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Streaming services are making a killing

Some win, others lose. The global economy continues to contract due to the social distancing measures requested by health experts. Many companies that depend on the public report losses and there is a historic increase in unemployment.

But as the saying goes: there’s good fishing in troubled waters. Technology-based industries have known how to survive this uncertain scenario. Although at first, it seemed that it would be affected by the disruption of the production chain in China, the situation seems different now that people locked up at home must adapt their lives to digital channels.

Streaming services have been one of the sectors that have smiled the most in the face of a turbulent time for the global economy. Yesterday, Spotify said it reached 130 million paying subscribers in the first quarter of 2020, 31% more than the previous year, while Netflix reported historic growth for the company.

Changes in tastes

The growth of Spotify subscribers is striking due to the change in the habits of its customers. Now they are no longer the drivers who go to work every morning with background music. Car, laptop, and web platforms decreased, while the audience that prefers to consume their service from television or video game consoles increased more than 50%.

Spotify continues to add users at a rapid rate, but those listeners don’t spend as much time on Spotify in countries affected by the coronavirus, the company said.

In the Spotify quarterly report, the Swedish company also mentioned its progress in the world of podcasts. They recently made a $ 196 million acquisition in the last quarter of The Ringer, a company focused on sports content.

So far so good: 19% of monthly active users participated with podcast content, up from 16% last quarter.

Searches for “relaxing” and “instrumental” playlists also increased, as two out of five consumers reported listening to more music than usual to control their stress.

Bottom line: Spotify’s first quarter puts it alongside its streaming friend Netflix as a rare bright spot in an otherwise bleak consumer environment.

Spotify reached 130 million subscribers at the end of March, 31% more than the previous year, the music streaming company said on Wednesday. The report places Spotify alongside Netflix subscription streaming service as a rare and prosperous sector when most industries are struggling with the closure of the coronavirus pandemic in much of the world.

“Based on our data, it is clear that morning routines have changed significantly. Every day now looks like the weekend, ”Spotify said in its first-quarter earnings report on Wednesday, echoing Google’s YouTube sentiment about changing patterns in its viewers.

For the first quarter, Spotify, based in Sweden, made a profit of € 1 million ($ 231 million) from a loss of € 142 million the previous year. On a per-share basis, the loss was reduced to 20 cents a share from 79 cents. Revenue increased by 22% to € 1.85 billion in the quarter.

Netflix has a rebirth

Investors were highly doubtful about the future of the Netflix streaming platform. The segmentation of the sector and the entry of a heavyweight in the creation of content such as Disney with its Disney Plus product did not augur a good start to the year for the platform.

However, Q1 is telling a quite different story. Netflix added more than 15.77 million new subscribers in the first three months of the year, breaking a record that will serve as a benchmark for how subscription video streaming can work during the coronavirus pandemic.

Netflix’s audience now reaches 182.86 million in total, the company reported in an earnings report this month. According to Thomson Reuters, that was Netflix’s January double guide for 7 million new members and analysts’ expectation of consensus of 7.5 million member additions.

While the year has been a good one for streaming services in general, Netflix is ​​positioned as a Top Performer. The company is confident that it will be able to maintain the production of new programs and films that would be integrated into its catalog in 2021, a different situation than what happens to its competition.

Netflix’s remote post-production locations allow the company to wrap up the shows and movies it is developing, such that all of its releases for this year are already filmed and in the final touches phase, which is what its team is up to. You can make it from the comfort of your home.

This way of working has shown that Netflix’s competitive advantage is not in its streaming platform but its mode of production. For new live streaming services like NBCUniversal’s Peacock and AT&T’s HBO Max, their exclusive original release lists were reduced to a fraction of what they originally planned. Traditional networks, relying more on live programming like sports and talk shows than Netflix, are struggling to figure out how they can get fresh footage in front of viewers.

“Almost all filming has stopped globally, except for some countries like Korea and Iceland,” said Netflix. The company has been able to move more than 200 post-production projects to continue remotely. And some of your production teams can also produce new jobs remotely. Within two weeks of the social distancing calls in Los Angeles, the majority of Netflix’s animation production team was working again, now from home.

Netflix Chief Content Officer Ted Sarandos stressed that the company is not going to need to adjust its premieres, at least in 2020. The fourth season of its historical drama The Crown will be released in late 2020, while the promising animated film Over the Moon, directed by an animation legend. Glen Keane is in the final stages.

Amid growing demand, Netflix said it has been dealing with a “significant disruption” in customer service during the surge in demand, which it has been able to cope with by adding 2,000 customer service agents working from home. He has also had to retrieve some of his alternative language dubs.

Netflix is ​​also acquiring ready-made movies made by other companies that are now stuck without theaters to release them.

By Juan Paulo Pérez-Tejada

I've studied Linguistics at the National School of Anthropology and History. I'm interested in NLP and Full-stack web development.

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