Netflix’s Next Act: Moving Beyond Streaming Services

Netflix (NFLX) has seen a significant drop in its stock price over the past year, down 44%. Investors are now wondering where the next wave of growth will come from. Instead of just focusing on gaining more subscribers, Netflix is looking to expand into new areas like advertising, live events, and gaming.

One area where Netflix is seeing success is with their ad-supported tier. This tier now drives over 60% of new sign-ups in countries where it is available, and the number of advertisers has increased by 70% to over 4,000 clients. Co-CEO Greg Peters mentioned that the goal is to double the advertising business to around $3 billion. While this is a significant growth opportunity, it is still a small portion of Netflix’s overall revenue.

In terms of gaming, Netflix is in the early stages of development. They have introduced the Netflix Playground app for kids, as well as cloud-delivered TV party games like Boggle and Pictionary. Live programming has also been successful, with events like the World Baseball Classic and Canelo vs. Crawford drawing millions of viewers. Netflix Houses have opened in various locations, and partnerships with companies like Mattel and Hasbro have been formed.

Even with these new ventures, Netflix still sees room for growth in its core streaming business. Greg Peters highlighted that Netflix only holds about 5% of the global TV view share, and they are still under 45% penetrated in terms of addressable households. The company’s guidance for 2026 includes revenue expectations of $50.7 billion to $51.7 billion and a 31.5% operating margin.

While Netflix’s valuation appears more in line with a mature media company rather than a high-growth one, analysts remain optimistic about its future. The mean price target is $114.15, with a consensus recommendation to buy shares. Investors are keeping an eye on how these new ventures will impact Netflix’s bottom line, as the company looks to diversify its revenue streams and continue growing in the streaming entertainment space.