This occurred as streaming usage across the industry skyrocketed. Verizon said streaming video on its US networks was up 41% in April. Americans watched about 27 billion minutes of streaming content on their TVs per day in April, up from 10 billion at the same time last year, according to Nielsen. Globally, daytime streaming usage was up 40% at the end of March, according to data collected by intelligence platform Conviva, which specializes in streaming media.

And Netflix was always positioned to take advantage. The normal rhythms of work and school life have changed, which decreases the value of so-called appointment viewing on TV and increases the value of the binge model. There are no time slots on Netflix, no advertising obligations to fulfill. It is a big blob of content, available to users whenever they want, to be consumed at whatever pace they choose. It’s the perfect form of leisure for those stuck in home confinement.

It’s also significantly cheaper than cable television. At $12 per month on average, Netflix is less than 10% the cost of the average monthly cable bill in the US. Cord-cutting was already accelerating before the pandemic, and now with live sports on hold, that could happen even faster, analysts say. Netflix will only stand to benefit even more if a larger percentage of consumers suddenly has more to spend on a Netflix subscription, or more viewing hours to use on its service.

Netflix’s library is also far more international than most of its competitors. Its content—though increasingly focused more on originals and less on licensed shows and movies—is vast. Disney’s nascent streaming service, Disney+, still only has a limited number of shows, and has yet to release anything of note since The Mandalorian, a Star Wars spinoff, last year.

The streaming service has added about $40 billion of value since the start of the pandemic. Last month, it surpassed Disney in market capitalization for only the second time ever. Since then, the companies have traded places several times.

Hulu, also owned by Disney, is only available in a handful of countries, while potential competitors HBO Max and Peacock have not yet launched. While they each aim to have content libraries as valuable to consumers as Netflix’s, neither will be as diverse; it will take years for them to make enough original content to sustain the catalog. And that’s difficult to do when all Hollywood production is on hold.

While Warner Bros. and other major Hollywood studios are postponing the theatrical releases for their blockbuster movies, Netflix is releasing content as if there were no global crisis. Last week, it debuted the trailer of a new film by Spike Lee, which is likely to be an awards season favorite. The pandemic may be what finally gives the streaming service the coveted Oscar for best picture—a prize it wants to prove to the industry’s most respected talent that it can compete with the old guard in the longterm.

Netflix says it still has enough content to release on its service with little disruption to users through 2020. If production hasn’t resumed after that, then things get interesting.

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When does the music stop for Netflix?

Netflix has already told investors this boom won’t last forever. In its first quarter’s letter to shareholders, it said both viewing hours and subscriptions will decline as soon as home confinement ends—which is beginning to happen slowly across the world. The logic is simple: The more time consumers spend outside, the less they will spend on at-home entertainment options.

The company preliminarily forecast an addition of 7.5 million subscribers in the second quarter—less than half the number of subscribers added this quarter, though still higher than that of the previous two quarters. It admitted the forecast was mostly “guesswork” which depends a lot on exactly when home confinement ends.

“The actual Q2 numbers could end up well below or well above that, depending on many factors, including when people can go back to their social lives in various countries and how much people take a break from television after the lockdown,” the company told shareholders.

For all of its proprietary data, Netflix doesn’t know how consumer habits in the wake of the pandemic will play out any better than any other company. It’s unlikely the global appetite for streaming content will simply disappear once home confinement ends, but streaming services—Netflix most of all—has some challenges to start preparing for.

The biggest one is figuring out production in time to continue the efficient release of content. Virtually all filming on Netflix’s TV shows and movies is at a halt right now, until it’s deemed safe to continue. Even when governments give the go-ahead for resumption, Netflix will have to be extremely careful—more careful than most, given how global its productions are, and how many countries it operates within. It makes original content specifically for many countries in which it’s available, and each of those countries will re-open at different speeds, with different laws governing how to go about it.

“No one knows how long it will be until we can safely restart physical production in various countries, and, once we can, what international travel will be possible, and how negotiations for various resources (e.g. talent, stages, and post-production) will play out,” Netflix said in its letter to shareholders.

How, exactly, film productions can resume in a post-Covid world is a complicated question with few answers. Movie shoots are some of the most hands-on, intimate work environments that exist, as hundreds of workers are forced into close quarters for hours at time (not to mention the unavoidable physical touching between actors and their handlers). Insurers will be hesitant to cover productions, Deadline reported. And all participants could be forced to sign waivers that prevent studios and production companies from being held liable if someone gets sick on the job.

