Amid COVID-19, more consumers are streaming Netflix, but will they stay?
As consumers self-isolate due to COVID-19, streaming video viewing is up across the globe. According to a study by Conviva, the time US consumers spent streaming video the week of March 17-23 was up 26% compared to two weeks prior. And it’s not just that existing customers are spending more time on these services—there are also more new (or returning) customers signing up, as well. Although the time consumers spend streaming video will likely remain high throughout the COVID-19 crisis, streamers should not expect the subscriber additions to continue at March’s rate, and they should anticipate a sharp dip in viewing when consumers emerge from their homes post-crisis.
Mintel ePerformance/eDataSource estimates Netflix sent 243% more welcome emails during the last two weeks of March than it did during the last two weeks of February. Disney+ also saw a sharp uptick (436%) during the same timeframe. Disney+ appears, however, to have welcomed fewer new subscribers the week after it launched Frozen 2 on the platform, and even experienced a slight uptick (8%) in goodbye emails the last week of March. In contrast, Netflix welcomes continue to rise at the end of March, and it even saw a 29% decline in goodbye emails in the last two weeks of March compared to the last two weeks of February.
Newer entrants compete with Netflix during COVID-19
Netflix is clearly the streaming video provider of choice in these trying times, despite the fact that it has not introduced any special offers or surprise-dropped any content, as some of its peers are doing right now. For Netflix, it’s largely business-as-usual, except for an uptick of winback emails that might be contributing in small part to its increased subscriber adds. What Netflix has on competitors like Disney+, Hulu, and, most certainly Apple TV+, is its wealth of content. Netflix not only offers something for everyone but it also announces new titles on the platform every week. And although Disney+ tries to offer content that appeals to more than just kids, it lacks the deep content library and variety of adult-oriented titles to keep child-free households (or those with older children) engaged.
The COVID-19 crisis is having the biggest impact on streaming video (and pretty much everything else right now), but the streaming space will also soon feel the effect of new entrants. This could cause more consumers to leave Netflix, particularly since some of these—HBO Max and Peacock TV—will also have substantial content libraries that include a wealth of classic consumer favorites. HBO Max will launch in May 2020. If we are still self-isolating by then, our old favorite shows and movies will likely feel very comforting—already, The Office is one of the top shows on Netflix during the COVID-19 crisis, suggesting a desire for light-hearted, familiar content. HBO Max is going to have an abundance of comfort shows, including Friends, The Fresh Prince of Bel-Air, Gossip Girl, South Park, The West Wing, and more. This could certainly put a dent in Netflix’s recently soaring subscribership.
How will consumers respond post- COVID-19?
The wild card for all streaming providers is how consumers respond post-COVID-19. Surely, streaming video will experience a dip in usage when consumers emerge from isolation. All things offline, and in-person, will surge for several weeks, maybe even months, and streaming providers should expect it. They may need to reconsider any significant content releases during this time, for instance, knowing that they’re likely to get a better reception when consumers are ready to spend hours bingeing content again.
Streaming services should prepare for a ‘new normal’ post COVID-19
Even beyond this initial celebration period, however, streaming video providers are likely to face competition from services and activities that weren’t as threatening to them before. For example, although gaming has always competed for consumers’ leisure time, it could take up a greater share, thanks to new habits formed during the COVID-19 crisis (Verizon reported that gaming during peak hours went up 75% since the quarantine first went into effect). Another possibility is that the re-emergence of sporting events, by enabling comradery and reasons to celebrate, turns those that previously cared little for games or matches into new, energized fans. In short, there will be many available distractions competing more significantly with streaming video after the crisis, and there’s no guarantee that life will go “back to normal,” after some period of time. Every business will be watching to see what the post-COVID-19 normal looks like.