It makes sense that Netflix and other streaming services would see a bump in subscribers while we’re all stuck at home indefinitely with nothing to do thanks to the COVID-19 quarantine. But no one — not even Netflix itself — could have predicted just how much of a bump the service received.
Netflix reportedly added 15.8 million new global subscribers in the first quarter of 2020, far exceeding its projections of seven million. But in its quarterly letter to shareholders, the streaming service wrote that it expects those huge numbers to decline whenever the quarantine is over.
“Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth,” the letter reads. “We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon.”
The company also noted in the letter that because Hollywood productions have been delayed due to the virus, “some cash spending on content will be delayed, improving our free cash flow, and some title releases will be delayed, typically by a quarter.”
While the virus has led to a huge surge in subscribers, Netflix also noted that it anticipates that growth to slow in the second quarter, projecting 7.5 million new global subscribers for the months of April through June. “Hopefully, progress against the virus will allow governments to lift the home confinement soon,” the company explained in the shareholder letter. “As that happens, we expect viewing and growth to decline.”
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