Netflix has already resumed some filming in Iceland, South Korea, and Japan, and will restart production in France, Sweden and Norway in the next few weeks. On the sci-fi series Katla, which is filmed in Iceland, all members of the cast and crew volunteered to get tested for Covid-19 (Iceland is one of the countries with tests widely available), Ted Sarandos, Netflix’s content boss, wrote in an op-ed for the Los Angeles Times this month. All tests came back negative, but everyone still has their temperature taken every morning before filming.

On another series, shot in Sweden, the cast and crew volunteered to self-quarantine for 14 days before filming, and then for the duration of the two-week shoot. Buffets were replaced with boxed meals, while makeup artists are using single-use, disposable applicators.

The logistical headaches could affect the actual storytelling, too. “Some shows will need to rewrite scripts or look to add visual effects to what previously would have been shot live,” Sarandos said. “For others, that may be impossible.”

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The old Hollywood guard has it much worse

All of Netflix’s problems around production also exist for the major Hollywood studios. But those businesses have an extra complication: They have no way to distribute the majority of their films without completely disrupting a business model that’s been profitable for decades—the theatrical experience.

While Netflix can simply add its content to its streaming service, studios like Warner Bros. and Universal have no easy way to distribute its content to audiences with all theaters shut down. Warner Bros., which is owned by AT&T, will produce some smaller films for the company’s upcoming streaming service, HBO Max, but not nearly enough to make longterm fiscal sense. It can’t put tentpole films like Wonder Woman, or Christopher Nolan’s upcoming thriller, Tenet, online without giving up millions in ticket sales. Those films will make so much more money in theaters—that is, when they’re allowed to re-open.

While studios generally split box office revenue with the theaters down the middle, they’re drawing from a much larger pot than a direct-to-digital release, in which they typically keep about 80% of revenue (the rest goes to the retailers renting out the film to viewer). A film like Tenet could make $1 billion worldwide when released in theaters. Half of that is certain to be far more than 80% of whatever Warner Bros. would generate if it put the movie online without a theatrical release.

Meanwhile, Disney, arguably Netflix’s biggest challenger, is dealing with its own set of troubles. Its non-streaming businesses are collapsing, since they rely on in-person experiences. Its parks business lost $1 billion in profit last quarter. Its movie studio can’t release movies in theaters.

Disney released Frozen 2 on its streaming service three months earlier than it planned. It also announced it will release the film version of the Broadway play, Hamilton, on Disney+ in July, more than a year early—a move clearly made to boost the appeal of the streaming offering during the pandemic. Disney will also release the family adventure film, Artemis Fowl, directly on Disney+ on June 12.

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So what’s next for theatrical distribution?

Most blockbusters will still wait for theaters to reopen before they’re released. The upcoming Fast & Furious movie, for instance, can make so much more money for Universal in theaters than it would if released online. That’s unlikely to change in either the short or longterm. But the relative success of Trolls World Tour, which grossed $100 million when it was released directly for home digital rental last month in lieu of a theatrical release, could convince studios to release more mid-budget films direct to home video. Even before the pandemic, many companies were already planning to do that. In the future, theaters could be reserved solely for blockbuster movies, while everything else comes out online—or in the few independent theaters still left.

And the theater chains, if they come out alive, could eventually find themselves owned by media and tech conglomerates like Amazon or Apple. An acquisition of AMC by Amazon (as has been rumored) would give the tech giant a free distribution pipeline through which to release its original films and TV series. It could give AMC the cash injection it needs to continue operating while simultaneously using it as a massive global marketing system for the brand.

If the Hollywood studios are weakened, Netflix could be in an even stronger position to grab potentially lucrative projects and secure top-tier talent that might otherwise have demanded a significant theatrical rollout. Many filmmakers want their films to show in theaters if at all possible, but they’d also rather they be released the Netflix way—that is, a simultaneous rollout to all subscribers’ homes—than not at all.

Just look at The Irishman, Martin Scorsese’s Oscar-nominated mob movie. Even before the pandemic, Netflix was the only company with the financial means to let Scorsese make the movie he wanted to make. And now coronavirus is making the already cash-strapped, risk-averse Hollywood studios even more hesitant to invest in a project that isn’t a sure-fire blockbuster. Scorsese’s next film, Killers of the Flower Moon, was originally set up at Paramount Pictures. But the studio is now balking at Scorsese’s desired budget, unsure if it’s a sound investment. The director is now in talks to bring the movie to Netflix.

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