Netflix’s recent decision to stop reporting subscriber numbers has caused a stir on Wall Street and has major implications for the streaming industry. The move signifies a shift in focus from customer acquisition to profitability and revenue, as the company enters a new phase of growth.
Traditionally, the “streaming wars” have been defined by a race for customers, with companies vying for subscribers. However, Netflix wants to change the narrative and have investors evaluate the company based on metrics that it considers to be indicators of customer satisfaction. These metrics include revenue, operating margin, free cash flow, and time spent on the platform.
This decision also hints that Netflix’s second wave of subscriber growth may be coming to an end. In the first quarter of 2025, the company added 9.3 million subscribers, thanks to its crackdown on password sharing and the introduction of a more affordable advertising tier. However, the company expects subscriber growth in the second quarter to be lower due to seasonality, and this could mark the beginning of a longer period of slowing growth.
The market reacted to Netflix’s announcement, with the company’s shares falling 4% in after-hours trading. One reason for this decline is a weaker full-year revenue growth outlook than what analysts had estimated. Netflix projects a revenue growth of 16% in the second quarter but only 13% to 15% for the entire year.
Investors generally prefer transparency, so Netflix’s reduction in providing detailed membership information is notable. The company used to pride itself on offering regional breakdowns that were more specific than its competitors. In contrast, Apple and Amazon have never disclosed quarterly subscriber information for their streaming services.
Nevertheless, this move signifies Netflix’s maturity as a company. Previously viewed as a disruptor to legacy media, Netflix has now become the dominant incumbent in the streaming industry. With substantial profit and free cash flow, as well as new revenue streams like advertising and extra member features, the company no longer solely relies on membership growth as an indicator of its potential.
Netflix’s financials are far healthier than those of most legacy media companies. Year-over-year revenue has increased by 15%, operating income has grown by 54%, and operating margin has risen by 7 percentage points to 28%. In comparison, competing companies such as Warner Bros. Discovery, Disney, Paramount Global, and Comcast’s NBCUniversal have money-losing or barely profitable streaming services, coupled with declining traditional TV businesses.
This raises the question of whether other media companies will follow in Netflix’s footsteps and stop reporting subscriber numbers for their streaming services. Many legacy media companies have yet to implement password sharing crackdowns, suggesting that they may still have room for growth. Investors would likely be interested in seeing this growth and may push for more transparency from these companies.
Netflix’s co-CEO, Greg Peters, acknowledged the company’s evolution during its earnings call, stating that historical metrics are becoming less accurate in assessing the state of the business. As Netflix continues to evolve, it will be interesting to see how the streaming landscape changes and whether other companies will shift their focus from subscriber numbers to profitability and revenue.
In conclusion, Netflix’s decision to cease reporting subscriber numbers marks a significant change in the streaming industry. By prioritizing profit and revenue over customer acquisition, the company is entering a new phase of growth. While this move may initially unsettle investors, it demonstrates Netflix’s maturity and financial strength compared to its competitors. The impact of this decision on the wider media industry remains to be seen, but it raises important questions about transparency and the future direction of the streaming market.
