Netflix adds 15.8 mn viewers as lockdown binge-watching boosts Q1 profit

Los Gatos, California headquartered Netflix, which owns and operates an eponymous on-demand video streaming platform, has added 15.77 million paid users globally in the first quarter of the financial year 2020-21, taking the total number of subscribers to 182.86 million.

The growth, in absolute terms, is higher than it was in the preceding four quarters. The company added 8.76 million viewers in Q4 FY20, followed by 6.77 million, 2.7 million and 9.6 million in Q3, Q2 and Q1, respectively.

Netflix has attributed the sudden spike in subscriptions -- most of which came in March -- to the Covid-19 lockdown across the globe. 

“During the first two months of Q1, Netflix’s membership growth was similar to the past two years. Then, with lockdown orders in many countries starting in March, many more households joined Netflix to enjoy entertainment,” the company said in a statement.

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Notably, net paid additions were the highest in the Europe, Middle East and Africa (EMEA) region, followed by Asia Pacific and Latin American regions, the US and Canada.

The company posted a 106% growth in net profit to $709 million during the quarter, on the back of the subscriber influx. Sequentially, the company’s bottom line grew 21% from $587 million. 

Additionally, Netflix’s revenues grew 27.6% to $5.77 billion, compared to $4.52 billion in the previous year, in line with its forecast. The company saw its operating margin rise to 16.6% from 10.2% in the same quarter last year. 

However, its profitability was lower by 1.4 percentage points than the expected margin of 18%, due to $218 million in added costs from stalled projects and hardship fund commitments.

The company also recorded a $115 million negative impact as the US dollar strengthened -- it mostly earns significant revenue in currencies other than the greenback. 

Its streaming average revenue per user (ARPU) grew 8% compared to the 2% decline the previous year.

Netflix expects net user additions to normalise to 7.5 million in the second quarter of FY21, depending on when people begin to socialise again and how much of a break they take from television after the lockdown ends, the company said. It also estimates to see a net profit of $802 million in Q2, on a revenue of $6.05 billion.

On-demand video streaming platforms in India also saw an increase in users. In March, the Cellular Operators Association of India (COAI) wrote to the government and 12 streaming companies, asking the latter to reduce streaming quality on their platforms to ease the load on network infrastructure.