Netflix will no longer be providing forecasts for its subscriber numbers, as the streamer moves toward a greater focus on revenue.
“We have such a wide range of price points, different partnerships all over the world, [that] the economic impact of any given subscriber can be quite different. And that’s particularly true if you’re trying to compare our business with other streaming services,” Spencer Wang, Netflix’s vp of finance, investor relations and corporate development, said on the investor video Tuesday.
“This is going to be, I think, even more important as we head into 2023 and we develop new revenue streams, like advertising and paid sharing, where membership growth is only one aspect of the revenue picture,” he continued.
The streamer will still report global and regional membership numbers, but will not provide guidance for them starting in January 2023, when it reports fourth quarter earnings. The company will still provide guidance on revenue, operating income, operating margin, net income and earnings per share.
The move comes as Wall Street grows weary of expansion at any cost in the streaming space. Many streamers, including Netflix, have tightened their budgets and made cuts amid a competitive and what some feared to be stalling streaming environment.
That’s not to say that Netflix is ignoring subscriber numbers. The company notably added 2.4 million subscribers in its third quarter, marking its first gain this year. And in response, Netflix co-CEO Reed Hastings declared on the investor call, “Thank God we’re done with shrinking quarters,” while also adding, “We’ve got to pick up the momentum.”
Some of this momentum is expected to come from the launch of Netflix’s ad-supported tier next month, with executives anticipating that the lower cost will bring in new subscribers, while existing subscribers stick with their current price tiers. The lower price point is also expected to help with overall churn, Netflix COO Greg Peters said Tuesday.
The ad-tier should also help boost revenue, though the company said Tuesday that it does not expect it to have a “material contribution” to revenue in the next quarter, since the tier is launching in the middle of the quarter. Initial demand for the ad-support tier has been “very strong,” Netflix COO Greg Peters said Tuesday, but the advertising model is still in its early stages, particularly with its still-limited ad targeting. Peters expects to improve the model over the next several quarters.
“We’re very much in crawl, walk, run kind of model,” Peters said on the investor video.
Netflix has also ramped up its crackdown on account sharing, with a new feature available this week that allows users to move their profiles, complete with watch history and recommendations, over to a new account. This move is expected to help boost paid membership, as the company has estimated that more than 100 million households worldwide are sharing their Netflix accounts.