back to article Netflix says subscriptions just boomed but tells investors it's no money heist and they should expect stranger things

Netflix has released its Q1 FY20 results and revealed some unusual coronavirus impacts. Made most plain in its Form 10-Q [PDF], Netflix said: “The COVID-19 pandemic has also led to an increase in our net paid membership additions relative to our quarterly forecast and historic trends.” Indeed, the company reported 15.5m new …

  1. SuperGeek

    Unusual not the right word

    "unusual coronavirus impacts" Really? Unusual? Everyone's stuck at home, so it should be "expected", surely?

    1. Glennda37

      Re: Unusual not the right word

      Its unusual on their normal... They are basically saying we may have grow by 15m subscribers this quarter but don't expect that every quarter from now on.

      1. Stuart 22

        Re: Unusual not the right word

        Be interesting to see if there are any differences by demographic. Here we never subscribed to Netflix despite the nudging from TV to tablet. iPlayer/ITVHub/All4 more than satisfied our needs - for free. Since the Covid-19 so many great institutions have been streaming their best content for free - we've never had time to watch even iPlayer for weeks.

        We've watched more operas in London, New York, Paris, Vienna, Brussels virtually than we have been to real ones in the UK for years. Indeed I'm sold on watching them on screen. It's a better experience imho than viewing and listening from the 'Gods'. You see so much more detail and you can pause for a pee-break - a real bonus for us bladder weak self-isolating old fogeys.

        We're so sad that we don evening dress when enjoying the posher venues ... well that smart TV might just be phoning home with pictures!

        1. Aristotles slow and dimwitted horse

          Re: Unusual not the right word

          iPlayer is not free. You are only able to access it if you pay the BBC tax.

    2. Anonymous Coward

      Re: Unusual not the right word

      Mixed blessing.

      1) Short term customers means adding customers

      2) More people staying at home means more watching which breaks their models.

      Monthly subscriptions are based on an estimate on how much the average person watches. While more people join, the average amount a person watches on Netflix increases. So they can have a net gain in subscribers but now still lose money because of the cost of delivery. (They don't own their infrastructure, remember?)

      Also there are now more competitors which have a couple of advantages. 1) Content 2) some own their infrastructure so ramping up doesn't incur the high cost Netflix has.

      1. anthonyhegedus Silver badge

        Re: Unusual not the right word

        People will be watching Netflix more, but they’ve halved their bandwidth: ultra HD has gone down from 15.25 to 7.62Mbps, and HD movies have halved too. They touted this as a way of reducing the strain on ISPs and home networks. They made it seem like they were doing the responsible thing, when in face, they were just reducing their cost of delivery.

        I can’t really perceive any difference in quality, but amazon prime have done a similar thing and when you’re watching and HD movie at only 2Mbps, you really can notice the difference.

        1. tip pc Silver badge

          Re: Unusual not the right word

          The EU asked streaming providers to lower the quality to preserve bandwidth for people working from home

          in a deal with the EU

          The agreement comes after talks with Thierry Breton, the industry commissioner of the EU’s executive arm, the European commission.

          Ntflix just agreed to do what the EU requested, nothing about Netflix saving money.

  2. Anonymous Coward
    Anonymous Coward

    How long before familes feel the pinch

    of less income and more expenditure (on food etc) with everyone at home?

    What will have to give?

    Stop the kids having breakfast or cancel Netflix/Disney/Sky/Amazon Prime?

    Something will have to give.

    At Chez AC, we don't subscribe to any of the above services and money is already tight.

    Perhaps there really is some magic money tree that none of us at chez AC haven't found yet.

    1. Richard 12 Silver badge

      Re: How long before familes feel the pinch

      I suspect most households are already burning through their savings, and that many have already run out of cash. The mortgage holidays have helped, but many (esp. poorer) are renting - and how many landlords have passed on even part of a mortgage holiday?

      The UK food banks are incredibly busy, and the Government don't seem to be helping them at all.

