Rightly or wrongly, streaming stocks have been judged by subscriber numbers. It’s not a complete picture of a company’s business, but it’s a key metric for judging the health of a platform. That’s why Netflix surprised investors by announcing it will no longer provide subscriber numbers starting next year.
In its letter to investors, Netflix said, “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. 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.”
Most streaming companies push their ad-supported tiers at deep discounts because those subscribers are easier to monetize. You save $8.50/month by watching ads on Netflix. The discount is $6 for Disney+ and Max, while Hulu gives you a $10 break if you sit through ads.
Advertisers are willing to pay a premium to target homes based on geography or demographics, and Netflix knows a lot about you.
According to its privacy policy, Netflix can scoop up information about the ads that you view or interact with, device information, IP addresses, and information provided by advertising companies (such as information about your likely interests they collect or infer from your visits to other websites and apps).
With these high-value ad-supported members being worth more than the ad-free subscribers, there is some logic to Netflix’s decision. If every account shifted from ad-free to ad-supported, Netflix would become wildly more profitable, though the subscriber count may appear static.
But there’s another reason Netflix may be hesitant to share these numbers: we may be nearing the end of Netflix’s mega-growth phase. While international subscriptions have increased 65% over the last four years, subscriber growth in the U.S. and Canada was 18% over the same span.
The company says it will share numbers when it reaches major subscriber milestones. But considering it took three and a half years for Netflix to climb from 70 million subscribers to 80 million in the U.S. and Canada, it may be a long time before an update. The next major milestone is likely 300 million global subscribers. If the historical trend carries, that would be sometime in 2026.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.