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The rise of streaming services during lockdown

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Netflix has thrived during the pandemic, with millions of people streaming films and TV shows while forced to stay home.

Picture: AP Photo

COVID-19 has been bad for most businesses except for some digital businesses such as streaming services.

Netflix has been one of the most obvious winners, with millions of people streaming films and TV shows while forced to stay home.

Netflix reported that almost 16 million people created accounts in the first three months of 2020. That is almost double the new sign-ups it saw in the final months of 2019.

The home entertainment giant’s share price has climbed more than 30 percent in 2020 as investors bet on its ability to benefit from people spending more time indoors.

Europe, the Middle East and Africa accounted for the largest number of new members, with almost 7 million new subscribers.

Growth in the US and Canada, which has lagged in recent quarters, also jumped, with 2.3 million new members joining the service, compared to just 550,000 in the final months of 2019.

The firm now has more than 182 million subscribers worldwide.

In 2020, Netflix said revenue increased to $5.76 billion, up more than 27 percent compared to the same period in 2019. Studies in the US and UK indicate that the biggest factor behind this increase was people spending twice as much time watching subscription streaming services such as Netflix, Disney Plus, and Amazon Prime Video – one hour 11 minutes per day on average in April 2020.

The trend was even more pronounced among those aged between 16-34s, who streamed for an average of two hours each day.

A study conducted in the US in March 2020 revealed that 68 percent of Disney Plus users who were practising social distancing had increased their usage of the service in the last month as a result of the coronavirus, as well as 66 percent of Netflix and Hulu users, who said that their consumption had also gone up in that time period.

A continuation of lockdown restrictions amid localised flare-ups would be positive for Netflix and other streaming services, acting as a catalyst for more people to try the service.

However, there is also the risk that recent subscribers cancel their plans once life returns to normal, suggesting that Netflix could have a large customer churn problem going into 2021.

The bigger question for Netflix is whether it can retain those paying customers after Covid-19 lockdown measures are eased.

BUSINESS REPORT