As Netflix boasts subscriber growth not seen in years, one expert believes investors should no longer focus on that headline figure when looking at the streaming service’s financials.

On Thursday, Netflix reported it gained 9.33 million subscribers in its first quarter of 2024, nearly double analysts’ expectations and marking its best start to a year since 2020.

Ben Mogil, managing director of Qualia Legacy Advisors, said context is needed when looking Netflix’s subscriber growth, as users will often cancel their plans after a couple of months, once they’ve consumed the programming they want to watch. 

“You've got subscribers churning on and off in the quarter a lot,” he told BNN Bloomberg in a television interview on Friday. “Looking at a quarter-end number doesn't necessarily reflect what's happened during a quarter.”

The frequent turnover in the streaming era has caught many of Netflix’s competitors off guard and has made it hard for the likes of Disney and Paramount to turn a profit from their platforms, Mogil said.

“For most of the players – Disney, Paramount, Comcast – (streaming) has not been as profitable as they'd hoped for,” he said. “I think really what they're now dealing with that they hadn't dealt with on the traditional linear side is they've never dealt with churn.”

“Of course, on cable to churn on and off a channel is very hard. On streaming, it's literally just going into a device and just unsubscribing.”

Subscriber growth is also not the best metric because of the variety of plans subscribers can opt for, including ad-supported, ad-free, and family packages, Mogil added.

“Not all subscribers are equal,” he said.

Michael Pachter, managing director at Wedbush Securities, believes Netflix has already won the streaming war.

“Disney, if they were to charge the same as Netflix is charging would be half the size,” he said.

“Honestly, I think Disney doesn't have the appetite to absorb the losses in order to catch Netflix.”

Pachter added that Amazon Prime Video has a similar subscriber base to Netflix, but the service is largely a free add-on for Prime members, while Apple TV+ is largely a perk for Apple users and focuses on fewer shows with higher quality.

“I don't think either of them is looking at being a stand-alone streaming service with 300 million users,” he said.

With files from Bloomberg News