Netflix is reconsidering its long-held commitment to a purely on-demand streaming model in response to weakening user engagement. Company executives have recently discussed the possibility of introducing live linear channels while also exploring the integration of third-party streaming services, such as NBCUniversal's Peacock, directly into the Netflix platform. The potential strategic shift highlights the intensifying competition across the streaming industry.

Over the past year, Netflix shares have fallen more than 40%, weighed down by slowing growth and its unsuccessful attempt to acquire Warner Bros. Discovery's studio assets. Industry data also showed that Netflix's share of U.S. television viewing dropped to a multi-year low of 7.8% in April. To strengthen its position, the streaming giant is accelerating initiatives aimed at expanding its advertising-supported business while reducing subscriber churn.

To better control content costs while competing against traditional media companies, Netflix has begun adding lower-cost programming, including short-form content supplied by content publishers. The company is also actively exploring opportunities to secure broadcasting rights for major sporting events, including the FIFA World Cup.

Bernstein SocGen lowered its price target on Netflix from $110 to $100 while maintaining an Outperform rating. The firm expects Netflix to face subscriber growth headwinds in 2026 and has reduced its subscriber forecast for the year by 3 million users. The revision reflects several near-term challenges that could weigh on investor sentiment.

Looking ahead, subscriber growth is expected to accelerate again in 2027 as Netflix expands its ad-supported subscription tier into 15 additional markets, a move projected to attract approximately 4 million new subscribers.

On the M&A front, reports indicate that Netflix lost the bidding war for Roku to Fox, which reportedly offered a $20 billion cash-and-stock deal. Despite the setback, market speculation suggests Netflix remains interested in acquiring Lionsgate, although no formal offer has been made.

Market Insight:

Although Netflix was unsuccessful in its attempts to acquire both Warner Bros. Discovery assets and Roku, the company's growing activity in the mergers and acquisitions market underscores its determination to strengthen its competitive position. These developments reflect Netflix's broader strategy to adapt and expand as the global media landscape continues to evolve.