Netflix Making Big Change to How it Reports Subscribers

Netflix announced on Thursday that it will stop reporting its quarterly subscriber growth starting in 2025, according to a report by Deadline. New subscribers has generally been Netflix's biggest metric of success, and it has been a key driver for the company's stock price and valuation. In a letter to shareholders on Thursday, the company said that new memberships "are just one component of our growth."

Starting in 2025, Netflix will not report changes to its subscriber audience every fiscal quarter, instead reporting only "milestones" when and if they are reached. The letter said that other metrics are much more important to the company now and will be reported instead going forward. It read: "As we've noted in previous letters, we're focused on revenue and operating margin as our primary financial metrics – and engagement (i.e. time spent) as our best proxy for customer satisfaction."

"In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential," the letter went on. "But now we're generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth."

Critics have often argued that subscriber growth is not a sustainable measuring stick for success in streaming – especially for a company that is practically ubiquitous around the world already. Streaming services are sometimes criticized for their lack of transparency, as they do not report the viewership of all their content openly the way that TV channels do using the Nielsen system.

Netflix's new strategy in 2025 will remove even more transparency, according to Deadline. Other prominent streamers are already keeping their subscriber numbers to themselves, such as Apple TV+ and Prime Video, while some of the most open services include Disney+, Hulu and ESPN+. Meanwhile, competitors are eyeing Netflix's recently-imposed policy about password-sharing, which could change the parameters for counting subscribers.

Netflix stock was reportedly trading down on Thursday after this announcement, and several financial analysts have predicted that this strategy will not go over well in the long term. One pundit on CNBC speculated: "They are thinking forward to next year and don't want to be held accountable to that metric." So far, Netflix has not responded publicly to this kind of chatter.