Netflix faces questions on user engagement ahead of third-quarter report

Investors in Netflix are eager to learn how the streaming service intends to maintain growth as it prepares to release its third-quarter report on October 20. The company's user engagement has been a topic of concern, with Ted Sarandos, co-CEO of Netflix, admitting the firm "is not growing as fast as I want us to" and proposing live programming as a potential growth booster.

The streaming giant faces a significant challenge in the rapidly evolving entertainment landscape, where lower-cost creator-led content is encroaching on premium scripted shows. YouTube, the leading streaming platform in the US, boasts nearly double the viewing time of Netflix and is gaining market share, according to Nielsen. Netflix anticipates its slowest third-quarter revenue growth in three years, with sales expected to rise by 11.8% to US$12.87 billion (S$16.46 billion).

The company laid off around 6% of its workforce, indicating the industry's shift towards profitability. Netflix also experienced a shift in content leadership, with the departure of its head of content Bela Bajaria and the appointment of former Disney executive Peter Rice as her replacement. User churn in the US increased by 16.6% year-over-year in the third quarter, almost double the rate from the previous three quarters, while downloads in the US and Canada dropped by 20%, according to Apptopia.

Average monthly viewing time per Netflix member declined to 49 hours in the first half of 2026 from 66 hours in the first half of 2023, according to market research firm Jefferies. Factors such as the 2026 World Cup and a less impressive content lineup in 2025 have impacted Netflix's engagement. The company is exploring advertising as a way to diversify its revenue streams, with Jefferies predicting ad revenue to reach US$7.5 billion by 2029.