Netflix (NFLX) will no longer report membership numbers starting next year — a big move for the streaming industry, which has historically tied company performance to subscriber gains or 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.
Along with subscribers, the company will also stop reporting a key profitability metric: average revenue per member, or ARM.
Peters cited Netflix's shifting revenue model, which now includes advertising levels and “additional member” fees, as the main reason for the decision.
These “are things that are not directly related to the number of members,” he said.
The executive added that the streamer has also “developed our pricing and plans with multiple tiers and different price points in different countries.” Therefore, he said, “Each incremental member has a different business impact.”
“That all means, according to the historical simple math that we've all done, the number of members [multiplied by] the monthly price is increasingly less accurate in reflecting the state of the company,” Peters said, although he noted that the company is also not “silent” about subscribers.
“We will update periodically as we grow and reach certain key milestones [but] it just won't be part of our regular reporting,” he said.
Instead, the company will continue to focus and report on other metrics, including operating income, operating margins, net income, free cash flow, earnings per share and revenue.
More emphasis will also be placed on involvement, the company emphasized in its earnings publication.
“Streaming success starts with engagement,” Netflix said. “As people watch more, they stick around longer (retention), they are more likely to recommend Netflix (acquisition) and they value our service more.”
“That's why we've been providing more and more engagement information, starting with our Top 10 Weekly and Most Popular lists and more recently our semi-annual report on Netflix viewing (which covers ~99% of all video viewing time on our service).”
While tech giants Apple (AAPL) and Amazon (AMZN) don't release subscriber numbers for their respective streaming services, other media companies do.
Disney (DIS) announces the figures for Disney+, Hulu and ESPN+ separately, while Warner Bros. Discovery (WBD) reports a combined figure for its Max and Discovery+ platforms. Paramount Global (PARA) also reports subscriber figures for its flagship platform Paramount+.
“The move to stop announcing quarterly subscriptions from next year will not go down well, especially given the subscription growth the streaming king has seen over the past year,” PP Foresight technology and media analyst Paolo Pescatore said in a e-mail.
Citi analyst Jason Bazinet added: “We suspect reduced disclosures could disappoint the Street.”
In its first-quarter earnings report Thursday, Netflix reported a strong increase in subscribers, with net additions of 9.3 million that exceeded expectations of 4.8 million. This follows the streamer adding 13 million subscribers in the fourth quarter of 2023.
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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