Netflix adds twist to tale of surging subscribers

Netflix gained another 9.3 million subscribers to start the year while its profit soared with the help of a still emerging expansion into advertising, but caught investors off guard with a change that will make it more difficult to track the video streaming service’s future growth.

The strong performance announced yesterday demonstrated that Netflix is still building on its momentum of last year, when a crackdown on free-loading viewers relying on shared passwords and the rollout of a low-priced option including commercials revived its growth following a post-pandemic lull.

The strategy resulted in Netflix adding 30 million subscribers last year — the second largest annual increase in its history.

Netflix’s gains during the January March period more than quadrupled the 1.8 million subscribers that the video streaming service added at the same time last year, and was nearly three times more than analysts had projected. The Los Gatos, California, company ended March with nearly 270 million worldwide subscribers, including about 83 million in its biggest market covering the US and Canada.

Investors increasingly are viewing Netflix as the clear-cut winner in a fierce streaming battle that includes Apple, Amazon, Walt Disney Co. and Warner Bros. Discovery — a conclusion that has caused its stock price to more than double since the end of 2022.

But Netflix surprised investors by disclosing in a shareholder letter that it will stop providing quarterly updates about its subscriber totals from next year, a move that will make it more difficult to track the video streaming service’s performance.

In a video meeting with analysts, Netflix co-CEO Greg Peters said management believes the company’s financial growth has become more meaningful to watch than quarter-to quarter fluctuations in subscribers.

“We think this is a better approach that reflects the evolution of the business,” Peters said.

The company still intends to give annual updates on total subscribers.