Why Netflix Will Stop Reporting Subscriber Numbers In 2025
One Piece. (L to R) Taz Skylar as Sanji, Mackenyu Arata as Roronoa Zoro, Iñaki Godoy as Monkey D. Luffy, Emily Rudd as Nami, Jacob Romero Gibson as Usopp in season 1 of One Piece. Cr. Courtesy of Netflix © 2023
On Thursday, Netflix kicked off the quarterly earnings season in Hollywood with its report on the streamer’s Q1 results. All things considered, it was an excellent quarter, as both the free cash flow (money that came in minus the money that was spent) was up and also the total number of subscribers. But a particular announcement during the call was a bit of a head-scratcher.
Netflix co-CEOs Greg Peters and Ted Sarandos revealed that starting in 2025, they will stop reporting subscriber numbers, as well as the average revenue per member, and will instead focus on other metrics time to provide guidance for investors during their meetings, like profitability and engagement. This comes on the heels of the streamer adding 9.4M new users but requires some historical context.
Two years ago, the company reported its first-ever quarter with a net loss of subscribers, in Q1 2022. That kicked off what is now known as the Netflix Correction after Wall Street freaked out and the stock price plummeted. Other companies were also hurt, as Netflix had been the leader in streaming for years, and that was seen as the future of Hollywood. After that report, some uncertainty on that front was raised.
It was a short-sighted reaction, and two years later, we’ve crowned Netflix as the champion of the Streaming Wars — after all, paying the Netflix bill is now another house utility, like paying cable was 10 years ago. But it didn’t come without effort. The company implemented several measures to try to add more subscribers, and the effects are still being felt. They went very hard on password sharing and also introduced a lower-priced, but more profitable ad tier.
Both of those things have lead to a lot more signups, between people who were sharing accounts before and are now forced to pay for their own, and people who were put off by the $16/month price tag but can afford $8 and some ads. However, that will eventually bounce back, and the company is not only not interested in letting Wall Street know about it, but it also doesn’t care for it.
In its expansion era, all Netflix wanted to do was to lure people in. That’s where the infamous “Love is sharing a password” tweet came to be, and was the foundation for their strategy until 2019-2020. But they have now succeded at that, as people see Netflix as a necessity, and are more focused on the bottom line. It’s not about how many people are paying, but how much they are contributing, and how long they are staying on the service. The first speaks about profitability directly, while the second one is a metric for ad buyers, which also reflects on the bottom line.
Of course, the shift also coincides with a time in which each customer is their own world — from users who pay the regular $16/month for their household, to people who belong to the cheaper ad tier to people who pay the $4 add-on to stay on their family’s plan, it’s getting increasingly complicated to draw any conclusions from the number of subscribers alone. Sarandos and Peters, whose 2023 compensation packages reached $40M and $50M, respectively, also said that they will be reporting whenever they reach subscriber milestones. At 270M worldwide, the next stop for them would be 300M.
Finally, this is also making a move on their competitors. Netflix has been profitable for years, but the rest of the streamers have yet to reach that threshold. Disney once announced they’d be reaching profitability in 2024, but that seems in question now. Max is scratching the surface but only because HBO had $2 billion in profit before being bundled into the WBD service. Prime Video and Apple TV Plus are barely reported on since they are a very small part of their respective parent companies’ balance sheet. And Paramount Plus and Peacock are kind of a joke at this point, in terms of profitability at least.
Netflix is simply exerting its dominance. They know they have won the battle for subscribers, but the Disney bundle is not that far behind. However, they want to turn the tide once again on how Wall Street sees the business, so they can remain far ahead of everyone else for the foreseeable future.
This all happens as Dan Lin takes over as film chief at the company, amid several changes on the feature side that will force Netflix to focus more on reining the budgets in rather than financing auteurs’ dream projects.
Miguel Fernández is a Spanish student that has movies as his second passion in life. His favorite movie of all time is The Lord of the Rings, but he is also a huge Star Wars fan. However, fantasy movies are not his only cup of tea, as authors like Scorsese, Fincher, Kubrick or Hitchcock have been an obsession for him since he started to understand the language of filmmaking. He is that guy who will watch a black and white movie, just because it is in black and white.
