countries such as the UK, the Netherlands, Italy, Spain and France.

Following Netflix’s bumper Q1 results, Kantar-owned media and global advertising technology company The Trade Desk weighed in on what they mean for the streamer.

Dave Castell, general manager of inventory and partnerships for EMEA at The Trade Desk, said: “With the vast majority of the population stuck at home, people are turning to TV streaming in their droves for distraction from the outside world, providing an invaluable opportunity for brands to connect with audiences.

“Netflix’s results demonstrate that this trend is undoubtedly good news for the company in the short term, but will this boom only last as long as the lockdown? It is vital that Netflix considers its long-term strategy if it’s to retain its dominant market position against an ever-growing number of competitors.

“And with economic uncertainty leading to the tightening of many consumers’ purse strings, Netflix will need to work hard and fast to top up its library with new, quality programming to convince viewers of its ongoing value as life returns to normal.

“The cost of doing this will be significant, and nothing offers Netflix the same monetary potential as advertising, while also offering cash-strapped consumers the possibility of accessing content at a reduced rate – or even for free.”

Mark Inskip, CEO of UK and Ireland at Kantar’s media division, added: “Our TGI [target group index] data shows that most consumers who pay for online streaming don’t pay for more than two or three subscriptions, and Netflix remains the most popular option.

“But as we emerge from the Covid-19 pandemic, and advertising budgets rise again, subscription platforms will need to foster strong USPs so as not to lose a percentage of their audience to ad-funded challengers.

“For Netflix, their wealth of content and the success of shows like Tiger King no doubt provide that attraction now, but they will need to continue to closely monitor and understand what interests and excites their users to retain – and grow – their subscriber base through an economic downturn.”

Paolo Pescatore of tech, media and telco analyst PP Foresight added: “Unsurprisingly, engagement is going through the roof and will proliferate over coming months. Expect to see users think twice about how much they spend with their current TV provider and possibly cut back or substitute in preference for online video streaming services.

“However, during these uncertain times, Netflix and its rivals, including traditional broadcasters, are not immune to the current challenges of filming new shows due to social distancing and stay at home rules. This will have a knock-on effect on all video subscription players later in the year.

“Arguably, Netflix should fare much better with its broad catalogue, while others have a limited content offering and may struggle to retain subscribers. Disney+ was smart to offer an exclusive annual subscription ahead of its launch.”