      If they don't publish their "exit strategy" pretty soon then a lot of people are going to get desperate because they can't see any end to it. That'll lead to protests and/or mass disobedience, and another few thousand unnecessary deaths on Boris's hands.

      The USA is in a far worse position. The protests - and the deaths - have already started there.

      1. Anonymous Coward
        Anonymous Coward

        Re: How long before familes feel the pinch

        Don't actually know if the Landlords are entitled to a Mortgage holiday?, surely its a commercial loan for buy to let?.

        Some of the Landlords with the poorer tenants will have been having struggles with rent arrears even before this so will find it harder and i think they are not allowed to evict at the moment so some people will take advantage of that.

        I own my home (well mortgaged) and have only rented ever from the local Council in the past so have never experienced a private landlord and for the sake of clarity do not own other homes to rent out or live in.

        1. Kientha

          Re: How long before familes feel the pinch

          Initially, private landlords were excluded from getting a mortgage holiday but that was quickly updated so that landlords with a tenant who was unable to pay rent due to COVID-19 was able to get a mortgage holiday.

      2. Anonymous Coward
        Anonymous Coward

        Re: How long before familes feel the pinch

        You must be watching CNN.

        The reality is a bit different.

        1) Banks are not going to foreclose on mortgages.

        2) Courts are going to approve eviction cases.

        3) The death rate in the US seems high because we're doing more testing. But the mortality rate over those who tested positive is less than in other countries.

        If you want to look at the UK, how many people are dying in their homes because they can't get tested and by the time they get to the hospital it is too late?

        So I have to ask... how many in the UK probably have the Wuhan flu (Covid-19) but can't get tested?

        1. John Brown (no body) Silver badge

          Re: How long before familes feel the pinch

          More testing gives a stronger indication and there fore higher official figures of confirmed infections. That means the death rate compared to confirmed infections should be LOWER.

          The UK also publishes the ONS data showing not only all deaths, but the dates they occurred as opposed to the well published "date of reporting" used in the daily announcements. The date of reporting is showing a still increasing number with some quite wild fluctuations caused by holidays, weekends and the bureaucracy. The ONS figures seem to be indicating not only an increase on non-COVID-19 deaths, but a quite significant falling of the rate of deaths.

          Since the government are not rushing to tell us the peak may be over, I wonder if they are trying to balance just enough fear and hope to keep people staying at home instead from all rushing outside and sticking with the reported deaths numbers and dates instead of the recorded death numbers and dates.

        2. Richard 12 Silver badge

          Re: How long before familes feel the pinch

          Banks aren't foreclosing and courts aren't issuing possession orders at the moment.

          What happens later, when households go back to work and haven't made mortgage or rent payments for 3 (or more) months?

          In the USA, many banks are saying that all those months will be due immediately after this is (mostly) over. That's instant foreclosure.

          - If the household can afford to pay 3 months in one go, then they would've been making those monthly mortgage payments anyway.

          In the UK it's an actual mortgage holiday - no payments are due - so cannot demanded when things get better.

          Of course, in both cases interest continues to accrue, so the monthly payments will likely rise afterwards. If it's only 3 months it'll be affordable, if six, maybe not.

          Landlords are still owed the rent, so unless they've come to a (signed) agreement to a temporary reduction or waiver during the lockdown, they will be able to immediately issue court proceedings and get possession orders if they don't get the unpaid rent. Again, nobody who has to skip those 3 months can afford to suddenly pay all of them when they go back to work.

          As mentioned, the UK mortgage holiday was extended to landlords entirely so they can actually afford to waive rent during lockdown.

          1. Anonymous Coward

            @Richard12 Re: How long before familes feel the pinch

            You need to learn more about the foreclosure process.

    2. Forum McForumface

      Re: How long before familes feel the pinch

      Less income, for sure. More expenditure seems less obvious though. For me, the time at home has cut expenditure because I’m not buying cups of coffee, sandwiches and so on (nor am I burning fuel in the car).

      I would imagine most families who weren’t getting free school meals are seeing food and drink costs dropping.

