Today’s headline poses a question you’ve probably never thought to ask, so I’ll start with my answer: yes, Netflix is washed now. The content on the platform has never been great, but it’s never been worse. I open the app these days and I’m amazed. What used to be a source of fun, buzzy, compulsively watchable, and occasionally excellent TV and movies is now an endless river of reheated IP, true crime documentaries, and filler dressed as prestige. Millions of people watch this stuff, and everyone instantly forgets it.

I offer this observation as a swirl of heightened anxiety surrounds the company, so let me clarify one thing up front: I’m not predicting imminent doom. Netflix content reaches a staggering 85% of American viewers and has 325 million subscribers globally. Growth is slowing, but that’s the law of large numbers. If practically everyone in America and much of the world is already subscribed to some version of Netflix, and churn rates are still low, then any concern is relative. Going forward: cable is still dying, and even if the biggest premium distribution platform in the world can’t make great content of its own, it can still license movies, TV and sports rights. Netflix can then spread those costs across hundreds of millions of subscribers and a steadily growing ads business, seeing more engagement in a week than Apple TV sees in a year.

So no, the company’s not doomed today or destined for collapse tomorrow. Instead, I think what’s interesting to consider is that Netflix has almost certainly peaked. As a cultural force, as a business success story, and as an entertainment death star destined to swallow Hollywood whole, the arrows are all pointing the wrong direction.

Here was Lucas Shaw at Bloomberg two weeks ago, writing about one of several problems the company has encountered over the past 12 months:

Netflix is struggling to get viewers to stick with its shows for more than a season.

One Piece, one of Netflix’s most-watched shows of 2023, lost more than 30% of its audience for the second season. Season two of Beef suffered a drop of more than 70%. The Night Agent shed 50% of its audience for the second season and another 35% for its third season. These figures are all through the first four weeks of a show’s release and come straight from Netflix.

Adding insult to injury, the latest season of Avatar: The Last Airbender, one of Netflix’s most-watched titles in 2024, suffered a drop of more than 60% over week one. That doesn’t bode well for the rest of the month.

That report went viral, prompting a week of commentary on Netflix’s binge model and elongated release schedules, with lots of Twitter users observing that viewers consume eight episodes across a few days and then often have to wait as long as two or three years for the next season. By that point, memories of plot or characters are faint at best. The emotional connection to the story doesn’t exist. No one should be surprised that the audience for a show like One Piece is cut in half in 2026, three years after the first season aired.

While that explanation certainly feels true, Shaw followed up this week to note that data is mixed as to whether extended breaks between seasons do in fact correlate to audience drop-off. Severance, on Apple, gained a ton of new audience after its nearly three-year break. Stranger Things and Bridgerton have been multi-season powerhouses at Netflix despite their long breaks between seasons. Conversely, Tina Fey’s Four Seasons debuted on Netflix in May last year, was met with pretty good reviews, and returned 13 months later with half its audience.

I think the Netflix problem is more fundamental than production schedules. What if these shows just aren’t very good or differentiated? Consider the original productions Netflix has surfaced in the past few months:

• A Good Girl’s Guide to Murder
• Running Point
• Lord of the Flies
• Something Very Bad Is Going to Happen
• Unchosen
• XO, Kitty
• Big Mistakes
• Beef
• Man on Fire
• Little House on the Prairie
• His & Hers
• Nemesis
• The Boroughs

That list is culled from a post by the Entertainment Strategy Guy charting Netflix originals that have under-performed in the second quarter of 2026, and one common thread between those titles is that I haven’t heard of almost any of them. Netflix is the one streaming service everyone subscribes to and is theoretically well positioned to be setting the cultural agenda, but that hasn’t happened for quite some time. Did you know that Avatar: The Last Airbender was a thing? Apparently that show lost 60% of its season one audience when its second season aired in late June.

Running Point is a show loosely based on Jeanie Buss, I know that much. Beef was well-reviewed during a first season I didn’t watch. Otherwise, I look at the list above and see a bunch of projects that may as well be fake 30 Rock movies starring Tracy Jordan or Jenna Maroney. Friends have never mentioned them, podcasts are not discussing them, and subjectively speaking, the weekly Nielsen streaming reports touting the audience for any of these shows read to me like economic data coming from a Potemkin village.

