LOS ANGELES - Netflix on April 18 unexpectedly announced that it will stop reporting subscriber numbers in each quarter, a decision seen as a sign that years of customer gains in the streaming wars are coming to an end.

Shares of the streaming video pioneer fell after it reported a large batch of new customers in the first quarter but gave a revenue forecast that missed analyst targets.

The stock was trading at US$585.41 after hours, down 4.2 per cent from its closing price.

Netflix said its ad-supported streaming plans helped attract 9.3 million new customers, nearly double the consensus forecast of analysts polled by London Stock Exchange Group.

That brought its global total to 269.6 million at the end of March.

Netflix executives have urged investors to focus on revenue and operating margins when assessing the company’s progress, rather than customer additions.

Netflix said it will stop disclosing subscriber additions in each quarter starting with the first quarter of 2025.

Instead, the company will announce them only when major milestones are reached.

“This change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to business,” co-chief executive Greg Peters said in a post-earnings video.

Analysts said the decision to end quarterly reporting of subscriber numbers would likely rankle investors, and would also make it harder for Wall Street analysts to model the company’s business, going forward.

They also said it was unclear what would drive new sign-ups once Netflix has pulled in as many users as possible from its crackdown on password sharing.

“It might be a few more quarters of paid sharing benefits, but we don’t really know what the next catalyst will be after that for a member addition,” said M Science senior equity research analyst Magalie Grossheim.

“I think that’s probably contributing also to why they’re deciding to stop reporting those numbers.”

Other companies have similarly stopped reporting familiar metrics – monthly active users, in the case of Meta’s Facebook and social platform X, previously known as Twitter – as growth slowed.

“The movement to no longer disclose quarterly subscriptions from next year will not go down well, more so given (subscriber) growth that the streaming king has seen over the last year,” said PP Foresight analyst Paolo Pescatore.

Netflix shares have jumped 89 per cent in the past year as it forged ahead of competitors such as Walt Disney, which is still losing money on its streaming business.

In a letter to shareholders, Netflix said it would fuel future growth by working to improve the variety and quality of its entertainment and scale its advertising business.

Netflix, which once eschewed commercials, is preparing to host its second annual presentation to advertisers in New York.

Co-CEO Ted Sarandos said he was “really excited” to share the upcoming slate, which includes new seasons of the period drama Bridgerton, the post-apocalyptic drama Sweet Tooth, and upcoming unscripted events such as a roast of retired American National Football League player Tom Brady.

Mr Peters said that it “is an opportunity to re-engage with advertisers and look at the fundamentals” of what their offerings are, including improvements in measurement.

Netflix began offering subscribers ad-supported plans, at a cost less than half of the commercial-free options, in November 2022.

That provided a low-cost option for those affected by Netflix’s 2023 crackdown on password sharing, as it sought to convert users of accounts of friends or family into paying subscribers.

The company said the ad-supported service now accounts for 40 per cent of all sign-ups in markets where it offers the plan.

Netflix earnings per share for January through March came in at US$5.28, beating analyst expectations of US$4.52.

Revenue rose 14.8 per cent to nearly US$9.4 billion (S$12.8 billion) during the period.

That was when the service debuted titles such as sci-fi drama series 3 Body Problem and crime thriller Griselda.

Operating income totalled US$2.6 billion, a year-on-year increase of 54 per cent.

Looking ahead, the company projected revenue of US$9.49 billion for the current quarter, shy of analyst expectations of US$9.537 billion.

Mr Sarandos challenged recent reports that Netflix aimed to make fewer, better films under its newly installed film chief Dan Lin.

“Just to be clear, there is no appetite to make fewer films,” Mr Sarandos said. “But there is an unlimited appetite to make better films, always. Even though we have made and are making great films, we want to make them better – of course.” REUTERS