Netflix published report for the first quarter, and the most interesting thing about it is that profits grew very significantly, largely due to the successful fight against password sharing and advertising rates.
The largest online movie theater also announced that starting from April 2025, it will not report the number of its subscribers in its reports, as the indicator is no longer so important. Instead, Netflix will focus on highlighting revenue growth and the amount of time viewers spend watching content on the platform. In this way, Netflix joins Apple TV+ and Amazon Prime Video, which do not report their subscriber numbers in their reports. The transparency we deserve.
«At the beginning of our development, when our revenue or profit was low, the growth in the number of subscribers played an important role as a clear indicator of the potential for further business growth. Now we generate very high profits and free cash flow».
an excerpt from Netflix’s address to shareholders.
In terms of subscribers, Netflix’s total audience as of April 2024 is nearly 270 million — up 9.33 million during the quarter, exceeding forecasts. At the same time, Netflix reserves the right «to announce important milestones as it moves forward». This means that we will most likely know when the number of subscribers crosses the 300 million mark. Netflix estimates that more than half a billion people worldwide watch TV shows and movies through its service, and the streaming company is desperate to make more money from them in a variety of ways — new subscription tiers, cracking down on password sharers, and displaying ads.
The number of subscribers is one of the key signaling indicators that Wall Street analysts rely on to assess a company’s growth rate. Therefore, Netflix is not the first company to remove this indicator from its reporting. Yes, it has happened before: not long ago, Meta decided to show the total audience of the entire social media conglomerate — Facebook, WhatsApp, Messenger, and Instagram instead of daily and monthly Facebook users on a quarterly basis. It is noteworthy that Mark Zuckerberg’s company made this decision after Facebook reported its first-ever loss of unique users. And even earlier (in 2018), Apple removed detailed information on iPhone, iPad, and Mac sales in units from the report, shifting the focus to the money generated by each category of devices. This happened, by the way, after iPhone sales stopped growing.
P.S. The news illustration is a reference to the second case of artificial intelligence being used by major movie studios this week: the authors of the crime documentary «What Jennifer Did», which was recently released on Netflix, were caught generating a happy and very confident Jennifer Pan before she was convicted of murder. We wrote about the first case yesterday — A24 commissioned neural networks to draw posters of the «Civil War» so that viewers could better feel the «impact of the war» on the United States beyond what is shown in the movie.