Bulletin
Investor Alert

Business in the Age of COVID-19 Archives | Email alerts

May 2, 2020, 9:15 a.m. EDT

Netflix may have edge on competition as coronavirus keeps people looking for new shows

Netflix in the age of COVID-19: While new rivals face production delays in attempt to catch up, Netflix has years of original content on its service and more shows already in the can

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Netflix Inc. (NFLX)
  • X
    Walt Disney Co. (DIS)
  • X
    Apple Inc. (AAPL)

or Cancel Already have a watchlist? Log In

By Jon Swartz


MarketWatch photo illustration/iStockphoto

This article is part of a series tracking the effects of the COVID-19 pandemic on major businesses, and will be updated. It was originally published on April 7.

While most prominent tech companies are fretting about the effects of the COVID-19 pandemic, Netflix Inc. may become even more important in the daily lives of Americans forced to stay at home and in front of their televisions.

The shelter-in-place orders across America, combined with the loss of live sports, could accelerate the adoption of the types of streaming services that Netflix /zigman2/quotes/202353025/composite NFLX -1.59%  pioneered. Early returns showed that paid subscriptions for streaming TV and video jumped 32% the week of March 16, according to Recurly Inc.

While a mass move to streaming from viewers who had held on to cable bundles could validate the years-long prophesy of Netflix Chief Executive Reed Hastings, there are still reasons to worry. To put a name on them, it would be Walt Disney Co. /zigman2/quotes/203410047/composite DIS +0.16%  , Apple Inc. /zigman2/quotes/202934861/composite AAPL +0.64% and Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -0.40%  , along with a few others.

Business in the age of COVID-19: Read how other large companies will be affected by the coronavirus

Hastings has repeatedly said that competition would benefit Netflix in the long run because it moves people to stream even more, but increased competition weighed on Netflix’s forecast for the first quarter, and is especially troublesome in the U.S., where growth has been an issue. Domestic net subscriptions have declined in 10 of the past 12 quarters, based on data compiled by Antenna.

A principal cause early last year was price increases, followed by heightened competition from Disney and Apple in November. (In February, Disney reported 28.6 million subscribers of Disney+ and 30.7 million for Hulu. Apple has not disclosed Apple+ subscriber numbers.) Netflix ended 2019 with 167 million subscribers worldwide, 61 million of them in the U.S.

See also: Netflix ends year strong, but questions surface about 2020

Two recent surveys underscore Netflix’s competitive challenge.

Disney+ and Hulu — also owned by Disney — have emerged as the most popular sercices among first-time subscribers, according to a survey of 6,809 people in the U.S. in late March by TV analytics company EDO . Since the coronavirus outbreak, 29% of new subscribers chose Disney+, followed by Hulu (21%), and Netflix (15%). Apple TV+ was picked by less than 10%.

Of those considering adding a new streaming service, Hulu, Netflix, Disney+ and Amazon Prime Video emerged as the first four choices, according to a poll of 1,000 people in late March from Kagan, the media research unit within S&P Global Market Intelligence.

What differentiates Netflix, and could give it a competitive advantage, is the volume of its catalog and the fact it has completed most of its programming for the year. While others are trying to build a catalog and are coping with production shutdowns, Netflix is benefiting from the viral popularity of its documentary series “Tiger King.” The company also has lined up an array of impending releases such as “#blackAF” (April 17), a mockumentary sitcom from “Black-ish” creator Kenya Barris, and “Never Have I Ever” (April 27), a coming-of-age comedy series about an Indian-American teenage girl, inspired by producer Mindy Kaling’s childhood.

See also: Here’s everything coming to Netflix in April 2020 — and what’s leaving

Last year, Netflix released 2,769 hours of original programming, compared with 1,537 hours in 2018, according to an Omdia report . Netflix offered 657 first-run original titles in 2019, compared with 386 in 2018.

/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 429.32
-6.93 -1.59%
Volume: 5.42M
May 22, 2020 4:00p
P/E Ratio
86.89
Dividend Yield
N/A
Market Cap
$188.82 billion
Rev. per Employee
$2.22M
loading...
/zigman2/quotes/203410047/composite
US : U.S.: NYSE
$ 118.02
+0.19 +0.16%
Volume: 9.29M
May 22, 2020 4:00p
P/E Ratio
39.82
Dividend Yield
0.00%
Market Cap
$213.18 billion
Rev. per Employee
$295,532
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 318.89
+2.04 +0.64%
Volume: 20.45M
May 22, 2020 4:00p
P/E Ratio
25.00
Dividend Yield
1.03%
Market Cap
$1382.18 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 2,436.88
-9.86 -0.40%
Volume: 2.87M
May 22, 2020 4:00p
P/E Ratio
116.41
Dividend Yield
N/A
Market Cap
$1215.46 billion
Rev. per Employee
$359,671
loading...
1 2
This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.