Netflix says subscriptions just boomed but tells investors it's no money heist and they should expect stranger things
(2020/04/22)
- Reference: 1587524532
- News link: https://www.theregister.co.uk/2020/04/22/netflix_q1_2020/
- Source link:
Netflix has released its Q1 FY20 results and revealed some unusual coronavirus impacts.
Made most plain in its [1]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 subscribers in the quarter for a total of 182.86 million, almost double recent quarters' subscription growth.
But the filing warns the surge “may not be indicative of results for future periods.”
“Our increase in net paid membership additions may reflect the acceleration of growth that we would have seen in subsequent periods, and membership growth may slow or reverse, due to slower acquisition and/or higher cancellations, as government and other restrictions are relaxed,” the document adds.
CEO Reed Hastings’ [2]letter to shareholders [PDF] opens with “In our 20+ year history, we have never seen a future more uncertain or unsettling” and goes on to explain that on-boarding a rush of new users has actually damaged Netflix’s average revenue-per-user.
The CEO also explained that the pandemic will impact the streamer’s pipeline of new shows, because most film crews worldwide have had to stop working (although animators were quickly back at work and writers mostly just kept writing).
Revenue for the quarter was US$5.7bn and operating income hit $958m, both the best results the company has achieved in recent history. And that’s after taking into account the strength of the US dollar, which reduces the value of subscriptions in other nations.
Hastings also wrote that Netflix’s investment in caching systems appears to have paid off, both in terms of user experience and letting it respond to government request to reduce its impact on networks.
The company has also [3]blogged about its introduction of support for TLS 1.3.
Senior software engineer Sekwon Choi wrote that TLS 1.3 has moved on from its predecessor’s use of weak ciphers and a chatty handshake process. Of special interest to Netflix is the new 0-RTT feature that Choi says “allows an application to include application data with its initial handshake message, instead of having to wait until the handshake completes.”
For Netflix this means it can do a full handshake with a device with one roundtrip, or sometimes without a roundtrip at all. That translates into faster starts for streams and less traffic on networks, both of which Choi thinks will be appreciated.
“Therefore, we have started deploying TLS 1.3 on newer consumer electronics devices and we are expecting even more devices to be deployed with TLS 1.3 capability in the near future,” he wrote. ®
Sponsored: [4]How to Build Your Digital Experience Portfolio
[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001065280/4afe837e-b704-49cd-b9f3-9583bfad10ca.pdf
[2] https://s22.q4cdn.com/959853165/files/doc_financials/2020/q1/updated/FINAL-Q1-20-Shareholder-Letter.pdf
[3] https://netflixtechblog.com/how-netflix-brings-safer-and-faster-streaming-experience-to-the-living-room-on-crowded-networks-78b8de7f758c
[4] https://go.theregister.co.uk/tl/1936/-8578/how-to-build-your-digital-experience-portfolio?td=wptl1936
Made most plain in its [1]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 subscribers in the quarter for a total of 182.86 million, almost double recent quarters' subscription growth.
But the filing warns the surge “may not be indicative of results for future periods.”
“Our increase in net paid membership additions may reflect the acceleration of growth that we would have seen in subsequent periods, and membership growth may slow or reverse, due to slower acquisition and/or higher cancellations, as government and other restrictions are relaxed,” the document adds.
CEO Reed Hastings’ [2]letter to shareholders [PDF] opens with “In our 20+ year history, we have never seen a future more uncertain or unsettling” and goes on to explain that on-boarding a rush of new users has actually damaged Netflix’s average revenue-per-user.
The CEO also explained that the pandemic will impact the streamer’s pipeline of new shows, because most film crews worldwide have had to stop working (although animators were quickly back at work and writers mostly just kept writing).
Revenue for the quarter was US$5.7bn and operating income hit $958m, both the best results the company has achieved in recent history. And that’s after taking into account the strength of the US dollar, which reduces the value of subscriptions in other nations.
Hastings also wrote that Netflix’s investment in caching systems appears to have paid off, both in terms of user experience and letting it respond to government request to reduce its impact on networks.
The company has also [3]blogged about its introduction of support for TLS 1.3.
Senior software engineer Sekwon Choi wrote that TLS 1.3 has moved on from its predecessor’s use of weak ciphers and a chatty handshake process. Of special interest to Netflix is the new 0-RTT feature that Choi says “allows an application to include application data with its initial handshake message, instead of having to wait until the handshake completes.”
For Netflix this means it can do a full handshake with a device with one roundtrip, or sometimes without a roundtrip at all. That translates into faster starts for streams and less traffic on networks, both of which Choi thinks will be appreciated.
“Therefore, we have started deploying TLS 1.3 on newer consumer electronics devices and we are expecting even more devices to be deployed with TLS 1.3 capability in the near future,” he wrote. ®
Sponsored: [4]How to Build Your Digital Experience Portfolio
[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001065280/4afe837e-b704-49cd-b9f3-9583bfad10ca.pdf
[2] https://s22.q4cdn.com/959853165/files/doc_financials/2020/q1/updated/FINAL-Q1-20-Shareholder-Letter.pdf
[3] https://netflixtechblog.com/how-netflix-brings-safer-and-faster-streaming-experience-to-the-living-room-on-crowded-networks-78b8de7f758c
[4] https://go.theregister.co.uk/tl/1936/-8578/how-to-build-your-digital-experience-portfolio?td=wptl1936
How long before familes feel the pinch
Anonymous Coward
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.
Unusual not the right word
"unusual coronavirus impacts" Really? Unusual? Everyone's stuck at home, so it should be "expected", surely?