Pivoting from traditional metrics, American streaming platform Netflix said it will stop reporting quarterly membership data from next year, choosing instead to focus on revenue, operating margin, and engagement to assess its performance.
“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,” Netflix said in a letter to shareholders on Friday.
“We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth,” the streaming giant said.
The extra member feature refers to Netflix’s crackdown on password sharing where it sends emails to users who are using an account outside a single household and who are asked to transfer their profile to a fresh subscription.
Netflix had previously halted its practice of providing quarterly paid membership guidance in 2023, signaling a shift towards more complex business impacts of each membership under its multi-tiered pricing strategy.
“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 (average revenue per member),” the letter added.
During an earnings call, co-CEO and director Ted Sarandos said engagement is now the best indicator of customer satisfaction, crucial for both retaining and attracting subscribers.
“Happy members watch more, they stick around longer…which all grows engagement, revenue and profit–our north stars. And so, we believe that those are the measurements of success in streaming,” Sarandos said.
The platform that currently reports engagement via its biannual engagement report, will look into building on its granularity, so that it’s easier to track its progress on engagement.
Overall, Netflix saw 16% growth year-on-year in paid memberships in the first quarter of 2024, reaching a total of 269.60 million users.
In APAC (Asia and Pacific) region, the platform added 2.16 new users in January to March, compared with 1.46 million in the same period a year ago. The company does not disclose country-specific numbers.
Its high-performing titles in the quarter include Griselda (66.4 million views), 3 Body Problem (39.7 million views); Avatar: The Last Airbender (63.8 million views), Love Is Blind season six (20 million views); American Nightmare (50.2 million views); and stand up with Dave Chappelle: The Dreamer (18.4 million views).
No Indian title made it to the top list this quarter.
According to an engagement report by the platform for January to June 2023, no Indian show or movie featured in its top 300 most-viewed titles globally.
Over the coming months, the service is set to premiere titles including Heeramandi: The Diamond Bazaar, a period drama created by filmmaker Sanjay Leela Bhansali, Maharaj to be produced by Yash Raj Films starring actor Aamir Khan’s son Junaid, Taapsee Pannu-starrer Phir Ayee Haseen Dillruba, and Neeraj Pandey directorial Sikander Ka Muqaddar.
In India, Netflix competes with the likes of Amazon Prime Video which also operates miniTV, an ad-based service. Meanwhile, with the merger of Disney and Reliance Industries, OTT platforms Disney+ Hotstar and JioCinema are all set to emerge as a formidable force in the streaming market.
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Published: 19 Apr 2024, 01:51 PM IST