• Netflix says that starting in 2025 it will no longer share figures about its subscriber numbers.
• Instead, the platform will focus on engagement as its most important metric.
• Netflix’s growth has slowed and even gone backward in some regions.

Despite trying to increase its member numbers through a lower-priced tier with advertising, paid sharing and a crackdown on password sharing, Netflix no longer believes that subscriber numbers are important enough to share.

This is what the streaming platform told investors in its latest financial results[PDF].

“As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary
financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction. In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we’re generating very substantial profit and free cash flow (FCF). We are also
developing new revenue streams like advertising and our extra member feature, so memberships are
just one component of our growth,” wrote Netflix.

“In addition, as we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact. It’s why we stopped providing quarterly paid membership guidance in 2023 and, starting next year with our Q1’25 earnings, we will stop reporting quarterly membership numbers and ARM,” it added.

For Netflix, engagement is now seemingly its key metric of success. The firm says that it will still report figures when it crosses major milestones but that’s likely going to lead to long gaps between those figures being reported.

This hasn’t stopped Netflix from reporting that it reckons it has an audience of half a billion people. It arrived at that number on the assumption that there are more than two people in a household on average and its subscribers total 270 million globally.

The fact of the matter is that growth in memberships has slowed significantly.

In the US and Canada, growth sat at 7 percent, but that’s the only region the platform saw positive figures. In Europe and the Middle East, despite adding 2.92 million subscribers, there was no tangible growth at all. Things are worse in the Latin America and Asia Pacific regions where growth fell 4 percent and 8 percent respectively.

While Netflix says that it now values engagement over membership numbers, the firm isn’t doing away with paid sharing or any of its tactics designed to improve its bottom line. In fact, Netflix anticipates that engagement will be negatively affected by paid sharing as well as the increasingly flooded streaming market.

The confusion continues even further when looking at figures regarding the share of streaming in the US. Here Netflix only has 8.1 percent of the market, and that’s exclusively on TV.

The trouble Netflix has is that its content can be incredibly hit or miss. For example, the adaptation of the novel 3 Body Problem cost a staggering $160 million to produce with each episode costing the platform $20 million. For that price, the show has only drawn in 39.7 million viewers or 7.9 percent of the claimed half a billion viewers on the platform.

Movies fare better with titles such as Damsel and Lift drawing in 123 million and 113 million viewers respectively.

This success is short lived though as once a person watches a film its unlikely they’ll watch it again, unless it’s really rather good.

Thr problem here is consistency and engagement is easy enough to fudge and make figures look good. For example, Netflix currently defines a view as the hours watched divided by the run-time of the piece of content but this can and has changed in the past.

A poor quarter for Netflix then and it appears as if like us, many others are fed up with the mess that is streaming.