As the economics of connected TV (CTV) advertising evolve, Netflix is increasingly borrowing from the platforms that its original model defied.

• Netflix generated $12.6 billion in revenue in Q2 last month, a YoY increase of 13.4%. 
• Despite the revenue gains, investors are experiencing a growing sense of unease as engagement stalls. US adults' time with Netflix is only expected to grow by two minutes a day this year, according to EMARKETER's May forecast. 

“We're still seeing that time spent on these streaming services,” said our analyst Daniel Konstantinovic on a recent episode of “Behind the Numbers.” “Even if it's ticking up slowly, it's still ticking up.”

Even so, Netflix is shifting its model to recapture more viewing time from its audience.

Is Netflix built for the way people watch video now?

Netflix’s conventional model is built around binge-watching, where viewers tune in for hours to stream several episodes. But consumer behavior is increasingly fragmented across shorter viewing sessions throughout the day, particularly on social media platforms, according to industry experts. 

"If a new movie comes out, it's not very hard to go to YouTube Shorts or Reels and find many, many clips of it and maybe not watch the entirety of it there," said Konstantinovic. "That definitely eats into the viewing habits of something like Netflix."

The shift to shorter videos and the use of second screens, could put pressure on Netflix to capture viewer attention in a different way. 

Netflix is flirting with regularly scheduled programming in hopes of rebuilding the habitual viewing experience associated with traditional television. Its recent premiere of its first-ever daily live program, the hit radio show "The Breakfast Club," follows other experiments with sports and various other live events. But analysts questioned whether viewers would be willing to pay for programming they could access for free.

"What's tough about non-sports live programming is it's not usually terribly exclusive, and it's not always something people are willing to pay for," said our analyst Ross Benes.

Testing the economics of free

The rise of free, ad-supported streaming is challenging Netflix's business model. 

Netflix is already expanding its advertising business as the company anticipates doubling its ad revenues to approximately $3 billion this year, with $2.5 billion coming from the US market alone, according to its most recent earnings report.

Netflix could potentially capture more viewing time and advertising revenue by offering viewers a free streaming tier, but opening up its content could dilute the premium positioning associated with the brand, as Konstantinovic points out.

"We've seen Apple try a reverse version of that model where big new seasons of their hit shows have come out and they open up access for free for a short period of time, but it doesn't seem to have moved the needle for them," he said. "Maybe Netflix is worried about diluting that premium brand reputation, which is something that a free tier could certainly do."

Could bundling make Netflix stickier?

Netflix may be pivoting to bundles as a way to strengthen subscriber retention and compete more directly with platforms such as Apple TV, Amazon Prime and Hulu. From a consumer perspective, bundling as a broader entertainment package could make Netflix an easier purchase to justify. For Netflix, it could reduce the likelihood that consumers would cancel individual subscriptions.

There is evidence that consumers would respond favorably to a Netflix bundle. Some 42% of respondents were more likely to continue subscribing to bundled services, as opposed to 14% of respondents who were less likely, according to a June 2025 report from Hub Entertainment. For Netflix, however, bundling could be another example of a company testing multiple paths forward. 

"This is a company that's just kind of desperately searching for the next thing, and all of these varied initiatives seem like an effort to find that," said Konstantinovic. "I'm just curious what it's going to end up being."

Listen to the full episode.

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