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Netflix Tells Shareholders to Focus on Revenue, Profits

Netflix had some pointed responses for investors during their quarterly shareholder letter, telling investors that they need to start focusing on revenue and profit, and stop obsessing about subscriber growth, according to CNBC.

Netflix added that it will stope forecasting paid subscriber additions, with explaining that their rationale change is to get investors focused on revenue instead of customer growth.

“We are increasingly focused on revenue as our primary top line metric,” Netflix wrote, per the report. “This will become particularly important heading into 2023 as we develop new revenue streams like advertising and paid sharing, where membership is just one component of our revenue growth.”

“Focusing on subscribers in our early days was helpful, but now that we have such a wide range of price points and different partnerships all over the world, the economic impact of any given subscriber can be quite different,” Spencer Wang, Netflix’s vice president of finance, said during the company’s earnings call Tuesday. “That’s particularly true if you’re trying to compare our business with our streaming services.”

“It’s hard to build a large and profitable streaming business – our best estimate is that all of these competitors are losing money on streaming, with aggregate annual direct operating losses this year alone that could be well in excess of $10 billion, compared with our +$5-$6 billion of annual operating profit,” Netflix wrote.

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