What will you learn?
1. Why has Netflix decided to stop reporting subscriber numbers?
2. Which financial indicators does Netflix consider a better reflection of its business?
3. How has the change in reporting affected Netflix's stock price after market close?
4. What other factors have contributed to the slowdown in subscriber growth?
5. Could other streaming platforms follow Netflix's lead in changing their financial reporting methods?
New Strategy Amid Subscriber Growth
Netflix recently reported adding 9.3 million new subscribers, a result of implementing global restrictions on password sharing and launching a cheaper subscription plan with ads. Despite this, the company expects subscriber growth to slow in the second quarter due to seasonal factors, which could indicate a longer trend of slowing new user additions.
Change in Performance Metrics
The shift in performance evaluation strategy aims to better reflect the company's maturity and its ability to generate profit. This is a response to Netflix's growing dominance in the so-called "streaming wars," where the company is increasingly competing for market shares.
Market Reactions and Long-term Effects
Following the announcement, Netflix shares fell by 4% in after-hours trading, mainly due to lower-than-expected revenue growth forecasts for the year. The decision to change the reporting strategy may inspire other media companies to revise their approaches, especially those that have not yet implemented effective methods against account sharing.
Netflix's decision to stop reporting subscriber numbers from 2025 is a milestone for the company and may change the way investors assess success in the streaming market. Shifting the focus from subscriber numbers to the quality and profitability of operations could be key to the long-term value of the company in the market.