While most of Hollywood is hurting due to the Chinese coronavirus pandemic, one studio has benefited from forced lockdowns and stay-at-home orders. Netflix said it saw a surge in memberships during the first quarter, adding nearly 16 million new subscriptions globally for the period ending in March.
Despite the record growth, the streamer warned that the coronavirus-related bump in customers will likely mean it will see slower subscription growth later this year. It also said some future shows will be delayed due to the industry-wide production shutdown.
Among the streamer’s breakout hits of the first quarter was the Mark Wahlberg movie Spenser Confidential, which was seen by 80 million households in its first four weeks of release. The docuseries Tiger King: Murder, Mayhem and Madness was released near the end of the quarter, but Netflix estimates that it was seen by 64 million households during its first four weeks.
Netflix reported Tuesday that it added 15.8 million new subscribers for the quarter, more than double its guidance for the period. The Los Gatos, Calif.-based company said that during the first two months of the quarter, membership growth was similar to the prior two years. But once lockdown orders in many countries started in March, it started seeing memberships accelerate.
The company said the burst in new members will likely result “in slower growth after the lockdown is lifted country-by-country,” especially in the third and fourth quarters. “Intuitively, the person who didn’t join Netflix during the entire confinement is not likely to join soon after the confinement,” it said in a note to shareholders.
Like other studios, Netflix has had to shut down production on its shows, which will impact its pipeline of new content that is a major factor in drawing new customers.
“No one knows how long it will be until we can safely restart physical production in various countries, and, once we can, what international travel will be possible, and how negotiations for various resources (e.g., talent, stages, and post-production) will play out,” the company said.
Netflix also warned that a higher dollar due to the coronavirus pandemic will create a drag on its international revenue growth.
The company’s top executives saw their paychecks get a boost during 2019. CEO Reed Hastings total compensation was $38.6 million, up approximately 7 percent from a year ago, while chief creative officer Ted Sarandos made $34.7 million, up 17 percent.
Netflix shares dropped slightly in after-hours trading Tuesday, but the company’s market capitalization of more than $190 billion still exceeds the Walt Disney Co., making it the most valuable entertainment company in the world.