In a surprising move that sent shockwaves through the streaming industry, Netflix (NFLX) announced that it will no longer report membership numbers starting next year. This decision marks a significant shift for the company, which has traditionally tied its performance to subscriber gains or losses.
During the first quarter earnings call, Netflix co-CEO Greg Peters explained the rationale behind this move, noting that the company is constantly evolving. He pointed to Netflix’s changing revenue model, which now includes advertising tiers and additional member fees, as a primary reason for this decision. These new revenue streams are not directly linked to the number of members, making the traditional metric of multiplying the number of members by the monthly price less accurate in capturing the state of the business.
While Netflix will no longer report membership numbers, the company will continue to focus on other key metrics such as operating income, operating margins, net income, free cash flow, earnings per share, and revenue. Additionally, engagement will be a major emphasis for the company moving forward.
“We’ve been providing progressively more information on engagement, starting with our Top 10 weekly and most popular lists, and more recently our bi-annual report into viewing on Netflix,” the company stated in its earnings release.
Unlike tech giants Apple (AAPL) and Amazon (AMZN), who do not disclose subscriber figures for their streaming services, other media companies such as Disney (DIS), Warner Bros. Discovery (WBD), and Paramount Global (PARA) provide detailed breakdowns of their streaming platform subscriptions.
In response to Netflix’s decision to stop reporting quarterly subscriptions, analysts have expressed concerns that reduced disclosures may disappoint investors. However, in its first quarter earnings report, Netflix reported a significant surge in subscribers, with net additions exceeding expectations.
As Netflix continues to adapt and evolve in the ever-changing streaming landscape, the company is prioritizing engagement as a key driver of success. By focusing on new metrics and emphasizing the importance of viewer engagement, Netflix is positioning itself for continued growth and success in the competitive streaming market.
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