Netflix to Cease Membership Reports in Favor of Shareholders’ Focus on Aggregate Revenue Figures

In the latest quarterly earnings report of Netflix, which saw a 15% increase in total revenue, there is one particular issue that has been widely discussed. Netflix has stated that they will stop reporting the number of subscribers on the platform starting next year. In the past quarter, Netflix had a total of 269.60 million accounts worldwide.

The reason cited by Netflix is that they want shareholders to consider the revenue figures and profit margins as the primary metrics. In the early days of providing streaming services, revenue was not significant, and the number of subscribers on the platform was a crucial indicator of business growth. However, the company now generates revenue from diverse subscriber bases in different countries, with additional revenue from advertisements in some countries. Looking solely at the total number of subscribers globally no longer accurately reflects the business’s picture; it is more important to focus on overall revenue.

Nevertheless, many analysts believe the real reason is that Netflix anticipates a decline in subscriber numbers moving forward (having declined in 2022). The recent increase in subscribers was attributed to Netflix implementing measures to combat password sharing.

One metric that reflects why Netflix does not want to focus on subscriber numbers is the Average Revenue per Member (ARM), which increases by only 1% compared to the 15% total revenue increase. This aligns with Netflix’s statement that subscription packages vary significantly across different countries. Examples that illustrate this disparity are:

United States: Standard with ads $6.99 per month, Premium $22.99 per month
Japan: Standard with ads ¥790 per month, Premium ¥1,980 per month
Thailand: Mobile 99 Baht per month, Standard 349 Baht per month, Premium 419 Baht per month
India: Mobile ₹149 per month, Standard ₹499 per month, Premium ₹649 per month

Moreover, competing streaming platforms like Apple TV+ and Amazon Prime Video have never disclosed subscriber numbers, while Disney+ and Paramount+ have reported their subscriber counts.

Source: CNBC

TLDR: Netflix’s decision to stop reporting subscriber numbers is attributed to a shift towards focusing on revenue and profit margins, with subscription package differences across countries contributing to the company’s growth strategy.