It wasn’t all that long ago that Wall Street basically only cared about one metric when it came to Netflix: total active subscribers, followed perhaps by projected subscriber growth. Over its decade-long astonishing ascent, acronyms like ARM or ARPU (both of which mean basically the same thing) entered the cultural-financial lexicon, as analysts pondered the size and scope of Netflix’s total addressable marketplace. Indeed, the infatuation with growth made other traditional business priorities—profitability, say, or diverse revenue streams—seem almost peripheral. After all, why distract a laser-focused management team, or so the philosophizing went, with those side shows?
But then it turned out that Netflix’s TAM wasn’t quite as large as once anticipated (or fantasized about, really) and the market punished the company for a multitude of previously overlooked sins: overpaying for celebrity showrunners rather than more retentive CSI fare, being lenient on password-sharing, and thumbing its nose at advertising. The Great Streaming Correction was a sign that post-ZIRP Wall Street cared less about subscribers than monetization. Netflix got the message and, soon thereafter, dug in on a new advertising strategy.