Streaming: At 270 million, Netflix stops counting
Netflix has declared an end to the streaming wars, said Oliver Darcy in CNN.com. The streaming pioneer last week said it added 9.3 million new subscribers last quarter, bringing its total to 270 million—and is calling an end to the count. Netflix said it will no longer report quarterly subscriber numbers from next year, asking Wall Street to “stop obsessing over pesky membership numbers and instead focus on other metrics,” such as profitability and revenue. That’s a pretty “significant turning point in the streaming revolution,” which saw “legacy media companies burn endless piles of cash” in order to show investors they were adding subscribers every three months. Wall Street prefers transparency; despite strong earnings, investors sent Netflix shares down nearly 10 percent. But the company is “a trendsetter,” and other streamers will likely follow suit.
Netflix has been spot-on with its other recent business initiatives, said Lucia Moses in Business Insider. The crackdown on password sharing has helped produce more than 31 million new subscribers in the past nine months, and its results last quarter were “double what Wall Street had expected.” Netflix also said that “over 40 percent of signups” went for its new lower-priced, ad-supported tier. Now it’s stealing a page from tech giants like Apple and Meta, said Molly Schuetz in Bloomberg. Apple in 2018 stopped reporting “the number of iPhones, Macs, and iPads sold each quarter.” Meta last year also said it would no longer report “the number of subscribers to its family of apps.” While some investors were angry, other analysts said “fewer disclosures” was like “a rite of passage” for maturing tech companies. And Netflix’s change won’t “have any impact on customers—its primary focus.”
There’s a less charitable interpretation here, said Therese Poletti in MarketWatch: Netflix has hit a wall. The password crackdown was a great success, but it will probably “lead to peak subscriber growth this year.” Rather than disappointing investors later, it’s forcing them to “rethink how they look at Netflix going forward.” They may choose not to. A “maturing” business has to make hard choices sometimes, said Dan Gallagher in The Wall Street Journal. The streaming pioneer “still has what looks like an insurmountable lead among its big media streaming peers.” It has been “trying to get investors to focus less on subscriber growth for a while now—and not without some justification.”
It’s a “wildly unpredictable metric,” whereas revenue growth
“has typically been steadier.” Still, Netflix will be under pressure to find other areas of growth. It will look to “get more viewers into its cheaper but potentially more lucrative advertising tier,” which is still “a relatively small business.” Or? Netflix could raise prices—not exactly what its subscribers are hoping for.