As Netflix prepares to release its quarterly earnings, the company’s strategy continues to evolve from a focus on subscriber acquisition to one centered on profitability. This shift reflects the maturity of the subscription video-on-demand (SVOD) market — where U.S. adoption is nearing its natural ceiling.
Netflix’s Position in a Saturated Market
Parks Associates data shows that 91% of U.S. internet households subscribe to at least one SVOD service, and households have maintained an average of five to six subscriptions for the past 5 years. In other words, growth often means stealing a subscriber from another service, rather than finding net new subscribers, and success means it’s about deepening value per household.
Despite market saturation, Netflix remains well positioned. Parks Associates’ subscriber estimates for Q3 2025 slot Netflix as the #1 SVOD position in the U.S., with Amazon Prime Video holding the #2 spot. Subscriber gains this quarter reflect Netflix’s continued ability to deliver content and experiences that sustain engagement even as competition intensifies.
Focus on Monetization & Profit
Netflix’s 2025 narrative centers on monetization efficiency — leveraging new revenue streams while optimizing existing ones:
- Advertising Tier Expansion: Netflix’s ad-supported plan continues to gain traction, growing to an announced 94 million monthly active users (MAUs) in May — an increase of more than 20 million over six months. It’s possible that Netflix shares a new number in its earnings call, but Parks Associates ad-tier subscribers have grown substantially from 2023-2025.
- Ad-Tech Management: Beyond scale, Netflix is focused on improving its ad operations through its in-house ad-tech platform, better inventory management, and enhanced targeting capabilities that drive higher CPMs.
- Paid Sharing Conversion: The company’s crackdown on unauthorized account sharing while giving consumers the ability to add non-householders in higher-priced plans, is a key strategy to monetize un-paid viewing.
- Price Adjustments: Streaming providers continue to increase prices, with Netflix’s latest increase rolling out this past January 2025, the results of which Netflix is realizing now.
Balancing Growth and Cost Discipline
Another key storyline for tomorrow’s call will be content spending. Netflix has indicated that operating costs will rise in the second half of 2025 due to increased content investments. The company faces the challenge of maintaining engagement while managing the profitability of its growing content slate.
Sports rights have been the hottest ticket in the streaming world with ESPN making major deals with the NFL and WWE amidst its August ESPN streaming service launch. Netflix has been a more reluctant spender, but has reportedly closed a three-year deal to stream the 2026 MLB Season Opener and Home Run Derby. Netflix is testing how live sports can drive both subscriber engagement and advertising appeal, building on its success with sports originals that appeal to both sports fans and general audiences.
What to Watch
As the earnings call unfolds, expect analysts to focus on three main themes:
- Ad revenue performance and trajectory toward higher monetization.
- Subscriber retention amid price increases.
- Content ROI, particularly in new categories like sports.
Netflix’s results will serve as a bellwether for the broader streaming ecosystem — where sustainable profitability defines the next phase of competition.
Parks Associates tracks the broadband, pay tv and streaming markets extensively. For more information on the Streaming Video Tracker or Parks Associates consumer, industry or forecast research, contact sales@parksassociates.com.
