Netflix is under pressure to reassure investors about its growth strategy when it reports second-quarter results on Thursday, as user engagement has faltered amid growing competition from traditional media players, YouTube and mobile viewing. The streaming giant has shed over a fifth of its value this year because of doubts about its growth efforts, including an ad business that is still far from becoming a major revenue stream.
Who Gets Squeezed
The people at the bottom of Netflix’s business model are the viewers and subscribers whose attention now gets treated like a commodity to be extracted, measured and sold. User engagement has faltered. Competition from traditional media players, YouTube and mobile viewing has intensified. And the company’s value has dropped by over a fifth this year as investors question whether the growth story can keep paying off.
Netflix is expected to report a 13.6% rise in revenue to $12.59 billion, its slowest growth in over four quarters, while adjusted earnings per share will likely total 79 cents, according to analysts polled by LSEG. That slowdown matters because the company has built its expansion on constant pressure to keep people hooked, and now even that machine is showing strain.
The Ad Business and the Pressure to Perform
The advertising business, seen as crucial to Netflix's growth since the boost from its password-sharing crackdown and price hikes over the past two years fades, is expected to bring in $705.8 million in revenue. That revenue stream is still not a major pillar, which leaves the company leaning harder on the same old tricks: squeeze users, sell attention, and call it strategy.
Emarketer analyst Ross Benes said, "We had to lower our (advertising) forecast," adding that the ad business has not grown as strongly as most analysts originally expected. That quote says plenty. The market wanted a faster payoff, and the numbers haven't cooperated.
The password-sharing crackdown and price hikes over the past two years helped boost Netflix before that effect started to fade. Now the company needs a new way to keep the money flowing. The ad business was supposed to be part of that answer. So far, it isn't delivering at the scale the bosses hoped for.
What They're Calling Growth
To draw in advertisers and boost engagement, Netflix has pushed into live events. CNBC reported that the company was exploring a bid for the 2030 and 2034 FIFA World Cup U.S. rights, and in talks to acquire online film platform Letterboxd. That’s the playbook now: chase bigger spectacles, buy more reach, and keep the attention economy humming.
PP Foresight analyst Paolo Pescatore said, "The company has moved from disruption to dominance, and the challenge now is to sustain momentum from a much larger base." The language of dominance fits the moment. Netflix isn’t the scrappy outsider anymore. It’s a giant trying to preserve its grip while the growth engine sputters.
Bloomberg News earlier this month reported that Netflix viewers were less likely to return for later seasons, with hit shows such as "The Night Agent" and "Beef" losing roughly half or more of their audience after their first season. That kind of churn is a problem for any platform built on retention, and it exposes the limits of a system that treats culture like a subscription funnel.
Comcast's NBCUniversal spinoff has also fueled deal speculation, but some analysts expect Netflix to focus on smaller deals rather than another major acquisition. The market keeps circling the same question: how much bigger can the platform get before the whole thing starts to buckle under its own scale?
Thursday’s results will give investors another round of numbers to parse. The people running the show want reassurance. The viewers, meanwhile, keep getting priced, tracked and pushed through a machine that never stops asking for more.