Netflix's push into advertising depends on users actually watching content, not just paying for subscriptions. The company's ad-supported tier has grown, but total viewing hours have stalled, limiting the inventory it can sell to advertisers. Netflix needs engagement to rise to meet its ad revenue targets and justify premium pricing. Analysts note that password-sharing crackdowns boosted sign-ups but not necessarily screen time.
With streaming competition intense, retaining attention is as critical as retaining subscribers. The next phase of Netflix's growth hinges on turning passive accounts into active viewers.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing