Netflix will stop reporting subscriber counts - starting April 2025

Netflix has released its report for the first quarter, and the most interesting aspect of it: the profit has significantly increased, mainly due to successful efforts in combating password sharing and introducing an ad-supported plan.

The largest online movie theater also announced that starting April 2025, it will no longer report the number of its subscribers in its reports, as the metric no longer holds such great importance. Instead, Netflix will focus on highlighting revenue growth and the amount of time viewers spend watching content on the platform. Thus, Netflix has joined Apple TV+ and Amazon Prime Video, which do not disclose the number of their subscribers in their reports. Transparency that we deserve.

“In the early stages of our development, when our revenue or profit was low, subscriber growth played an important role as a clear indicator of further business expansion potential. Now we generate very significant profits and free cash flow”.

As for subscribers, the total Netflix audience as of April 2024 is almost 270 million — it increased by 9.33 million in the quarter, surpassing expectations. At the same time, Netflix reserves the right to “report on important milestones as we move forward”. This means that we will likely find out when the number of subscribers crosses the 300 million mark. According to Netflix estimates, over half a billion people worldwide watch TV shows and movies through its service, and streaming is desperately trying to make more money from them through various ways — new subscription tiers, combating password sharing, and showing ads.

Other key metrics from Netflix's financial report

• Quarterly revenue grew by 15% compared to the same period in 2023, reaching $9.37 billion. Operating income jumped by 54%, reaching $2.63 billion, while profitability increased by seven percentage points to 28%.
• The number of subscribers on the ad-supported plan grew to 9.3 million from 1.8 million over the year.
• During the quarter, Netflix generated operating cash flow of $2.2 billion and ended with free cash flow of $2.1 billion (the same as a year ago). At the same time, the company repaid $400 million in bonds and bought back 3.6 million shares for $2 billion.
• By the end of the quarter, cash and equivalents amounted to $7 billion, while total obligations stood at $14 billion.
• Netflix expects free cash flow of $6 billion by the end of 2024, assuming no significant currency fluctuations and content production expenses below $17 billion.

The number of subscribers is one of the key signal indicators that Wall Street analysts rely on to assess a company's growth rate. So Netflix is far from the first company to remove this metric from its reporting. Yes, it has happened before: not long ago, Meta decided to show the total audience of the entire conglomerate of social networks — Facebook, WhatsApp, Messenger, and Instagram on a quarterly basis instead of daily and monthly users for Facebook. Interestingly, Meta's decision came after Facebook reported its first ever loss of unique users. And even earlier (in 2018), Apple removed detailed information on iPhone, iPad, and Mac sales in units from its report, shifting the focus to the revenue each device category brings in. By the way, this happened after iPhone sales stopped growing.

P.S. The illustration for the news is a reference to the second case of major film studios using artificial intelligence this week: the creators of the crime documentary "What Killed Jennifer?" recently released on Netflix, were caught generating a happy and very self-assured character, Jennifer Pan, before her conviction for murder. We wrote about the first case yesterday — A24 tasked a neural network to create posters for "The Civil War" to help viewers better feel the "impact of the war" on the USA beyond what is shown in the film.