Netflix NFLX-Q shares fell on Friday as its plan to stop sharing subscriber numbers from 2025 stoked growth worries, with analysts warning that rivals may follow the step by scrapping the key metric on the streaming industry’s health.
Subscriber additions have long been watched by investors and Wall Street analysts to evaluate how companies, including Netflix, Walt Disney Co and Warner Bros Discovery, are faring in the streaming wars.
But after three quarters of blockbuster growth in subscribers, streaming pioneer Netflix said late on Thursday it would stop reporting the figure to focus more on revenue and profitability.
“Industries tend to work in unison and if one of the leading players decides it is better that investors judge performance on different measures, rivals might adopt the same logic,” said Dan Coatsworth, investment analyst at AJ Bell.
The move comes as some analysts raised concerns about how Netflix plans to maintain growth after its password-sharing crackdown, which helped it add 9.3 million new customers in the first quarter.
There are signs that streaming growth is saturating in the U.S. as it halved in 2023, data from research firm Antenna showed in February.
“While this is partially a sign of Netflix’s unrivaled market share, it also raises questions about the streamer’s ultimate ceiling in the current landscape,” said Brandon Katz, entertainment industry strategist for Parrot Analytics.
Netflix’s stock fell 7.3 per cent to $565.85, its largest drop since July, as its revenue forecast for the second quarter was below estimates. If losses hold, its market valuation was set to fall about $19-billion.
Netflix has said it plans to fuel future growth by working to improve the variety and quality of its entertainment and scale its advertising business.
Wolfe Research said the streaming giant could enter the bidding for NBA media rights, which mark a big change from its strategy of focusing on sports entertainment – content such as Formula One docu-series ‘Drive to Survive’ and WWE.
“Netflix leaps from subs to engagement (and less disclosure) at a pivotal moment: the NBA’s media rights sale. Will Netflix spend $1-3B for some of the NBA’s media rights? We think so. Sports is the biggest slice of the pay TV pie, and Netflix can accelerate sports brands’ globalization.”