Here are 3 reasons the coronavirus is bad business for Netflix:
U.S. Revenue Doesn’t Rise With Viewing
Because Netflix has repeatedly stated it will not have advertising, analysts at Needham calculate Netflix will lose four million U.S. subscribers during 2020 driven by higher churn due to growing competition from new deep-pocketed companies with attractive bundling options. The flip side can also be argued. “With Italy quarantined, the home entertainment market will continue to outperform,” says Stephan Paternot, co-founder and CEO of online film finance marketplace Slated. “And, Netflix is likely to have more customers in Asia sample the service via trial subscription.” Prior to COVID-19, analysts at Needham estimated Netflix would spend between $17 to $18 billion on content in 2020 and report negative FCF of roughly $3 billion.
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