Netflix thinks your binge habits are more important than subscriber count

Opinion

Netflix’s shift to focus on engagement suggests that long-term success depends much more on how subscribers are reacting to ads rather than simply how many those ads reach.

Netflix’s most recent results were anything but chill. A record-breaking quarter sent shares soaring, with strong growth seen in the number of new subscribers on both its paid user accounts and free ad tier.

A strong Christmas showing no doubt helped. While the much-anticipated boxing match between Mike Tyson and Jake Paul stole the headlines by achieving more than 108m global viewers, there was no shortage of premium sporting content. This included its first foray into American football, showcasing an NFL double-header on Christmas Day — dubbed “Beyoncé Bowl”. Netflix wrapped up the festive season with the return of Squid Game. 

However, this latest report marks a turning point in Netflix’s strategy. No longer will the company announce its subscription figures to the public. Focus will instead shift to financial metrics such as revenue — and, perhaps more importantly, engagement.

But will that be enough to satisfy brands and advertisers looking to invest in the platform?

Will engagement metrics go far enough?

To say that shifting to engagement metrics is a big change in direction is an understatement.

While the move away from pure subscriber numbers could be attributed to the combination of ad tier and paid subscription packages now on offer, Netflix also believes that subscriber totals aren’t as meaningful as user engagement.

This, in part, should be celebrated as it’s absolutely true. For brands and advertisers, subscriber numbers are one thing, but the success of long-term strategies depends much more on how those subscribers are reacting to ads rather than simply how many those ads reach. 

Engagement metrics within connected TV (CTV) currently revolve around factors such as viewability, reach and video completion rate. While these are still important in providing the context behind how ads are performing, Netflix should also be trying to report on the metrics that prove not just how many people subscribe, but how the ads are being perceived and if they’re driving interest. 

This is especially true when we know that one key advantage of CTV is the quality of the content with which ads are associated — something that plays a crucial role in the performance of campaigns.

For advertisers, the reassurance of premium environments such as Netflix adds a layer of brand safety — a growing concern in media investments — and makes CTV an increasingly compelling choice in the marketing mix.

Currently, CTV metrics that show engagement simply don’t go far enough. Engagement only tells part of the story, such as what people are interested in watching and for how long. What about the rest of the picture? How did they react to the ads? What is their opinion of the brand? And are they seriously considering your product or service?

Marketing budgets are being scrutinised across the board and engagement alone isn’t enough to convince them any more. It’s a challenge that needs to be dealt with, not least because marketers still have a lot of uncertainty about making the right media investments.

The challenge for streamers is to persuade them to invest in CTV over, or as a complement to, other channels and why they should do so. 

Big shift for brands

In order to really connect with audiences, advertisers need access to focus on the metrics that directly affect purchasing decisions. Notable examples include brand preference, ad recall and attribution. As Netflix looks to convince more brands to spend their ad dollars on the platform, being able to provide those kinds of metrics would go a long way in building long-term confidence. 

But it’s not just about Netflix. To get a holistic view, it’s important to focus on every streaming platform, but also to consider the entire media plan that audiences engage with. A brand exists and expresses itself across multiple environments, so choosing standardised metrics that apply beyond a single platform will deliver even more value to advertisers.

Although any additional information in terms of viewer engagement will be welcomed by advertisers, brands shouldn’t fall into the trap of over-relying on the platform’s metrics to fuel their campaigns. While this can certainly give them a good indication in terms of viewer trends and appetite for certain content, advertisers also need to have independent metrics beyond what the platform is telling them.

Ultimately, streamers have to align the metrics they deliver with advertisers’ goals to ensure they prove their value. If advertisers run campaigns to improve awareness or purchase intent, they should be able to measure awareness, purchase intent and sentiment among their target audiences — not just what’s being engaged with.

Netflix and scale

Netflix’s decision to change the reporting channel, with engagement metrics stealing the spotlight away from subscriber growth, should be acknowledged as more than a simple strategic shift. This is an invitation for companies across all industries to rethink the metrics that truly matter.

This evolution underscores a broader realisation: long-term growth relies on more than just raw numbers. Metrics like user engagement, audience sentiment and the resonance of a brand’s message provide a much clearer picture of long-lasting impact. 

Netflix’s approach points to a future where success is defined not by how many people a company reaches, but by how deeply it connects with them.

Virginie Chesnais is chief marketing officer at Happydemics