Netflix's second-quarter update revealed modest viewing growth of just 2% in the first half of 2026, while content spending is projected to increase by about 10%. Co-CEO Greg Peters emphasized that raw viewing hours do not fully capture audience value, highlighting live events that, despite low total viewing time, significantly boost sign-ups, engagement, and advertising revenue. This perspective marks a shift from merely defending engagement metrics to reimagining how viewer engagement translates into financial returns.

The discussions also ventured into Netflix’s advertising strategy, particularly the potential introduction of a free, ad-supported tier. Peters noted that such a service might make sense in select markets once the advertising revenue reaches a scale large enough to support it. Netflix is actively expanding inventory to enable this, including daytime video podcasts, lifestyle programming from partners like Condé Nast, Hearst, and People Inc., and AI-assisted content production that lowers costs while increasing output. These developments aim to produce more advertiser-friendly viewing hours.

Netflix co-CEO Ted Sarandos addressed concerns about audience declines in second seasons of shows, asserting that there is no significant change and even slight improvement compared to last year. He cautioned against drawing conclusions from limited data samples and underscored the company’s commitment to broad content variety. Notably, Netflix has integrated AI tools in about 300 titles, accelerating production and cutting costs, with savings planned to be reinvested into further content creation.

Partnerships are also key to Netflix’s growth strategy, with early results from the integration with French broadcaster TF1 described as promising. Peters indicated Netflix would consider similar collaborations based on mutual benefit. Altogether, Netflix’s earnings call framed viewing growth as a complex equation involving quality, variety, and quantity of content, alongside evolving monetization avenues like advertising and new distribution models, setting the stage for future revenue streams beyond subscriber fees.