Concerns over Netflix’s decision to stop sharing passwords are growing

(Reuters) -As growth concerns were fueled by Netflix’s intention to cease disclosing member counts starting in 2025, the company’s shares dipped on Friday. Analysts cautioned that competitors may decide to do the same by doing away with the crucial indicator of the streaming industry’s health.

Investors and Wall Street analysts have long tracked subscriber increases to assess how businesses like as Netflix, Warner Bros. Discovery, and Walt Disney Co. are doing in the streaming battles.

However, streaming giant Netflix said late on Thursday that it would no longer be releasing the number of new members following three quarters of phenomenal growth in order to concentrate more on income and profitability.

Investment analyst Dan Coatsworth of AJ Bell said, “Industries tend to work in unison and if one of the leading players decides it is better that investors judge performance on different measures, rivals might adopt the same logic.”

The decision was made in response to worries expressed by certain analysts over Netflix’s growth strategy after its crackdown on password sharing, which resulted in the addition of 9.3 million new members in the first quarter.

As it halved in 2023, there are indications that streaming growth is saturating in the United States, according to research company Antenna’s February findings.

According to Parrot Analytics’ entertainment industry expert Brandon Katz, “this raises questions about the streamer’s ultimate ceiling in the current landscape, even though it is partially a sign of Netflix’s unrivaled market share.”

Due to lower-than-expected revenue for the second quarter, Netflix’s shares had its worst decline since July, plunging 7.3% to $565.85. Its market worth was predicted to drop by around $19 billion if losses continue.

According to Netflix, it intends to expand its advertising business and enhance the range and caliber of its content in order to support future development.

According to Wolfe Research, the streaming behemoth may bid for NBA media rights, which would be a significant departure from its previous strategy of concentrating on sports entertainment, including WWE and the Formula One docuseries “Drive to Survive.”

“At a critical juncture, with the NBA’s media rights transaction, Netflix moves from subscribers to engagement (and decreases transparency). Will Netflix pay $1–3 billion to acquire certain NBA media rights? We believe that. The largest portion of pay TV is devoted to sports, and Netflix has the power to hasten the internationalization of sports brands.”