Streaming giant Netflix has seen a surge in sign-ups due to the coronavirus lockdown, but the company has warned investors that subscriber growth will slow.
Netflix added more than 10 million subscribers in Q2 of 2020, bringing the total of new subscribers to 26 million in 2020.
In contrast, Netflix saw 28 million new subscribers for the whole of 2019.
The company said: “Growth is slowing as consumers get through the initial shock of coronavirus and social restrictions.”
Netflix shares dropped in after-hours trading as investors received the company’s quarterly update.
Its revenue increased almost 25% to $6.1 billion, while profits rose to $720 million in the quarter, up from $271 million a year ago.
The subscriber additions were far higher than analysts had expected.
While, some people might still end up quitting the service, the pandemic has clearly shown that Netflix is an indispensable part of viewers lives, analysts said.
Netflix also announced it was promoting chief content officer Ted Sarandos to co-chief executive.
CEO Reed Hastings told investors: “This change makes formal what was already informal – that Ted and I share the leadership of Netflix.”
Netflix was founded in 1997by Reed Hastings and Marc Randolph in Scotts Valley, California. The company’s initial business model included DVD sales and rental by mail, but Hastings abandoned the sales about a year after the company’s founding to focus on the initial DVD rental business. Today, Netflix produces and distributes content from countries all over the globe.
Netflix shares surged on July 17 after the company announced it now had about 104 million subscribers, a larger-than-expected number that boosted revenues.
According to the company’s bosses, the gains were a sign that investment in new shows and movies was paying off as online television becomes more popular.
Netflix is behind shows such as 13 Reasons Why, about teen suicide, and political drama Houseof Cards.
The company CEO and co-founder Reed Hastings said it was “the rewards of doing great content”.
Netflix has cultivated those audiences with movies such as Okja, a movie made by one of South Korea’s top directors about a young girl’s quest to recover a giant companion from a multi-national corporation.
The company also said it expected international members to help boost profits for the year – a first for that part of the business.
The growth helped Netflix to report a 32% rise in second quarter revenues to $2.8 billion, and it expects revenues to reach nearly $3 billion in the third quarter.
Netflix profits for the second quarter of 2017 were $65.6 million, up about 60% year-on-year.
Netflix’s shares have soared after the video streaming company posted a record number of subscribers that beat estimates.
The company added 3.2 million international customers in the last three months, far more than the 2 million analysts had predicted.
In the US, the number rose 21% to 370,000 as hit shows such as Stranger Things and Narcos won over more subscribers.
The move helped Netflix’s quarterly revenues rise 31% to $2.29 billion, sparking a 20% jump in the company’s share price.
In Q3 of 2016, Netflix had about 83.3 million subscribers.
Netflix said on October 17 that it plans to license content to existing online service providers in China rather than operate its own service in China in the near term.
The video streaming service has been expanding in international markets to counter slowing growth in the US. It has a strong presence in more than 130 markets worldwide, except China.
Concern that Netflix’s growth was slowing had overshadowed the company. Its shares had fallen about 13% this year.
In after-hours trading on Wall Street Netflix’s shares jumped 20% to about $119.
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