Should Netflix Rivals Imitate Its Decision to Stop Disclosing Subscriber Numbers?

Is Netflix about to disrupt the entertainment industry yet again? 

The news that the streaming giant will stop regularly reporting its subscriber numbers may seem, at first glance, likely to shake up the established standards for data transparency in the SVOD business. If the streaming wars’ champion no longer feels the need to tout its subscriber totals, why would anyone else want to disclose a comparatively paltry user base? 

But as much as rival streamers love to imitate Netflix, this is one maneuver the legacy media players may be ill-advised to copy. Because while the strategy makes some measure of sense for Netflix, it would be unlikely to benefit its major competitors. 

Netflix is unique among the major streamers in that its subscriber totals still largely (though not completely) dictate its stock price, with shares often rising and falling on the strength of the platform’s quarterly additions. Indeed, it’s profoundly ironic that the Great Netflix Correction prompted Wall Street to start scrutinizing SVOD financials more closely, when it was a reaction to subscriber totals, rather than financial metrics, that caused the correction in the first place. 

But such is the nature of the pure-play streaming business model: The most obvious success metric for subscription streaming becomes investors’ default success metric for Netflix as a whole. 

Ceasing to report those numbers will therefore likely benefit Netflix shareholders in the long run, as irritating as this may be to data-loving analysts (yours truly included).  

The streamer’s leaders can obviously foresee a day when the service’s subscriber growth will start to slow or reverse again — perhaps soon, as the payout from its password-sharing crackdown dries up — and are seeking to avoid another investor panic when that inevitably happens. 

And while the Street has reacted adversely to the news thus far, investors won’t have much to complain about if the company continues growing its revenues and profit at a healthy clip. Focusing attention on topline numbers could also help alleviate concerns that Netflix’s narrative may grow overly complicated as it diversifies its business, with advertising likely to begin contributing more significantly to revenues going forward and an aggressive push into video games coming down the pike.

In short, this is a strategic move Netflix’s leadership seems to have considered quite carefully — and the last thing any of its rivals should do is rush to copy it. 

The traditional media companies are still under pressure to grow their streaming operations and, moreover, to prove these operations can become long-term growth engines as their legacy businesses decline. And none are particularly close to doing so, Warner Bros. Discovery’s slim 2023 profit aside. 

Subscriber totals may not be the be-all, end-all of streaming success they once were, but they remain key growth metrics as media companies try to wrangle their losses lower each quarter. Where Netflix has by far the healthiest financial metrics of the major SVODs and can afford to focus investors’ attention on those metrics, its rivals need every bit of evidence they can muster to support their growth narratives. 

Last year, for instance, Disney shares saw its largest single-day drop since Bob Iger returned as CEO after the Mouse House reported shedding 4 million Disney+ subscribers in the previous quarter. This despite the fact that Iger managed to shrink the company’s direct-to-consumer operating loss by 26% year-over-year that quarter. 

Ultimately, Netflix’s new subscriber black box will simply be yet another marker of what the streamer has always been: a tech company with Hollywood-studio ambitions, much like its compatriots Amazon and Apple (which have never reported their streaming subscribers publicly). And in the long run, the black box’s greatest legacy could be helping to push Netflix shares further toward the rarefied heights of those two tech behemoths.