Netflix added a record 15.8 million subscribers in Q1 of 2020, more than doubling its initial estimates of 7 million subscribers, per company statements. The company added 2.3 million domestic subscribers, up 23% year-over-year (YoY), and a massive 13.5 million abroad (up 74% YoY), underscoring the company’s international expansion efforts in recent years.The streaming giant’s record growth was fueled largely by the coronavirus crisis. While the pandemic has put pressure on consumers to reduce nonessential spending, it has also left many people with both more time on their hands and fewer leisure options to choose from.
Netflix’s domestic growth is especially impressive given that it was expected to slow — now the question is how much of the new subscribers stick around. Although its international gains are massive, the platform’s domestic growth is particularly notable given that it has been slowing for a while as Netflix approaches market saturation and faces increased competition from the likes of Disney+ and Apple TV+.
In fact, new eMarketer estimates, updated in April, predict that Netflix’s share of US time spent with digital video will decline for the first time in 2020. Still, this was Netflix’s best quarter for domestic subs in two years, and a signficant acceleration from last quarter’s domestic additions of just 548,000. Now, the big question the platform faces is how much of this unexpectedly large group continues to use Netflix once the pandemic lessens.
Subscription video is seeing a major surge overall, and if enough consumers grow accustomed to ad-free SVOD, Netflix and other platforms could see long-term benefits. While time spent on digital media has increased across the board, subscription video has captured a large portion of this time — 51% of US respondents reported watching these services more due to the pandemic, according to Business Insider Intelligence’s Coronavirus Consumer Survey, which was conducted on March 31, 2020 and resembles the US population on the criteria of age, gender, income, and living area.
And people aren’t just watching a little more, either — only 10% of respondents reported increasing their watch time by an hour or less, while 49% said they were watching 1 to 3 hours more, and 41% were watching even more than that. Though these numbers will likely decrease significantly as stay-at-home restrictions lift, there could be a lasting impact on consumer behavior if enough people get used to the ad-free environment that subscription video services provide — potentially enough of an impact to mitigate Americans’ growing subscription fatigue.
While Netflix expects to see declines in viewership as the crisis lessens, it has already succeeded in pulling more consumers into the SVOD model, and now it has an opportunity to win over these consumers that may otherwise not have signed up for the service.