The news: Netflix’s Q4 results beat expectations, with $12.1 billion in revenues and EPS of 56 cents; full-year 2025 revenues rose 16% YoY to $45.2 billion.

• Subscriber growth slowed but remained positive, with global subscribers topping 325 million, up nearly 8% YoY.
• Management instead emphasized record free cash flow, pricing discipline, and rapid advertising growth as investor focus shifts to its pending Warner Bros. Discovery deal. The all-cash transaction values WBD assets at $27.75 per share, with a shareholder vote expected in April 2026 and a 12–18 month regulatory review period.
• Netflix expects $275 million in incremental costs this year, after $60 million already spent, prompting a pause in share buybacks, and plans to finance the purchase through cash, credit facilities, and committed financing while Discovery Global is separated to preserve value.
• Netflix also plans to increase film and TV spending by 10% in 2026, following roughly $18 billion in content spend last year, to support new studio deals, live events, games, a redesigned mobile interface, and broader monetization of a deep film and TV library across streaming, consumer products, experiences, and gaming.

Why it matters: Despite steady performance, investor sentiment is being driven more by deal risk than Netflix’s underlying business.

Netflix shares are down nearly 30% since October, reflecting concerns over antitrust issues, execution complexity, and uncertainty relative to faster-growing AI-focused investments, notes Yahoo Finance. Shares dropped another 5% overnight after the company shared content spending plans.

That said, Netflix’s scale advantage is strongest in paid streaming but weaker across the broader attention economy—which is why its spending spree might be justified.

• In 2025, Netflix captured 31.7% of US adults’ time with subscription OTT video but only 14.7% of total digital video time and 7.3% of overall digital media time.
• EMARKETER projects Netflix’s US CTV net ad revenues will grow from $1.67 billion in 2025 to $2.44 billion in 2027, trailing Disney+ (including Hulu) at $3.6 billion and YouTube at $9.83 billion.

What to watch next: With audience growth slowing, Netflix’s next phase hinges on deepening engagement and improving monetization rather than expanding its subscriber base.

• From January through August 2025, YouTube captured roughly 10.8% to 13.4% of US TV viewing time, while Netflix ranged between 7.5% and 8.8%.
• Global monthly Netflix digital video viewers are forecast to reach 835.3 million in 2026, or 20% of the world’s total, but growth is slowing from 8.0% YoY in 2024 to 4.3% this year.

Implications for advertisers: Netflix must rely more on increasing engagement, ad load, and monetization efficiency. For advertisers, Netflix remains a premium CTV environment, but its position sits within a broader video mix increasingly dominated by platforms with more habitual, daily viewing. How Netflix balances scale, advertising expansion, and deal-related uncertainty will shape its appeal through 2026 and beyond.