Netflix Ditches Subscriber Numbers: Wall Street Focuses on Ads, Sports, and Creator Content in Q1 Earnings

Netflix is set to release its first-quarter 2025 earnings report this Thursday, and there's a notable change coming: the company will no longer disclose quarterly subscriber numbers. This data has long been a key metric for Wall Street to gauge Netflix's business health. However, Netflix argues that focusing on user engagement and revenue will provide a more accurate picture of its success, especially as the company matures. In the fourth quarter of 2024, Netflix saw its largest-ever surge in new subscribers, thanks to a robust content lineup and the successful integration of live sports events. Despite this success, many analysts anticipate a more modest growth in the first quarter of 2025 due to a weaker content pipeline. With the elimination of subscriber numbers, Wall Street will shift its attention to several critical areas: 1. **Advertising Business Growth**: Netflix plans to drive significant revenue growth through advertising over the next few years. In the 2024 TV upfront market, the company saw a 150% increase in ad commitments. Netflix aims to double its advertising revenue this year. The focus will be on whether Netflix can capitalize on this momentum and how the overall health of the ad market is trending. 2. **Economic Uncertainty**: While Wall Street remains generally optimistic about Netflix, economic factors like trade tariffs could impact its advertising business. In 2024, Amazon introduced advertising on Prime Video, leading Netflix to significantly lower its ad prices. If trade tensions escalate, Netflix might need to reduce prices further to attract advertisers. Morgan Stanley, in a report on April 8, slightly reduced its advertising revenue expectations for Netflix but remains bullish on the company. 3. **Ad Technology Development**: Netflix has developed its own internal advertising technology platform to assist advertisers in purchasing ad slots. The company is reducing its reliance on Microsoft's Xandr and turning to partners like The Trade Desk and Google's DV360 for ad sales. Analysts are curious about whether this approach is attracting new advertisers and the potential for further growth in the ad business. As of November 2022, Netflix's ad-supported plan had attracted 70 million global users, and by January 2024, it accounted for over 55% of new users. 4. **Content Strategy for Creators and Sports**: Netflix's strategy to boost ad revenue through sports programming and creator content is of particular interest to analysts. Morgan Stanley notes that YouTube has established a strong position in creator content, which adds both pressure and opportunity for Netflix to enhance its advertising monetization, content personalization, and production efficiency. 5. **Cracking Down on Password Sharing**: Though efforts to combat password sharing have been somewhat effective, analysts want to know when this strategy might reach its limits. While the benefits of paid sharing may slow in 2025, Netflix continues to derive incremental revenue from ad-supported users. Analysts predict that a decrease in ad inventory could lead to higher costs per thousand impressions (CPM). Industry experts have mixed opinions about this change in reporting, but most agree that it reflects Netflix's confidence in its business transformation. Laurent Yoon, an analyst at 斗投 (Dòutóu), stated that while this move might increase uncertainty around earnings, the ultimate focus will remain on the company's financial health and margin improvement. As one of the largest streaming platforms globally, Netflix's shift in how it discloses financial information could potentially influence other tech companies to follow suit.