Trying to find a weakness in Netflix’s business model is like aiming for the thermal exhaust port on the Death Star. The company was closing in on 100 million U.S. and Canadian subscribers at the end of 2024, when Ted Sarandos and Greg Peters decided to stop reporting that number to focus on revenue and engagement. (Netflix is now hawking a new metric that reveals how many people are watching ads.) We don’t officially know whether Netflix is still adding net users in the U.S., but we do know that the service has the most-loyal customer base of any streamer: Only about 2 percent cancel in any given month, far better than the industry average. On its earnings call last month, executives announced a quarterly profit of $2.55 billion.
But competition for time spent, the all-important metric that every executive across Hollywood and Silicon Valley obsesses over each week, is stronger than ever. And on that score, Netflix appears to be reaching the upper bound of just how many eyeball-hours it’s humanly possible to capture.
In the first half of 2024, subscribers watched 94 billion hours of Netflix content, up from 90 billion over the previous six months, but total hours stalled out in the second half of last year. And while viewing reaccelerated in the first half of 2025, every incremental hour gets a little harder to hold. In the U.S., Netflix’s most mature market, viewing as a percentage of total TV time has grown by less than half a percentage point year over year, according to Nielsen. Meanwhile, YouTube has grown its share by two percentage points.
It’s an issue that’s clearly on the minds of company executives. Peters spent a significant portion of the company’s latest earnings call bragging that audience engagement in the U.S. was up 15 percent since 2022. Elizabeth Stone, the company’s chief technology officer, recently opened up about the streamer’s new engagement experiments, including more testing of shortform video, revamped kids’ profile menus, and the impacts of audience interactivity features like live voting.
Obviously, engagement is at least partially dependent on the popularity of new content. Just last quarter, Netflix was under pressure after reporting mere 1 percent growth in engagement year over year. Then it dropped KPop Demon Hunters, now the most watched movie ever on the streamer. According to Parrot Analytics, the animated blockbuster slash cultural phenomenon drove a significant percentage of Netflix’s engagement into Q3—months after it was released. (If you left your house at all on Halloween, this may not shock you.)
Of course, breakout global hits aren’t a sustainable long-term strategy. Perhaps anticipating investor concerns, Sarandos made a point on last month’s earnings call to note that no single title typically accounts for more than 1 percent of total hours watched. That’s one benefit of Netflix’s superscale. The downside, however, is that it becomes harder and harder to move the growth needle. Obviously, it’s not enough to just have more content—it needs to be better, and more engaging, too.
The Billion-View Opportunity
Netflix is no longer just competing with cable, or even other streamers: It’s also competing against TikTok, video games, live sports, podcasts, and, as Reed Hastings famously once said, sleep. So Netflix is looking to win more hours in the day not just by adding content, but by expanding its offerings. It already has some live sports (the Christmas NFL games) and other appointment viewing (the recent Canelo–Crawford fight) aimed at stealing engagement from cable TV and rival streamers. But Netflix is also beginning to encroach into less familiar territory.
At Bloomberg’s Screentime conference last month, Peters announced that the company was getting into “social gaming” in a big way, with party games like Boggle and Pictionary, where users can use their phones as controllers while the action unfolds on their TV screen. More recently, Netflix announced a partnership with Spotify to bring video podcasts into its app—a shot directly across YouTube’s bow.
Netflix’s past ventures in the gaming space have been relatively lackluster. Games are—right now, today—available to anyone with a Netflix account for no additional charge, and yet less than 1 percent of Netflix subscribers reportedly play them. Now, the company has decided to shift its gaming ambitions. Over the past year, Netflix has shut down two of its in-house studios: Boss Fight Entertainment, which was behind the Squid Game mobile game; and its AAA gaming studio, internally named “Team Blue,” which was led by major gaming figures including Overwatch executive producer Chacko Sonny and Halo creative lead Joseph Staten. Instead, it’s focusing its gaming efforts where Netflix already holds considerable consumer attention: the TV.
The bigger opportunity, in my view, is the Netflix-Spotify partnership. (The streamer is reportedly in talks with SiriusXM, too.) Video podcasting drives more than 1 billion views on YouTube each month, representing hundreds of millions of hours of engagement. It’s a format (people on-screen, talking) that audiences have been tuning into since the dawn of television. And it’s a far cheaper experiment than buying up more sports rights or producing their own steady stream of topical fare. Plus, the involvement of The Ringer—which has multiple shows covering sports and the entertainment industry—offers Netflix some unique synergy opportunities.
Of course, Netflix will need to prove that its audience wants to engage with this type of content. (Netflix has its own podcasts, but they’re not predominantly featured on the platform… and I don’t think anyone at Netflix would argue they matter all that much.) And it took YouTube years to build its dominance in podcasting. Netflix may have a solid investment thesis here, but it remains to be seen whether viewers watching A House of Dynamite will also want to tune in to see two people talking about the movie on The Big Picture. (N.B.: The Ringer produces The Town, Matt’s podcast.)
Still, it’s not hard to envision the flywheel that’s spinning in Ted and Greg’s heads: I.P. on Netflix, podcasts that deepen the fandom, then recommendations for similar content, or a game of Boggle with the family. A few years ago, we may have called a version of Netflix that offers podcasts, games, and sports “Netflix+” or “Netflix Premium” at a higher price point. The fact that Sarandos and Peters are hellbent on ensuring it’s all just “Netflix” says it all.
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