Stay-at-home streamers lift Netflix, as it names new co-CEO

Netflix continued to benefit from COVID lockdowns, adding more subscribers than expected, as it named a co-CEO.

Steve Carell, left, and John Malkovich in Netflix’s Space Force.

Netflix continued to be a beneficiary of the shelter-in-place world with the streaming giant beating its forecast for new subscribers, as it named programming chief Ted Sarandos co-chief executive.

Netflix said Mr Sarandos has also been elected to the board of directors. The move puts Mr Sarandos in position to eventually succeed Netflix chairman and chief executive Reed Hastings.

Mr Sarandos, 55, will continue as chief content officer.

“This change makes formal what was already informal -- that Ted and I share the leadership of Netflix,” said Mr Hastings, 59, in a letter to shareholders. Jay Hoag, the lead independent director of Netflix said, “The board and I are confident this is the right step to evolve Netflix’s management structure so that we can continue to best serve our members and shareholders for years to come.”

The company reported 10.1 million net new subscribers, a gain that surpassed the 7.5 million Netflix had projected for the second quarter earlier this year. The increase is less than the company’s gain for the first quarter, when it added about 16 million customers as economies and people began locking down amid the spread of the coronavirus.

Like most of Hollywood, Netflix isn’t making much content because COVID-19 has halted production of movies and television shows, but it has a large arsenal of programming and is still able to offer new content to viewers.

The California-based company said it ended the second quarter with a total of 192.9 million paying subscribers, up from 182.9 million as of the first quarter and 151.6 million a year earlier.

The company has benefited from heightened demand for television shows, movies and other forms of content that can be streamed at home as the pandemic forces changes in consumer behaviour. People in many markets have stayed at home as movie theatres have shut down, sports leagues have delayed competition and entertainment venues have cancelled concerts.

“We saw significant pull-forward of our underlying adoption leading to huge growth” during the first two quarters of the year, the company said.

However, Netflix said it expects less growth for the second half of 2020. It anticipates adding 2.5 million net new subscribers in the third quarter, down from a gain of 6.8 million in the year-ago period.

Shares fell more than 10 per cent in after-hours trading. The stock has been one of the strongest performers in the S&P 500 in 2020 and ended Thursday up 63 per cent so far this year.

For the second quarter, Netflix said it added 2.8 million subscribers in the region including Europe and the Middle East, 1.8 million in Latin America and 2.7 million in Asia.

The company reported more than 2.9 million new subscribers in the US and Canada for the second quarter, up compared with a gain of 2.3 million in the first quarter.

Netflix is facing more competition for viewers in North America. Comcast Corp’s NBCUniversal has launched its Peacock streaming service. In May, HBO, part of AT&T Inc., began offering commercial-free HBO Max. Walt Disney and Apple also have their own streaming platforms.

Netflix reported second-quarter revenue of $US6.15 billion, up from $US4.92 billion a year earlier. Analysts expected Netflix to generate $US6.08 billion in revenue for the latest quarter.

Profit rose to $US720 million, or $US1.59 a share, from $US271 million, or 60 cents a share, the year earlier. Analysts had expected $US1.82 a share, according to FactSet.

Dow Jones Newswires