The coronavirus pandemic has led to lockdowns of varying severity all across the world, forcing people to stay inside their homes. Of course, this has led to an increase in demand for online services such as streaming and gaming, as people look for ways to pass the time. Some providers have done better than others though, as we will see.
The biggest ‘winner’, in a way, of this lockdown, has been Netflix. The streaming giant added a staggering 16 million new subscribers in the first three months of the year, and it estimates that a further 7.5 million will be added by June. There has been so much demand for its service that it recently announced that it would be reducing the quality of its videos in Europe, to ease the strain on its servers as well as internet service providers. It even hired over 2,000 new customer support staff to handle the increase in subscriptions. All of this has been reflected in its share price, which has risen by almost 30% this year.
The numbers are quite staggering. Nearly 64 million people watched its documentary ‘Tiger King’, with almost 85 million watching the Netflix movie ‘Spenser Confidential’ for at least two minutes – which is the cut-off for Netflix to count it towards its viewing figures. However, there are a few concerns for the company. Almost all of its filming for series under production has come to a halt due to the crisis, while it has also warned that the growth seen over the first few months of the year will ease off as lockdown restrictions are gradually removed. Further, while it expects to stick to its release schedule through June, and is acquiring new movies and shows to keep delivering fresh content, delays to upcoming shows and series could have an impact on subscriptions as well.
The biggest question for Netflix is whether it will be able to retain those customers who have signed up due to the lockdown. There are streaming wars going on in the industry at the moment, with the likes of Disney Plus and Amazon Prime also spending big on original content to rival Netflix. Disney Plus already has a huge catalog of its own content, including the extremely popular Marvel titles as well as multiple Disney movies, and so this is a formidable challenge for Netflix to overcome, especially if consumers are picking one over the other. This is especially problematic for Netflix because the likes of Disney and NBC had leased their shows to Netflix earlier, but are now pulling them from the platform as they come up with their own streaming services, thus reducing Netflix’s library of popular content.
This is where the possible delays to Netflix’s own titles could be a problem, with newer entrants such as Quibi and HBOMax spending billions to create their own content. It remains to be seen how Netflix responds to this threat, but nevertheless, its growth in the first half of the year has shown that it is the most popular streaming service across the globe, with over 180 million subscribers across the planet.
