[Asia Economy Reporter Joselgina] Netflix, a global online video service (OTT) company that has entered legal disputes in South Korea over network usage fees, is reaping significant benefits from the special demand caused by the novel coronavirus infection (COVID-19). In the first quarter (January to March) alone, the number of subscribers worldwide increased by 15.77 million, pushing the total number of subscribers beyond 180 million. However, Netflix expressed concerns that this is only a temporary surge and that growth may sharply slow down in the future.
According to major foreign media such as CNBC, Netflix announced on the 21st (local time) in its earnings report that its first-quarter earnings per share (EPS) reached $1.57. Revenue was estimated at $5.76769 billion, a 28% increase compared to the same period last year. This exceeded Wall Street expectations.
Netflix's global paid subscriber count increased by a whopping 15.77 million in the first quarter, more than double the company's initial forecast. This is attributed to the impact of COVID-19, as people stayed home for extended periods without going out and subscribed to services like Netflix to watch videos. As a result, the total global subscriber count rose 9% compared to the end of December last year, reaching 182.86 million.
By region, the number of subscribers in Europe, the Middle East, and Africa (EMEA) increased by 6.95 million. The Asia-Pacific region also added 3.6 million subscribers. According to FactSet, Netflix had initially expected to add 775,000 subscribers in the US and Canada and 7.2 million subscribers worldwide in the first quarter.
This growth trend is expected to continue into the second quarter. Netflix's second-quarter revenue is estimated to increase 23% year-over-year to $6.048 billion. Paid subscribers are also expected to increase by 7.5 million compared to the end of March.
However, Netflix warned in a shareholder letter that as the COVID-19 situation eases, viewership will sharply decline and growth will slow. CNBC reported, "It is unknown when the COVID-19 situation will ease," and "subscriber numbers are expected to decrease in the third quarter."
Netflix also stated that the recent strength of the US dollar is negatively impacting global earnings. In Brazil, for example, the subscription fee was $8.50 when converted to dollars, but due to recent exchange rates, it has dropped to $6.50. The company said this effect will offset the benefits of subscriber growth.
Since the spread of COVID-19, Netflix has halted filming of many programs since mid-March. For works originally scheduled to be released in the second quarter, filming has already been completed and they will be broadcast as planned, but if the COVID-19 situation prolongs, this will inevitably have a negative impact as well.
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