Content and the Year of Discontent

I mentioned the anxiety surrounding Netflix these days, so let me take a step back here. Amazingly, it’s only been eight months since Netflix won the bidding war to buy Warner Bros. Discovery and looked poised to become an entire generation’s one-stop shop for high-end entertainment. The implications of that news produced lots of anxiety, including one of my first articles on this website—Netflix and the Flattening of Everything—and a memorably ominous Variety cover that captured Hollywood’s mood at the time:

The Warner Brothers deal was abandoned at the end of February, when Netflix walked away from the table in the face of regulatory pressure from Washington and an increased bid from Paramount. Even so, the market hated the initial play, as investors wondered en masse why the world’s most (only?) successful streaming platform was suddenly ready to take on a mountain of new debt to acquire a company that had already been the subject of several expensive, failed acquisitions over the past 25 years.

Now, even as the deal is off, the questions remain. Are we sure a Netflix world takeover is a forgone conclusion? Is Netflix sure? The stock is down 18% this year and over 40% across the past 12 months. Investors who did a double take last December seem to have noticed that YouTube has twice the overall engagement that Netflix does, and more time watched on televisions, while free, ad-supported TV services like Tubi and the Roku Channel are becoming meaningful engagement competitors themselves.

Meanwhile, alongside all the original programming that’s failed to launch (or re-launch?), Netflix is adding videos from BuzzFeed, Condé Nast, Hearst and Penske Media (as Shaw notes: “Get ready for lots of Bon Appétit cooking videos on Netflix.”) Last fall the platform also added a variety of high-end podcasts in a bid for relatively cheap, recurring content that may be seeing underwhelming results. Then again, they continue to buy more, so who knows? Elsewhere, the Wall Street Journal reports that Netflix executives have “recently discussed adding live channels that would continuously stream certain programs, or shows and films from a certain genre.” Can Netflix become HBO before HBO becomes Netflix? Can Netflix become Tubi before Tubi destroys Netflix’s long-term pricing power?

All of those moves might have once been seen as the savvy power plays of a world-conquering behemoth intent on taking the next step to expand its footprint. Today, in the shadow of a Warner Brothers bid that accidentally punctured the company’s air of inevitability, this year’s moves look more like spaghetti being thrown at a wall by a company that’s searching for something—anything!—that might hold people’s attention and scale more effectively than an expensive library of content that’s consumed, discarded, and then effectively worthless.

Looking back at the deal to acquire Warner Brothers, HBO and all that IP, I think it’s clear Ben Thompson was right when he wrote that concerns over competition from YouTube specifically and the internet generally were likely key drivers of Netflix’s decision-making. Those concerns seem to be animating all the other options the company is considering, and understandably so. The same way that the rise of social media has throttled the growth of the gaming market, it stands to reason it could do the same to demand for scripted content. With respect to the specific Netflix logic for buying WBD, that context is important: the biggest companies, with the deepest, most diverse libraries, will have the best chance at defending themselves in this new environment.

The problem, of course, is that Netflix didn’t actually buy HBO and Warner Brothers. So now what? On Thursday night, Netflix stock was getting hammered again after a disappointing earnings call in which the company announced changes to its reporting on viewership and engagement (that data will come annually now, not biannually) and provided disappointing revenue guidance for the current quarter.

I like to leave all Aggregator analysis to Ben, but I don’t think investors are crazy to have some questions about where this leads and what the upside looks like. For all the advantages its massive customer base affords (leverage over costs, advertising upside), an obvious difference between Netflix and businesses like Meta, YouTube, or Google—the other demand aggregators—is that Netflix has to spend far more money to deliver on its value proposition to customers and has fewer network effects to defend its long-term centrality to people’s lives. The bull case from Ben has always been that Netflix will use its customer base and revenue to outlast its streaming competition and eventually become the most dominant buyer and distributor of content in Hollywood. Content costs will come down at the same time Netflix gains leverage to raise prices on consumers and deliver more audience to advertisers.

Maybe that day will come, but it’s also possible that consumption trends will shift before it ever does. With respect to engagement and attention, the headwinds are intensifying, not fading. My wife now unwinds every night with Instagram Reels, not Netflix. YouTube draws from the entire world and creates much bigger stars than Netflix does. And rather than folding, Hollywood just produced the biggest cultural touchstone of the summer with Obsession, while The Odyssey will likely be even bigger. Paramount Plus, Disney Plus, Amazon, and Apple remain committed to streaming and their content continues to win awards and critical acclaim across a variety of genres. Meanwhile, Netflix is adding Bon Appetit videos, Hot Ones exclusives, a celebrity YouTube chef, podcasts, and possibly TV channels. In other words, the company that’s selling premium entertainment is not very good at making it, and now looks like it wants to become a more expensive and better curated version of the internet.

