Covid-19 lockdowns have yielded strong usership growth for social media and streaming platforms, but retention of users after lockdown will be an essential challenge.

The quarterly earnings reports of the biggest social media and streaming platforms showed big usership gains, especially for some new players.

Since joining the online-only streamers in November 2019, Disney+ has gained 54.5 million subscribers, which is impressive considering that Netflix grew its 182 million-user base over five years.

However, Netflix also saw strong growth just in Q1 2020, gaining 33m subscribers. Both Netflix and Disney+ have attributed this growth to a captive audience in lockdown, which they need to retain.

Social media saw more activity in Q1

Social media saw a similar effect in Q1. Facebook and its subsidiary platforms – including Instragram and WhatsApp – saw 300 million more daily active users than in Q1 2019.

Twitter also received a boost, with 164 million daily active users versus 134 million in Q1 last year. Social media platforms have a wider range of new users to retain.

They function as lockdown entertainment like the streamers, but are also outlets for pandemic-related news, communication in isolation and interaction with brands and services.

Social media and streamers will need to retain new users once lockdowns begin to be lifted

A major challenge for new streamers like Disney+ and Apple TV+ will be producing original content. Original content is particularly important for Apple TV+, which lacks Disney’s familiar back catalogue.

Netflix is formidable here. Its Q1 earnings report stated that there was enough content either completed or in post-production for new releases through 2020 and even into 2021.

Amazon Prime, another more established producer of online-only content, will likely weather the storm as well, supported by a parent company that has gained during lockdown, unlike Apple and Disney.

Apple’s device sales decline in Q1, and Disney’s streaming gains have done little to offset its income losses from theme parks and cruises, which cut its quarterly income by 58%.

Whatever the state of content production during the next year or so, these companies’ content budgets will be at risk as revenues fall in other areas of their businesses.

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Ad-revenue declines for social media puts added pressure on retention

Despite strong gains in active users, Facebook and Twitter have both warned that users will drop off once lockdowns are pulled back and people return to offices.

This could, however, be mitigated by a large section of the workforce remaining at home when some employers decide to make a permanent shift towards remote working.

The real risk for social media platforms which fail to retain their new users will be reductions in advertising spend, as business users reduce marketing spend despite the larger audience.

Facebook in particular reported a sharp quarterly decline in Q1 ad-revenue as its partners cut non-essential costs. The on-demand advertising model means that these partners can drop Facebook immediately.

Users therefore need to be retained for when their attention becomes more lucrative.

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