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Netflix’s Q2 2020 earnings on Thursday showed that the streaming wars aren’t hurting the platform as much as some people worried. Despite production delays and the entrance of major competitors like Disney+ and HBO Max, Netflix saw strong subscriber growth in the quarter.
- Netflix now has about 193 million worldwide subscribers, adding 10.1 million new subscribers in Q2, which reflects 27.3% year-over-year (YoY) growth. Since the beginning of the year, Netflix has added 25.9 million subscribers worldwide, which is just 2 million shy of their total additions for all of 2019.
- In the US and Canada, the streamer’s largest markets, the company reported 72.9 million subscribers, up 2.9 million from Q1, growing 9.6% YoY.
- Netflix did say it expects a significant slowdown in new subscriber additions in the back half of the year as lockdowns lift. But even then, if it adds no new subscribers, its YoY growth would be 15.5% worldwide and 7.7% in the US and Canada. For reference, US and Canada subscribers grew just 4.5% last year, so this would represent a significant acceleration in growth for their largest, most saturated markets.
Prior to the pandemic, we expected Netflix’s growth would slow down in the US due to its growing market saturation and increased competition in the streaming space. Since November, we’ve seen competitors launch their own streaming services — Disney+, HBO Max, and Peacock — and end licensing deals with Netflix. In terms of market share, in 2019, 54.1% of US internet users watched Netflix on a monthly basis, and those who did not represent a group that’s hard to reach: They’re likely to be older, have lower income, and/or have less access to high-speed internet that’s required for streaming video. Despite these headwinds, Netflix so far has grown even faster than in 2019.
Looking forward, Netflix will continue to extend its lead in streaming video because pandemic-related production delays have not affected it as much. Netflix said that it won’t see major impacts to its content slate until late 2021 because of its longer production lead times. By comparison, traditional TV networks and new streaming services were impacted more acutely because they typically have a much shorter production window: Many shows scheduled for late 2020 or 2021 would have been filming now if not for lockdowns. This reduced ability to create new content will stunt early growth for services like HBO Max and Peacock, which are looking to rapidly scale their subscriber bases.
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