Despite, or because of, what it calls the current ‘uncertain times’ with restrictions on social interactions, Netflix has unveiled, as expected, a hugely strong second quarter of 2020 adding 10.09 million global paid streaming customers, more than five times than a year ago, to total 192.95 million, 27.3% year-on-year growth.
Putting this into context, this meant that for the first half of 2020 ended 30 June 2020 the subscription video-on-demand (SVOD) leader has pulled in 26 million paid net additions, compared with 12 million for the first half of 2019. Furthermore this first half figure was more than any full year’s total before 2018.
The surge in subscribers was the engine for a massive uptake in revenues which totalled $6.148 billion for the quarter, up 24.9% compared with the second quarter of 2019. Operating income was $1.358 billion, an annual rise of 22.1%, with net income of $720 million. Q2 streaming ARPU increased 0.4% year over year and excluding a $289 million impact from foreign exchange (F/X), streaming ARPU grew 5% year-on-year.
Yet despite such strong additions and revenues, early trading in the stock of fell as the company warned that the current marked upward surge in subs would abate as the year progressed. In its financial statement for the quarter, Netflix warned that net growth was slowing as consumers got through the initial shock of Covid and social restrictions. In addition, it noted that paid net additions for the month of June also included subscriptions cancelled for a "small percentage" of Netflix members who had not used the service recently.
Going forward, Netflix forecasts 2.5 million paid net additions for Q3 20. The third quarter of 2019 saw 6.77 million paid additions. The company noted that Q3 19 saw Q3’19 noticeable positive impact from new seasons of both Stranger Things and La Casa de Papel (Money Heist).
In the context of new original programming, Netflix said that since its content production lead time was long, 2020 plans for launching original shows and films continued to be largely intact despite production shut downs caused by the covid-19 pandemic. For 2021, based on current plans, the company expects the paused productions will lead to a more second half weighted content slate in terms of our big titles, although it anticipates the total number of originals for the full year will still be higher than in 2020.
Assessing the hugely competitive nature of the SVOD arena in the Q2 results statement, Netflix cited WarnerMedia, Disney and NBCUniversal as pushing their own streaming services and that “two of the most valuable companies in the world”, Apple and Amazon, were growing their investment in premium content. It added that TikTok’s growth was ‘astounding’, showing the fluidity of internet entertainment. That said, Netflix stated that instead of worrying about competitors, it would continue to stick to its strategy of trying to improve service and content every quarter faster than its peers.
The surge in subscribers was the engine for a massive uptake in revenues which totalled $6.148 billion for the quarter, up 24.9% compared with the second quarter of 2019. Operating income was $1.358 billion, an annual rise of 22.1%, with net income of $720 million. Q2 streaming ARPU increased 0.4% year over year and excluding a $289 million impact from foreign exchange (F/X), streaming ARPU grew 5% year-on-year.
Yet despite such strong additions and revenues, early trading in the stock of fell as the company warned that the current marked upward surge in subs would abate as the year progressed. In its financial statement for the quarter, Netflix warned that net growth was slowing as consumers got through the initial shock of Covid and social restrictions. In addition, it noted that paid net additions for the month of June also included subscriptions cancelled for a "small percentage" of Netflix members who had not used the service recently.
Going forward, Netflix forecasts 2.5 million paid net additions for Q3 20. The third quarter of 2019 saw 6.77 million paid additions. The company noted that Q3 19 saw Q3’19 noticeable positive impact from new seasons of both Stranger Things and La Casa de Papel (Money Heist).
In the context of new original programming, Netflix said that since its content production lead time was long, 2020 plans for launching original shows and films continued to be largely intact despite production shut downs caused by the covid-19 pandemic. For 2021, based on current plans, the company expects the paused productions will lead to a more second half weighted content slate in terms of our big titles, although it anticipates the total number of originals for the full year will still be higher than in 2020.
Assessing the hugely competitive nature of the SVOD arena in the Q2 results statement, Netflix cited WarnerMedia, Disney and NBCUniversal as pushing their own streaming services and that “two of the most valuable companies in the world”, Apple and Amazon, were growing their investment in premium content. It added that TikTok’s growth was ‘astounding’, showing the fluidity of internet entertainment. That said, Netflix stated that instead of worrying about competitors, it would continue to stick to its strategy of trying to improve service and content every quarter faster than its peers.
