Netflix announced in the first quarter of 2025 that they will stop disclosing their subscriber numbers and average revenue per user, indicating a shift in performance evaluation metrics.
Netflix's investment in original content, amounting to billions, was pivotal in the so-called streaming wars. This expenditure was primarily aimed at fuelling subscriber growth, driving the platform's dominance in the competitive streaming landscape. Iconic shows like House of Cards and Orange Is the New Black exemplified their commitment to captivating audiences and attracting new members. However, the announcement to no longer disclose their subscriber numbers reflects a shift in strategy and a significant move towards their new ad-tier business model.
Shifting Focus from Subscribers to Revenue Metrics
With the introduction of an advertising tier in 2022 and subsequent initiatives like the password-sharing crackdown in 2023, Netflix has been reshaping its revenue streams and operational focus. The streaming giant has also evolved its pricing and plans with different tiers and prices across countries. Consequently, traditional metrics centred on subscriber counts may no longer offer a comprehensive snapshot of the company's business. Now, it is much more important to look at revenue numbers to reflect Netflix's performance, rather than focusing solely on subscribers, as it no longer accurately reflects the company’s growth. Analysts and stakeholders are urged to scrutinise revenue figures for a more accurate assessment of Netflix's performance.
Q1 results reported by Netflix this month revealed 15% year-on-year growth in overall revenue, with an increase in ad-supported accounts of 65% compared with Q4 2023.
Continuation of the Streaming Wars
However, the decision to cease subscriber reporting triggered a notable decline in Netflix's stock value, echoing Apple's similar move in 2018 regarding the disclosure of iPhone sales figures. Unlike Apple, though, Netflix lacks the same market dominance, as it is positioning itself alongside industry peers in the expansive landscape of international TV companies like Disney, Paramount, Warner Bros Discovery, and Comcast.
Netflix's Strategic Embrace of Industry Standards and Advertiser Trust
It is now increasingly important for Netflix to nurture relationships and trust with advertisers. Netflix’s membership affiliations with industry standards like Thinkbox and Barb are vital for establishing this trust with advertisers, as Netflix aligns itself with established measurement practices. Alongside establishing these relationships with brands, affiliations with established measurement practices will become an important alternative metric to gauge the success and health of Netflix’s performance.
Despite Netflix’s decision to stop disclosing subscriber numbers, this move accompanies their transition to an ad-tier business model, reflecting a strategic focus on revenue streams through advertising.
The reporting decision underscores an evident commitment to serving advertisers with insights into consumer behaviour, preferences and trends. With greater emphasis on personalisation, such performance assessment can enable more refined targeting. For brands considering investment in streaming services, a comparative understanding of revenue data is crucial to maximising effectiveness.
