Netflix to Stop Reporting Member Numbers: What It Means

When Netflix recently released its earnings report, it announced that as of the first quarter of 2025 (1Q25), it would stop reporting Netflix member numbers and average revenue per member. The company had previously decided to discontinue guidance on these metrics last year.

Netflix Shifts Reporting Focus to Engagement

Instead of member numbers, Netflix argues that Netflix engagement metrics are more relevant for investors. This primarily refers to hours watched or views. This decision was notably the first question during the subsequent Netflix earnings call, where the company reiterated its position from its investor letter.

A History of Evolving Metrics

It is not uncommon for companies to have differing views from investors on which metrics hold significance. Netflix itself, early in its public life, advocated for membership numbers over financial metrics. Similarly, WeWork famously introduced a "Community Adjusted EBITDA" metric to direct focus away from a lack of profitability towards a metric that inherently showed continuous growth. These instances highlight a recurring theme of companies attempting to reshape the narrative through selected reporting.

Questions Surround Netflix's Reporting Change

The shift from the long-standing membership metric to a new engagement-based metric arrives at a surprising juncture.

Strong Membership Growth Preceded the Shift

First, recent developments concerning the old metric were positive. As discussed in previous analyses, Netflix reported subscriber growth of 16% year-over-year, marking a considerable improvement from prior periods. This strong performance in Netflix member numbers makes the timing of their discontinuation unexpected.

The Impact of Password Sharing Crackdown

Second, Netflix recently undertook a significant initiative to improve its traditional membership metric. Over the past 12 months, the company's crackdown on password-sharing generated extensive media coverage, directly aiming to bolster subscriber figures. Abandoning the metric after such a focused effort raises questions regarding the long-term strategy.

Lack of Transparency on New Engagement Metrics

Lastly, the company has not provided investors with comprehensive data on the recent evolution of its new engagement metrics. While it shares individual successes, such as "Griselda" (66.4 million views since release), "The Gentlemen" (61 million views since release), and "Damsel" (123.9 million views), these specific examples do not offer a holistic view of overall engagement. This lack of detailed historical context or a clear framework for evaluating the metric makes it challenging for investors to assess its utility as an indicator for future revenue growth or to compare it effectively with past Netflix reporting.

The Investor Outlook on Netflix's New Metrics

Overall, Netflix's rationale and the data provided to shift investor attention from traditional Netflix member numbers to new engagement-based Netflix metrics are not yet fully convincing. The industry will observe how the company proceeds with its decision to discontinue the old metric as of 1Q25.