Netflix is getting stingier with its viewing data, and Wall Street isn't happy

By Bill Peters

Netflix's stock is falling in the wake of mixed earnings and a new plan to cut back on the publication of 'What We Watched' reports

Netflix's stock is down around 21% this year.

Netflix has been in Wall Street's doghouse lately following concerns about declining interest among viewers, and its earnings on Thursday sparked even more investor concern.

The streaming giant narrowed its full-year forecast and reported mixed quarterly results. It also said it would publish viewership data less frequently. And it forecast a 10% increase in content spending this year, as it tries to attract viewers with live entertainment, games, podcasts and shorter videos.

Shares of Netflix (NFLX) slid 9% after hours on Thursday and matched that percentage decline after the market opened Friday.

Netflix's stock had fallen 21% on the year through Thursday's close. Wall Street has grown more worried about potentially weaker viewership trends, along with competition from rival platforms like YouTube and short-form video operators. Analysts have also expressed concerns that some viewers may be resisting recent subscription-price increases as they navigate higher costs of living.

During the company's earnings call on Thursday, executives tried to tamp down Wall Street's anxieties. They said that recent price increases were "going well" and that the platform was still picking up new members. They also highlighted Netflix's Emmy nominations, the success of series like "I Will Find You" and "The Polygamist," as well as films like "Swapped," which management said was set to be the second-biggest original animated film on the site behind "KPop Demon Hunters."

Executives also said that Netflix was present in under 45% of "addressable households" worldwide, suggesting remaining room for growth. And as Wall Street tries to parse how many people are watching shows and films, co-CEO Greg Peters suggested there was more nuance to those metrics.

"There is not a linear relationship between viewers and revenue and profit, because all hours are not created equal," he said.

Live programming, for instance, brings in ad dollars and can help drive sign-ups. While live events will likely make up 5% of Netflix's content budget this year, they might only account for 1% of viewers.

Still, the company will be offering fewer windows into who is watching what. Netflix said that it would start publishing its "What We Watched" report annually in the first quarter, as opposed to semiannually. That report provides a window into Netflix viewership data that is prized by investors.

Netflix said the change was intended to "keep the focus on our primary financial metrics - revenue and operating profit."

The streaming platform on Thursday narrowed its full-year revenue forecast to between $51 billion and $51.4 billion, helped by membership growth and higher prices. Previously, the company expected $50.7 billion to $51.7 billion in revenue.

Management kept its operating-margin forecast of 31.5% for the year. Netflix also said annual ad revenue was still on track to double, roughly, to around $3 billion.

For the second quarter, Netflix reported $12.56 billion in revenue, just shy of Wall Street's consensus estimate of $12.58 billion. The company earned 80 cents a share, a penny above the consensus profit forecast.

Netflix said it expects third-quarter revenue of $12.86 billion, below analysts' forecasts for $12.99 billion.

Reports have indicated that Netflix has made other moves in an effort to ward off competition. The company is testing free trials for "non-rejoining new members" in some countries, Peters said Thursday. The Wall Street Journal reported last week that the company was weighing the introduction of live channels and streaming-service bundles - including with NBC's Peacock (CMCSA). Executives did not directly answer a question about Netflix's interest in bundling with Peacock, saying only that they would consider potential deals that served members.

Other analysts, meanwhile, are worried about whether AI-generated videos might eventually take eyeballs off of shows made by Netflix.

Co-CEO Ted Sarandos, during Thursday's call, said AI was "scaling quickly across the entire creative process" at the company. The technology, he added, was helping with difficult film shots and sequences, and punching up scenes of crowds and historical battles that crews wouldn't otherwise be able to render on screen without lots of time and steep costs.

"We're making higher-quality output more quickly and efficiently than we could have using traditional methods," he said. "Gen-AI workflows now have been used in roughly 300 of our titles." The largest concentration of that usage, he said, was on postproduction.

He then added: "On the content side, we believe it takes great artists to make something great, and AI is not changing that."

-Bill Peters

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07-17-26 1018ET