Lockdown boost fades and Netflix subscriptions do not reach estimated numbers

Netflix CEO Reed Hastings is among the few people who can claim to have also benefited from the lockdown. A 6.15 billion dollars benefit. With its 67.1 subscribers in the US, 47.4 million in Europe and Africa, 14.5 in Asia and 29.4 million in Latin America in 2019, the streaming giant saw the numbers go well beyond original estimates in the first and second quarter of 2020.

As was to be expected, home confinement forced up the number of users on streaming platforms. In fact, in the first six months of the year alone, Netflix added 26 million new subscribers, with the peak between March and April, reaching the total number of almost 193 million subscriptions. Analysts’ initial forecasts were 8.07 million, but the third quarter closed with a return of 6.44 billion dollars, 22.7% more than the previous year’s quarter, with 125 million more of net income (790 million entered in the accounts compared to 665 million in 2019).

However, with the easing of lockdowns in several countries, there has been a change of course. Already in the midst of the pandemic, in Netflix’s headquarters there was talk of numbers “doped” by home confinement and a boom that could have not lasted forever. “We expected and knew there would be some level of slowdown” said Chief Financial Officer Spencer Neumann, after the release of the results. Jim Nails, analyst at Forrest Research, sees it as “the sign of a mature business”. 

Meanwhile, there are 2.2 million new subscribers, 7.9 less than the second quarter and less than the 2.5 estimated by the company forecasts. Let it be clear, the streaming giant keeps growing; we are still talking of a 790 millon dollars increase compared to the 665 million of the previous year, but still it lays below the estimation line. This translates into a stock market crash of about 15%.

A comforting data

The competition keeps moving forward but Netflix remains in pole position. After PrimeVideo and AppleTV, this year Disney+ and Hbo Max have also joined the giant’s rivals team. Furthermore, in the USA, the several television networks have their own streaming platforms.

In the meantime, although there does not seem to be any official news about the possible increase in subscription rates at the moment, it is rumored that Netflix is already preparing the rise of prices in the US, which should affect the standard subscription, that would go from 13.99 to 14.99 dollars, and the premium subscription, that would change from 16.99 to 18.99 dollars. The basic one would remain unchanged.

Who knows, maybe post-lockdown’s effects will delay the rise of subscription fees.

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