Netflix (NASDAQ:NFLX), by nearly all accounts, crushed it in the fourth quarter of 2019.

By adding 8.76 million new subscribers, despite raising its monthly subscription rates for U.S. users earlier in the year, the streaming leader beat most market expectations. As a result, Netflix stock has been on an uptrend since its Jan. 21 earnings report.

Who watches?

Netflix's new swords-and-sorcery megahit, The Witcher, also seems to have pulled in more eyeballs than many expected. Some 76 million subscriber households, or nearly 46% of Netflix's 167.1 million subscribers around the world, tuned in to watch Henry Cavill as Geralt of Rivia in its first four weeks of availability.

Woman watching streaming service on couch

Source: Getty Images

The Witcher wasn't even Netflix's most popular new content in Q4. That honor goes to the silly Michael Bay-Ryan Reynolds shoot-em-up film 6 Underground, which had 83 million viewers in its first month on the service.

By comparison, Disney's Avengers: Endgame sold an estimated 95.2 million tickets in the U.S. over 20 weeks of release, which was good for an $858 million take at the domestic box office.

You can use data to prove anything that's even remotely true

It's probably unlikely that 83 million people actually "watched" 6 Underground in four weeks, nor is it likely that 76 million people really watched The Witcher.

Netflix's methodology for tracking viewership changed in Q4, in a major way. This shift appears to run counter to the recent promise from Netflix honcho Scott Stuber to provide "more transparency" into its viewer metrics in 2020.

Beginning last quarter, Netflix stopped defining a viewer as "anyone who watched 70% of a movie or one episode of a series." Instead, it now counts anyone who watched a particular title "for at least two minutes," regardless of program length.

This change, according to Netflix, brings its viewer metrics more in line with how The New York Times calculates its "most popular" digital articles, or with view counts for videos on Alphabet's YouTube.

It also boosted Netflix's viewer counts by roughly 35% over calculations done using the old methodology.

All views are not created equal

Contrast this metric to the way Nielsen (NYSE: NLSN) reports TV viewership, which is based on the average number of people watching something while it's on the air, also known as the "average minute audience."

Pay-TV networks with companion streaming apps, such as AT&T's HBO, tend to use something like Nielsen's metric when reporting their all-in viewer data.

Game of Thrones, which The Witcher is attempting to supplant as the world's most popular pop-culture grimdark fairy tale, had an average of 44.2 million viewers per episode for its widely panned final season. That number includes delayed viewings and streams.

Simply adjusting Netflix's viewer data back to the original metric, reducing reported numbers by 35% across the board, brings The Witcher more in line with Game of Thrones. Its 76 million views look more like 56 million views. The film 6 Underground would've had closer to 61 million views than 83 million.

These are still impressive numbers, of course. But what do they mean for Netflix and its investors? To answer that question, it helps to put things in a more long-term context.

Let's take a look at Netflix's most popular original titles by quarter, as compared to its subscriber count and year-over-year subscriber growth:

Quarter

Most Popular Shows (Views in Parentheses)

Subscribers

YOY Sub. Growth

Q4 2019

6 Underground (83 million/61 million)

The Witcher (76 million/56 million)

167.1 million

20%

Q3 2019

Stranger Things (64 million)

La Casa de Papel / Money Heist (44 million)

158.3 million

21.4%

Q2 2019

Murder Mystery (73 million)

The Perfect Date (48 million)

151.6 million

21.9%

Q1 2019

Triple Frontier (52 million)

Umbrella Academy (45 million)

148.9 million

25.2%

Q4 2018

Bird Box (80 million)

You (40 million)

139.3 million

25.9%

Data source(s): Netflix quarterly shareholder letters. YOY = year over year.

Content is king

Reducing by 35% the viewer totals for The Witcher and 6 Underground drops both programs below previous record-setters. The Witcher would drop to second place for an original series behind Stranger Things; pre-adjustment, 6 Underground would be Netflix's third-most-popular original movie, behind Adam Sandler's Murder Mystery and the Sandra Bullock thriller Bird Box.

A smaller share of Netflix's subscribers are tuning in to its more recent hits as well. Some 57% of Netflix's subscribers watched Bird Box within a month of its release; 48% watched Murder Mystery; 37% watched 6 Underground.

Netflix keeps adding subscribers at a rapid pace nonetheless. This probably comes down to the sheer volume of content on the service as much as anything else.

Last year alone, the company released an estimated 700 original titles, 371 for U.S. audiences. This content explosion cost Netflix $3.3 billion in negative free cash flow for the year.

This spending is doing a fine job in terms of seeding the service with more stuff to watch. In 2018, Netflix dropped about 1,500 hours of content across 345 titles. If double the titles equals double the runtime, Netflix has probably dropped a solid half-year's worth of original content into subscribers' laps since the start of 2018 -- 187.5 days' worth of binge-watching with no sleep, snacks, or bathroom breaks.

Chasing monsters or steadier gains?

As Netflix continues to build out its content library, it's likely to get even better at anticipating what will work, what won't, and what's worth the investment. As Fool analyst Adam Levy says, Netflix is already "really good at getting subscribers to watch... whatever it wants them to." The inability of new big-budget bets to draw the same audience numbers as earlier hits may not matter as much when all those earlier hits are still there.

There's also room for growth with The Witcher and other original shows like Umbrella Academy. It took Stranger Things three years for its latest season to draw in 64 million first-month viewers, and The Witcher is nearly there after just one.

A diminishing content-driven cash burn might disappoint fans of streaming-platform cult favorites like Sense8 or BoJack Horseman, both of which Netflix canceled before their creators felt the stories had reached natural conclusions. Netflix will also be less likely to finance such shows in the future. But these shows aren't disappearing, and Netflix might even be able to avoid future fan heartbreak by more proactively identifying successful concepts that better fit within their long-term spending scheme.

When Netflix reports Q1 earnings, you may want to reduce any stated viewer numbers by 35% for a more consistent assessment of any new title's popularity. However, the popularity of any new titles may come to matter less and less as Netflix expands its library of originals. Netflix's member totals (and growth rates) will always be a more vital indicator of success, and these numbers still show investors all the right signals.

Don't worry if Netflix's next breakout hits fall short of The Witcher or 6 Underground, as long as the company continues signing up millions of new subscribers.