Nolte: Refusal to Release Subscriber Numbers Means Netflix Likely Peaked

Jonathan Raa/NurPhoto via Getty Images

Netflix’s decision to end its quarterly reporting of subscriber numbers tells me Netflix knows it has peaked.

On Thursday, Netflix released a glowing report that showed the streaming service attracted 9.3 million new subscribers during the first quarter of 2024, which brings its total number of worldwide subscribers to 269.6 million.

That’s a great number that embarrasses second-place Disney+. The Disney Grooming Syndicate has 149.6 million worldwide subscribers. But a peak is a peak, and corporations are all about growth.

Netflix also reported $9.37 billion in total revenue during the last quarter and $5.2 billion in earnings per share, which is better than Wall Street expected. But then Netflix announced it would no longer release quarterly subscriber numbers starting in 2025. The streamer will also stop reporting average revenue per member (ARM), another metric Wall Street counts on.

“As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction,” the Netflix earnings report 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.”

Wall Street said that’s all well and good, but those subscriber numbers tell us about the future.

Netflix hasn’t made many mistakes in its revolutionary approach to entertainment. Netflix single-handedly changed how we watch TV, has won the streaming wars, and is the only streaming outlet not losing billions. However, the decision to not report subscriber numbers is a mistake, and Wall Street is letting Netflix know that. Despite an amazing quarterly report, the streamer’s stock took a hit:

Netflix Inc. shares tumbled the most in nine months on Friday as a weak forecast for revenue and a warning that the streaming giant will stop reporting subscriber numbers in 2025 overshadowed an otherwise strong start to the year.

The stock dropped as much as 8%, to $562, as trading got underway in New York. It marks the biggest decline since last July. The shares were up 25% this year through the close of regular trading Thursday.

Refusing to reveal subscriber numbers is a huge tell that Netflix feels it has peaked with the number of subscribers it can attract. After all, everything that can be done to draw people to subscribe has been done. After a subscriber drop a few years ago, Netflix responded by killing password sharing and adding cheaper tiers that included advertising. That helped. Subscriptions increased, and the stock rebounded. Okay, but now what…? What else can Netflix do to expand its subscription base?

Other than adding live sports, I don’t see it. Everything that can be done has been done. At some point, you will have sold your product to everyone who might want to buy it.

The affirmative action of cable TV is dying. The billions Hollywood made forcing a hundred million U.S. households to pay $150  a month for hundreds of channels we never watch is coming to an end. Streaming is merit-based. We will only purchase your product if we like your product. Netflix has so far trounced the competition, but the days of Hollywood making money producing content no one watches are thankfully coming to an end. With cable TV, it was easy to raise revenue by raising prices. The customer had nowhere else to go. That’s not the case with streaming. Wall Street and Hollywood are looking at peak Netflix and gulping.

John Nolte’s first and last novel, Borrowed Time, is winning five-star raves from everyday readers. You can read an excerpt here and an in-depth review here. Also available in hardcover on Kindle and Audiobook


Please let us know if you're having issues with commenting.