Netflix’s subscribers are staying, but estimated viewing per subscriber has fallen by about 9% over three years: a weakness that matters more as the company increasingly relies on advertising for growth.

The estimates, drawing partly on Wells Fargo’s work, concern average viewing, not the service’s total audience hours. Netflix reported a 2% rise in total viewing hours in the first half of 2026 and maintains that subscriber engagement remains healthy. Both measures can move in opposite directions.

Netflix retains some of the industry’s lowest cancellation rates, alongside strong profits and cash flow. Yet its shares have lost roughly half their value since last year’s peak. The valuation question is whether it remains a fast-growing technology business or increasingly resembles a mature media company dependent on hits and price rises.

In established markets such as the United States, widespread streaming adoption makes subscriber growth harder. Netflix has increasingly relied on higher subscription charges and its cheaper, advertising-supported plan, launched in 2022. Subscription fees arrive regardless of hours watched; advertising depends on opportunities to show adverts.

In third-quarter results published in October, Netflix cut its expected 2026 advertising revenue to about $2.7 billion from roughly $3 billion. It blamed delays introducing new advertising-system capabilities, not declining viewing. Overall quarterly revenue rose about 12% to approximately $12.9 billion, while its operating margin improved.

Competition extends beyond Disney+ and other subscription services to YouTube, TikTok and abundant short-form video. Nielsen measured YouTube’s share of US television-screen viewing at 15.8% in August, against Netflix’s 7.7%. Those figures exclude phones and computers.

Netflix could sell more advertising within each hour. Ampere Analysis recorded about 2.4 minutes of adverts per viewing hour on its advertising plan in August, compared with roughly 7.5 minutes on Disney+ and more than eight on Hulu. Netflix has already increased its advertising load this year; further increases risk irritating viewers.

The alternatives carry costs too. More spending on programmes could squeeze margins, while further price rises could push subscribers towards the cheaper plan, increasing the importance of advertising income.

Following the disappointing forecast, co-chief executive Ted Sarandos said Netflix needed to improve, particularly in the United States, and refocus on quality series and films. Next year’s planned attractions include new series of Wednesday and Bridgerton, alongside a Narnia film.

The distinction now matters commercially: keeping a subscriber’s payment does not necessarily keep their attention, and advertising makes that attention more valuable.