Not Losing, But Not Winning

For the record, I’m very much enjoying the year of Netflix investor anxiety. Industry leaders who accrue this much power should be judged by how they use it, and with a handful of exceptions, I find most of Netflix’s creative instincts to be either cynical or incompetent, and sometimes both. Production after production yields movies and shows that are just interesting enough to make you watch and just mailed-in enough to make you regret the investment afterward. I’ll grant that this isn’t scientific analysis, but the Netflix brand of bingeable, glossy and warmed-over filler is so consistent that I’m convinced certain shows and movies would seem better, and would get better reviews, if they aired on Apple or Paramount. Meanwhile, no less than Matt Damon has shared that the streamer instructs writers to assume that everyone is on their phone and needs plot points reiterated throughout the dialogue.

That, by the way, is the primary reason I always preferred Paramount to Netflix in the competition for Warner Brothers. Both deals present antitrust concerns, but if we’re consolidating talent and resources in the midst of secular decline, I’d much rather that happen at a company that cares about theatrical distribution and actually knows how to make great movies and TV, or at least has a demonstrated track record of trying.

Netflix, by contrast, spends $18 billion a year on… what, exactly? Licensing movies and shows, certainly. I think the Netflix original Tires is wonderful and worth at least $1 billion of that spend. Legends was good too. My three-year-old son loved the Steven Spielberg Dinosaurs docuseries, and he’s an avid fan of the Paw Patrol episodes they’ve licensed from Nickelodeon. But with respect to originals generally and the under-performing Potemkin titles I highlighted at the start, I think it’s fair to wonder whether a corporation that’s trying to serve an endless river of content to the entire planet—while maintaining fiscal discipline, without alienating any customers with difficult questions or characters—could ever be capable of doing that job in a compelling way.

There was a time when Netflix seemed to be invested in undertaking ambitious projects that millions of people found refreshing and exciting, but that era gave way to a decade of much safer bets on big names who got famous elsewhere and formulas that had a predictable audience. The latter strategy culminated with the Warner Brothers acquisition attempt in December. Eight months later, Netflix seems to have decided that reliance on scripted TV and movies may not be the answer to its long-term future, at least now that the company can’t buy Warner Brothers and HBO scripts. From here they will explore areas beyond their expertise and see where that leads. Shaw at Bloomberg has reported the company is considering licensing news broadcasts and already running experiments with that programming in foreign markets.

It’s tempting to track those developments and conclude that if even a company like Netflix is feeling vulnerable in its reliance on scripted programming, it’s a bearish signal for the future that content everywhere else. I think that’s a mistake. Again, The Odyssey may make a billion dollars beginning this weekend. HBO continues to generate hits and is still profitable on its own. So is Prime Video. So is Disney. Apple is…well, Apple. The future of the entertainment business, supported less by cable than by eccentric billionaires, theme parks, and giant businesses looking for fun complementary products, actually looks a lot safer and more predictable than what Netflix has gotten itself into—lower upside, certainly, but less of a Sisyphean battle week after week.

The problem here is not audiences or a collective turn away from scripted content, but the particular game Netflix has to play. The company has already saturated the richest markets in the world with subscriptions for premium content, and to the extent the share price and long term growth is now predicated on the promise of maximizing not only subscription revenue but also daily engagement and revenue from advertising, that journey will be humbling. The platform has so many users and so much money that I’m sure it’ll find plenty of ways to succeed, but success will be more relative than it used to be, and potentially very expensive if the company chooses to make a bigger play for sports rights (the real premium content).

What should be clear to everyone is that Netflix is now a long way from fighting Blockbuster during the 2000s or disrupting cable companies and legacy studios that couldn’t be bothered to compete for the first 10 years of the company’s entry into streaming. If the battle is for holding our constant attention, YouTube, X, TikTok and Meta are everywhere, already, and they are drawing from a universe of user-generated content that’s free, hilarious, more risk-tolerant, and more alive than anything Netflix can produce on a continuing basis. A year-long reckoning with the implications of this competition is why the company now looks old and a little bit confused, while anyone who opens the app is both over- and underwhelmed.

That is what the future of the platform looks like. The only comfort I can offer Ted Sarandos is that this does happen to the best of us. And again, I do love Tires.

---

Sharp Text is extension of the Stratechery Plus podcasts Sharp Tech, Greatest of All Talk, and Sharp China. To subscribe and receive weekly posts via email, click here.