Netflix just added 9.33 million subscribers to its platform, showing strong user growth this seems reinforced by their efforts to crack down on password sharing. But despite that, the streamer announced that it will no longer share its quarterly subscriber numbers starting in 2025. This, of course, is a big change in the world of streaming. Since the beginning of the industry, which was largely led by Netflix, streamers have used subscriber numbers as benchmarks for success. Of course, while this announcement seems odd juxtaposed against a huge subscriber increase for Netflix, it actually makes a lot of sense when looking at the landscape of the streaming world. Subscriber growth is no longer a sustainable variable to continually increase. But what will replace it? Most likely, the generational revenue generator on television: commercials.
Netflix has shared which was ceasing its share of subscriber numbers in the company's earnings report:
As we've noted in previous letters, we focus on revenue and operating margin as our primary financial metrics, and engagement (i.e., time spent) as our best indicator of customer satisfaction. In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But we are now generating very substantial profits and free cash flow (FCF),” the earnings release said.
We're also developing new revenue streams such as advertising and our additional membership feature, so members are just one component of our growth. Also, as we've evolved our pricing and plans from a single tier to multiple tiers with different pricing by country, each incremental paying member has a very different business impact.
From time to time, however, Netflix will share subscriber numbers, noting, “We'll also announce important subscriber milestones as we pass them.”
Ultimately, Netflix's decision to stop sharing subscriber numbers probably boils down to this. At the beginning of the streaming project, it was very easy to see gains in subscribers. Now, subscriptions have basically been taken advantage of. If you have a Netflix account, you already have one, saving you slow drips. Since it is no longer a sustainable growth method, Netflix, and likely other companies, will divert subscriber numbers to other profit generators. Unfortunately for the user, this means we'll likely see a drop in user experience… And probably a return to cable essentially.
