Netflix High on Revenue, Low on Subscribers

Even though it seemed like Netflix was going to grow a lot more due to the current circumstances, in 3Q20 the company registered an increase in revenue but did not reach the number of subscriptions it had foreseen.

According to Primicias, in 1Q20 Netflix had 15.8 million subscribers and in 2Q20 it added 10.1 million more. Between March and June, the company’s revenue rose to US$720 million, 166 percent more than what it made in 2Q19. Despite the excellent increase seen this year, Netflix’s forecast for 3Q20 was to reach 3 million subscribers. The company came out short by only reaching 2.2 million.

The explanation was that its subscription increase was directly linked to the quarantine. People knew they would be locked in their homes for a while, so they started hiring streaming services, even the ones they would not have thought of subscribing in the beginning. Lacking results led Netflix’s stocks to fall more than 6 percent to US$492.22 per title.

According to Cnet, a couple of months ago, there had already been forecasts on some factors that could affect Netflix.  The one that was supposed to affect the company the most was new competition from other streaming services like Apple TV, Disney+, HBO, Peacock and Amazon Prime. These new competitors would set a new challenge to see who got the most subscribers.

According to eMarketer Analyst Marc Haggestram, Netflix's main objective was to get the most subscribers it can, which is what made it different from other streaming services. This has become its biggest challenge once new competition started appearing. For a moment, everything seemed to be in Netflix’s favor and numbers appeared to keep going up. But now that the pandemic has lasted a while, the large number of people that were going to subscribe already did.