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There is a lot to discuss about this company, but I think they are headed in the correct direction and no one is noticing.
Compared to many other industries and stocks in the market, software has been heavily discounted into hardware, but Netflix Business hasn't changed.
I'm going to paint you a picture of my thoughts on our dystopian future and certain trends I've noticed. 90% of US households subscribe to at least one streaming video provider. Over 25 million young adults (approximately 33%) under 35 are now living with their parents. Approximately 64% of US homeowners report a stronger desire to stay at home than before the pandemic, a trend fueled by increased expenses and a move toward in-home leisure. People with huge families cannot afford to be outside. Financial pressures: Children spend their entire lives being acquainted with this lifestyle, which involves cost-cutting and changing consumer budgets. Remote work and employment have grown dramatically since the outbreak.
Netflix today is running towards becoming a cheap alternative for TV while using Advertising to generate most of their revenue while their subscription model keeps money flowing consistently. Netflix has more foreign Tv shows than any legacy media company. Local originals that travel globally (the “Squid Game” model) plus AI‑assisted dubbing, subtitling, and localization can deepen moats in those regions and make ARPU expansion easier over time. which is hard to do at scale.
Sarandos deserves credit for pushing bold bets when the future was unclear — the original-content pivot ($100M for House of Cards in 2011) is the textbook case of leadership making a scary call that redefined the industry and they’ve always taken big bets and been successful ever since. But critics argue that this past year Netflix has leaned harder into cheap, algorithm-friendly volume over the kind of prestige swings that built its reputation on which could be a bearish outlook but I would argue that is a quick fix! Netflix looks to me like they’re cutting back spending and seeing what they can make with what little spending they can do with to create another hit show.
Investors are also quick to point out competition is fierce with all the streaming platforms trying to take the playbook from Netflix but funny enough we’ve seen a slow acquisition of the film industry with Disney acquiring Hulu, paramount acquiring WBD and now owning HBO platform now moving over to Paramount, etc your starting to see the lineup unfolding of 3 major players Prime Video, Paramount, Disney+ with this smaller and smaller ownership less platforms to subscribe to for streaming content into the top 4 today. Another thing that is also very bad for consumers is the fact that Building a streaming service Very difficult and Requires tech, licensing, apps, payment systems, customer support and constant content, And then, after all that, it’s even harder to get new subscribers – and keep them. These monopolies will soon be able to control all of the prices as they grow and produce their own hit shows/movies and buyout the rights to thousands of existing popular TV shows and movies.
If they can keep producing their own hit shows that have global appeal, they’ll be a bigger differentiator to rivals like Amazon, Paramount and Disney and it won’t matter how good they are in the US. If their movies/shows are a huge hit globally and one of their main competitors paramount is already financially strapped to a huge chunk of debt approximately $79 billion in net debt would likely be a significant constraint for several years. Less flexibility in management annual cash flow will go toward servicing debt while having to pay their competitor Netflix a $2.8 billion breakup (termination) fee that capital they earned from the deal will help create Local originals that travel globally and continue that strategy.
Lately Netflix has hit another home run not just with a single hit tv show that will be irrelevant in the next 5 business days but already become a successful value and revisited growth tool Gaming. Netflix is moving closer to cloud-streamed gaming, allowing people to play games on their TV without a console. AI is helping developers to create game worlds faster and cheaper, which is fueling the rapid growth of Netflix’s gaming catalog. games are being treated as a strategic engagement lever tied to franchises and retention, not a vanity metric, which is precisely how they can become a meaningful driver of time spent and IP value over the long term. If you’ve never played a Netflix game before, I recommend checking out the App Store on your cellphone under their brand. They have a ton of open world games included with your subscription. Also, try playing FIFA World Cup and Unhinged on TV just to see what they’re capable of.
Netflix’s next film and production costs are likely to decline as they’ve quietly acquired InterPositive – a developer of AI tools that help filmmakers with things like relighting shots, color correction, visual effects, and filling in missing footage, while keeping creative control with directors and edit and continued to Hire AI researchers and engineers to Invest heavily in AI tools for production workflows helping the biggest impact is expected to be on repetitive, time-intensive production tasks. AI is already helping with pre-production, editing, visual effects (VFX), marketing, and localization: Translate and dub films into many languages more quickly, with improved lip synchronization, which will help Netflix’s strategy. For example:
A $10 million film might eventually save $1–3 million. A $100 million film might save $5–20 million. A $250 million blockbuster could potentially save tens of millions of dollars, though the exact amount would vary widely. If a studio like Netflix spends billions of dollars annually on content, a 10% improvement in efficiency could translate into hundreds of millions of dollars that can be redirected money toward other things and is a huge win for Netflix.
Everything investors complain about with Netflix is easily fixable — management is likely experimenting with cheaper content or different content mixes. I also believe many investors hold the opinion that there’s “no content” on the platform, when in reality, they’re just consuming content faster than Netflix can produce it. That’s why Netflix has started diversifying its lineup with short-form videos, documentaries, podcasts, games, live streaming, and more.
If someone comes home from work looking for a new movie to watch every single day of the year, they’re eventually going to burn through a massive amount of content. But I’d note that these are typically the same people who have 3-4 streaming subscriptions and aren’t bothered by short-term gaps in Netflix’s movie and show lineup.
**Netflix Today**
Netflix is guiding for 2026 revenue of $50.7–51.7 billion, representing roughly 13–15% growth. Operating margin, which came in at 29.5% in 2025, is targeted to expand to 31.5% in 2026.
This gives Netflix enormous financial flexibility, including the ability to:
**•** Repurchase shares
**•** Invest in original content
**•** Acquire studios or technology companies
**•** Pay down debt, if desired
Compared with most major entertainment companies, Netflix’s balance sheet remains relatively strong.