More than 15.7 million people have started using Netflix in the first three months of the year, when the coronavirus he began to break into the daily life of people all over the world. That figure marked a record high for the company of issuing in continuous, according to the report of results for the first quarter released on the 21st of April.
Netflix account with 182,8 million subscribers, which ranks among the largest entertainment services. It added 2.3 million users in United States and Canada during the first quarter, which reached a total of 69,9 million; in terms of their numbers of international, won 13.5 million of additional users.
These results are synthesized with great clarity the impact of the coronavirus in the industry on live broadcasts, the first real test of the persistence of the online videos for the pandemic. The emission in continuous also it has become one of the few activities that have kept afloat in Hollywood in an era in which the entertainment industry is at a virtual halt.
Although the report of the company to the shareholders is usually a description summarizing the achievements of the quarter, on this occasion had a tone emotional.
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“We have never perceived greater uncertainty or concern as to the future”, I read. “The coronavirus has affected up to the last corners of the world and, while we do not have a treatment for widespread or a vaccine, no one knows how it will end this terrible crisis, or when.”
“It is a tragedy unbelievable to the world,” emphasized Reed Hastings, the chief executive officer, during a teleconference with investors after the announcement. “We all have to deal with its consequences, both in health and in terms of the aggravation of poverty and hunger, and we are also very unsure of what the future will bring”.
The company acknowledged that it has withstood the crisis well, but noted that it expects to “reduce hearing and slow down the growth of the membership as the lifting of the measures of confinement in the house”, which expects that to happen soon.
There has not been a time easy for the industry as a whole. The cable networks and transmission of television, they lost their most important programs: the sports. Advertisers have cut their spending on tv up to 12,000 million dollarsaccording to the research firm eMarketer. Film studios, for their part, have not been able to sell tickets from that order was given to stay at home.
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In contrast, Netflix has benefited. You do not have sports programs. You do not have to trade. You also don’t need movie theatres in general. The Hollywood studios have changed course and have decided to release movies on services of issue continuous to be able to reach your target audience. On the 21st of April, Netflix announced that it had acquired the rights of “Enola Holmes”, a ribbon of time located in the universe of Sherlock Holmes that appears in the Millie Bobbie Brown, the star of the success of Netflix “Stranger Things”. Legendary Entertainment, the studio that produced the film, initially considered making the release in cinemas.
Netflix faces a number of competitors very wealthy. Walt Disney Company unveiled its service Disney Plus in November and has already registered more than fifty million subscribers. The division NBCUniversal of Comcast filed Peacock the last week to more than fifteen million customers of Comcast and will be disseminated to the general public this summer. On the 21st of April, AT&T announced that HBO Max, his multimillion-euro project expected for a long time, finally see the light of day on the 27th of may.
Hastings praised Disney. “I had never seen a performance of such quality,” he said, as he had already said in November. “Disney is the company from which we can learn more in terms of entertainment”, said at the time.
Netflix said on April 21 that it expected the current quarter, which ends in June, showing some slowdown. According to the forecasts of the company, you will need 7.5 million new subscribers and around 6000 million dollars in sales, and 820 million in earnings.
Since the companies have been standing, has been opening up a widening gap in the programs of the content industry. Netflix also has suspended some of the productions, but has continued paying salaries thanks to a fund of 150 million dollars that was created to prop up the economy of Hollywood.
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Ted Sarandos, director of content division of Netflix, said the company is still in a good situation for this exercise. “Most of our programming for 2020 is already filmed, and we are very advanced with the of 2021,” he said.
The slowdown is a blessing in the short term. Netflix usually spends a lot of cash to finance its contents. How you pay your productions ahead, before it’s possible to see them, it does not count those costs until after, in some cases up to more than a year after you have spent the money.
For that, Netflix can say they have gains even though it has spent more than it received. This accounting practice is common and is applied by all the companies involved in the media; the difference is that Netflix does on a much larger scale.
Netflix had the good fortune temporary in this aspect. During the first quarter, had a positive cash flow of around 162 million dollars, even though Netflix stated that it had no relationship with the deceleration. In annual terms, the company spends up to 3000 million dollars in cash, but estimated that that figure could drop to only one billion dollars this year.
Revenues for the quarter were 5700 million dollars, with profit of 709 million, below the figures calculated.