Netflix to Stop Reporting Subscriber Numbers, joining Facebook and Apple

Netflix shares dipped down last week, even after the streaming giant made better-than-expected first-quarter financial results. The plunge came after the company said it would no longer report quarterly subscriber numbers.

Netflix executives may change their focus on metrics such as sales and profits, an alternative strategy that has been adopted by other tech giants such as Apple and Facebook, as stated by a Bloomberg report making Netflix, Apple, and Facebook Unite for alternative Strategy.

However, though many investors are not happy with the decision, Bloomberg mentions that Netflix's core customer base won't be affected by it. Previously, Netflix has faced difficulties in altering its service structure.

Netflix, Apple, and Facebook Unite for alternative strategy as in 2018, Apple stopped reporting unit sales for Macs, iPhones, and iPads to focus on its expanding services business, according to Bloomberg. Previously, Facebook recently announced that it would no longer disclose user numbers for its Facebook app, Instagram, and WhatsApp or monthly subscriber numbers for its whole app family. This makes Netflix not the first company to withhold specific data Apple and Meta also applied this strategy earlier.

According to Bloomberg, citing analysts at Bernstein, this "rite of passage" trend is becoming a "new normal" for big tech firms. While limiting disclosure helps them control investor attention, it also makes it harder to forecast and can be seen as a sign of a more mature growth model.

Netflix's growth in the most recent quarter was largely due to a ban on password sharing, which encouraged viewers to set up their accounts, as well as a robust slate of original content. This, in combination with an influx of new subscribers from all over the world, drove Netflix's alternative strategy for sales and earnings growth.

In the past, subscriber numbers were often unpredictable and hard for the company to forecast. 

According to an analyst at Guggenheim Securities, Michael Morris, No longer reporting membership data raises questions about management's ability to continue to expand the subscriber base. Morris also says that the change may also be intended to alleviate investor concern caused by small swings in subscriber numbers.

Greg Peters, Co-Chief Executive Officer cited initiatives such as the "ad-supported tier" as the reason for stooping to report subscriber data.

So, this is a significant move with Netflix, Apple and Facebook unit for alternative strategy.