Netflix (NFLX) will no longer report membership numbers starting next year, a bombshell for a streaming industry that has historically tied company performance to subscriber gains and losses.
“We have evolved and we will continue to evolve,” Netflix co-CEO Greg Peters said of the decision during the company's first-quarter earnings call on Thursday.
As well as subscribers, the company will also stop reporting average revenue per member (ARM), a key revenue metric.
Peters cited a change in Netflix's revenue model, which now includes advertising and “additional membership” fees, as a key reason for the decision.
These are “things that are not directly related to membership numbers,” he said.
The executive added that the streamer has also “evolved its pricing and plans with multiple tiers and different price points in different countries.” Therefore, “each incremental member has a different impact on the business,” he said.
“So, according to a simple historical calculation that we all did, the number of members is [multiplied by] “Monthly fees are an increasingly inaccurate picture of the health of your business,” Peters said, but he said the company was not “silent” on its subscribers either.
“We will provide regular updates as we grow and reach certain key milestones. [but] It just doesn't become part of our regular reporting,” he said.
Instead, we will continue to focus and report on other metrics such as operating income, operating margin, net income, free cash flow, earnings per share, and revenue.
There will also be a greater emphasis on engagement, the company emphasized in its earnings release.
Netflix said, “Streaming success starts with engagement.” “The more viewers we have, the more they stay longer (retention), recommend Netflix more often (acquisition), and place a higher value on our service.”
“That's why we've progressively provided more information about engagement, starting with our weekly Top 10 and Most Popular lists, and most recently our annual report on Netflix viewing, which is part of our ), which covers approximately 99% of all video viewing time on the service.
While tech giants Apple (AAPL) and Amazon (AMZN) don't disclose subscriber numbers for their respective streaming services, other media companies do.
Disney (DIS) reports numbers for Disney+, Hulu, and ESPN+ separately, while Warner Bros. Discovery (WBD) reports combined numbers for its Max and Discovery+ platforms. Paramount Global (PARA) also revealed subscriber numbers for its flagship platform, Paramount+.
“The move to not publish quarterly subscriber numbers starting next year is not going to work,” Paolo Pescatore, technology and media analyst at PP Foresight, said in an email. Even more so when you think about it.”
Citi analyst Jason Bazinet added: “We suspect that the reduction in disclosure will disappoint the public.”
Netflix reported a surge in subscribers in its first-quarter earnings report Thursday, with net additions of 9.3 million, higher than expected of 4.8 million. This follows the 13 million subscribers the streamer added in the fourth quarter of 2023.
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, Email alexandra.canal@yahoofinance.com.
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