      1. Anonymous Coward
        Anonymous Coward

        Re: How long before familes feel the pinch

        I’m spending far more money on food and drink than before. My household grocery bill has effectively doubled to ~£140 a week for 2 adults and a 3 year old, dairy & gluten allergies see 4 loafs of bread at £10 and 3 litres of milk at ~£7 amongst other things being pricy due to ingredients.

        Electric and gas is higher as have been in with tv’s going heating on and my other half seems to like opening the doors 5 minutes after asking for the heating to be turned up.

        Am saving on diesel but I’ve heard that’s gone down in price.

        I’m still spending far too much at Amazon and John Lewis though.

        1. Anonymous Coward
          Anonymous Coward

          Re: How long before familes feel the pinch

          It might be a good time to get the allergies (blind) tested, it might save yourself some money. It's amazing how the brain can create an experience when it thinks it has eaten something which someone has said could cause sensitivity or bloating and then an allergy is presumed.

          As actual gluten allergies don't exist (or at least they don't have clinical evidence for them) that could be something to consider in your family's case. I know they were quite trendy for a while. I presume that there is no actual diagnosis of celiac disease as that isn't described as a gluten allergy by those who have it.

          1. John Robson Silver badge

            Re: How long before familes feel the pinch

            Gluten intolerance most certainly is a thing.

            Single biscuit and I’m on steroids for several months.

          2. Anonymous Coward
            Anonymous Coward

            Re: How long before familes feel the pinch

            other half has been gluten and dairy free for ~ 30 years.

            Unwitting ingestion of gluten results in sore joints, bloating, tiredness, dairy results in rapid onset of heavy snot and mucus with coughing, toddler presents similar symptoms as mum. Can always tell when nursery has given toddler dairy or wheat, especially in nappy deposits when a baby.

            You don't need a medical degree to observe that cutting those elements out of your diet makes those issues go away.

            GP's decades ago dismissed diet as being a contributor, GP's & dieticians (yes we've consulted them) now specifically advise us to stay away from Gluten and Dairy, even goats milk is no longer tolerable in our household so are on the nut (actually mainly rice) milks.

            Just living in a society that didn't / doesn't respect dietary choices is enough of a blind test. Options for eating out are now far better than they where before with restaurants and takeaways taking ingredients very seriously. Luckily my families ailments are not life threatening, just expensive.

        2. John Brown (no body) Silver badge

          Re: How long before familes feel the pinch

          "Am saving on diesel but I’ve heard that’s gone down in price."

          108.7p/l at our local Morrisons. Has been for the last fortnight or so.

          1. tip pc Silver badge

            Re: How long before familes feel the pinch

            not sure i'd trust Morrisons fuel,

            i'm sure millions do but i'm not tempted.

  3. Flak

    Less chatty TLS - wow

    Given that we are talking about streams of typically a couple of hundred MB or more, the lowered overhead of TLS 1.3 fades to insignificance.

    Don't get me wrong, it is the right way to go in terms of latest protocol version, security and start up times, but the overhead benefit is negligible.

    1. tip pc Silver badge

      Re: Less chatty TLS - wow

      I was thinking the same. On an individual stream it likely makes no difference but aggregated over millions of subscribers every time the box initiates a connection probably adds up to something meaningful.

      Diminishing returns but keeps them ahead of the competition like Amazon prime or Disney.

      1. Flak

        Re: Less chatty TLS - wow

        A more efficient Codec would bring far greater results - compare an hour of content on iPlayer, Netflix and Prime for example.

      2. John Robson Silver badge

        Re: Less chatty TLS - wow

        And of course the stream isn’t the only connection, how many connections are made logging in and searching?

  4. Mark192

    Downplaying future revenue

    Makes sense to downplay the benefits they're getting from this - in countries severely affected by the virus it will go down badly to be seen crowing about the 'disease dividend'.

    Also, got to be careful not to be seen as too successful lest governments decide to come a-taxing the beneficiaries of the virus - most govs will have massive extra expenditure and massively reduced incomes...

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