Coronavirus pandemic leads to massive subscription drive for Netflix; here is why the streamer is unhappy

Huge increase in Netflix subscribers in the first quarter of this year has made the streamer worried

In a massive subscription drive, Netflix has got 15.77 million new subscribers in the first quarter of this year. The huge numbers are mainly because of the lockdown directive issued by various countries due to coronavirus pandemic.

Netflix Inc had in January stated that it was expecting seven million new subscribers in the first quarter, but due to the pandemic and the developments following it, the subscription more than doubled in the first quarter.

However, this is a temporary development as the subscriber rate will go down in the second half of the year. Although the recent stocks of Netflix remain unchanged. When the subscription was at its peak in early April, the stock traded as high as $485. But now, it is struggling to higher than $450 it may settle around a price of $385, opine experts.

Netflix Revenue

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Netflix's revenue for the first quarter was $5.77 billion, which is a small margin as the expectation was $5.76 billion. Interestingly, the value per share was $1.57 against the expected $1.65 per share. As per membership drive, by the end of 2019, Netflix had 167.1 million subscribers. The largest number of subscription came in from Europe, the Middle East, and Africa, where Netflix had only seven million subscribers and currently the number grew to 58.7 million.

The second challenge Netflix faces is the lack of new releases. With stopping of shooting following the lockdown directives, there are not many new shows to be released on the streaming platform.

Netflix challenges

Netflix has warned its investors about the downside of the service's numbers and financial performance. "Hopefully, progress against the virus will allow governments to lift the home confinement soon. As that happens, we expect viewing and growth to decline. Therefore, we currently guess that [summer and fall] will have lower net additions than last year due to these effects," the Netflix told in the shareholders letter, stated reports.

Another factor raised by the streamer is that in the second quarter, there is no guarantee that the person who subscribed for Netflix during lockdown may not sign up for some time, resulting in revenue loss.

Content-wise too with fewer releases and latest content, many subscribers may not be interested in signing up or making bill payments for the next few months till there is new flow of content affecting the subscriber growth of the streamer in the coming quarters.

Related topics : Netflix