Netflix will release viewership data once a year instead of twice, aiming to train investors on revenue and profit. The stock has fallen 40% in the past year.
Netflix will stop publishing its twice-yearly “What We Watched” engagement report and instead release the data once a year, the company said in its investor letter Thursday. The goal is to shift Wall Street’s focus toward revenue and operating profit, the letter said.
The move mirrors Netflix’s April 2024 decision to stop reporting subscriber numbers every quarter. Netflix is not required to release either data set, and competitors like YouTube provide far less transparency. Still, the company leads its peer set on disclosure, the letter noted.
Analysts and investors have flagged worrying trends in the engagement data Netflix has been releasing. Subscribers appear to be spending less time with Netflix content than in the past. Bloomberg reported this month, using Netflix’s own data, that some of the streamer’s biggest shows see steep drop-offs in their second seasons.
Netflix pushed back on those concerns. Co-CEO Ted Sarandos said on the company’s earnings call Thursday that the second-season drop-offs are much smaller than those of peers. The company also argued in its investor letter that “quality of engagement” matters more than total hours. “Not all hours are equal,” the letter said.
The word “engagement” appeared 13 times in Thursday’s investor letter, a sign of how sensitive the topic is for Netflix.
Netflix shares have fallen 40% over the past year. A big part of that decline came from investor concern about Netflix’s plan to buy Warner Bros. Discovery for $83 billion, a deal that eventually fell through. The worry was that Netflix would take on too much debt and that the acquisition signaled Netflix needed to spend big to reignite growth.
Warner Bros. Discovery, which Netflix considered acquiring, holds an Alpha Score of 38 out of 100, according to AlphaScala data. The WBD stock page shows the company’s sector as Communication Services.
Whether Wall Street will move on from engagement data remains unclear. Netflix’s earlier decision to stop reporting subscriber numbers eventually led investors to focus on other metrics, and the stock rallied for a time. The engagement data has been a more stubborn concern, partly because it directly affects the narrative around content spending and subscriber retention.
Netflix uses those engagement numbers for more than Wall Street. The company also releases them to woo Hollywood talent who worry their shows may get lost amid the streamer’s offerings. The shift to annual reporting could make it harder for talent to gauge performance between releases.
The next “What We Watched” report will come out in 2026.
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