Netflix has confirmed a surge in subscribers as millions of people around the world are still under lockdown due to the coronavirus.
But while users are up, the online streaming giant says that it won’t emerge unscathed from the global pandemic. Like other content creators, it is being forced to pause productions around the world in line with official guidance.
That means Netflix is relying on a backlog of content it has already produced.
According to a recently-published letter to shareholders, Netflix has enough content in the pipeline to last through 2020 and into 2021.
However, unlike Disney, it doesn’t have a huge back catalogue of TV shows and movies to benefit from endless re-runs. As such, the company is being wary of the road ahead.
‘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,” the letter explains.
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‘Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth. In our case, this is offset by a sharply stronger US dollar, depressing our international revenue, resulting in revenue-as-forecast.
The company gave an update on where production stands at the moment.
‘While our productions are largely paused around the world, we benefit from a large pipeline of content that was either complete and ready for launch or in post-production when filming stopped,’ the letter reads.
‘So, while we’re certainly impacted by the global production pause, we expect to continue to be able to provide a terrific variety of new titles throughout 2020 and 2021.’
The warning comes as Netflix value skyrocketed on Wall Street after the company announced its first quarter earnings for this year. Stocks reached an all-time high after moving up 30% year-on-year and the value for the company surpassed $190 billion making it more valuable than Disney.
Analyst predictions for the first quarter of 2020 was that Netflix would bring in around eight million new subscribers. Thanks to the coronavirus, that number ended up being 15.77 million global subscribers.
In the short term, Netflix is confident it can hold on to the influx of new viewers.
‘Our content competitors and suppliers will be impacted about as much as we are, in terms of new titles,’ the letter to shareholders reads.
‘Since we have a large library with thousands of titles for viewing and very strong recommendations, our member satisfaction may be less impacted than our peers’ by a shortage of new content, but it will take time to tell.’
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