By Harshita Mary Varghese and Kritika Lamba
(Reuters) – Netflix’s $120 billion stock rally this year faces a crucial test on Tuesday: proving that its costly investments in advertising and video games can sustain the growth that has made the streaming pioneer a Wall Street darling.
A strong content slate including “KPop Demon Hunters,” Netflix’s most successful film, and the second season of “Wednesday” are expected to deliver the company’s fastest revenue increase in more than four years when it reports third-quarter results on Tuesday.
The final three months of 2025 will also feature strong programming, including the final season of “Stranger Things.”
But some investors and analysts fear the streamer’s years of meteoric growth could fade.
They noted that the company decided to stop sharing subscriber numbers earlier this year, urging Wall Street to focus more on financial indicators such as revenue and profits.
This has pushed the company to focus on new projects such as video games, which analysts say have struggled due to changes in management and strategy.
According to the Wall Street Journal, Netflix has invested about $1 billion in purchasing game studios and expanding the company, which now offers more than 120 mobile games, including Rockstar Games’ “GTA: San Andreas,” as well as games based on its own hit shows such as “Squid Game: Unleashed.”
Netflix announced this month that it would bring board games such as “Boogle Party” and “Pictionary: Game Night” to television.
A BET THAT DIDN’T PAID
Netflix’s video games increased users’ time spent – a key metric of engagement – by less than 0.5%, after more than four years of operation, according to an analysis by technology research firm Omdia published in June.
Co-CEO Greg Peters – considered the architect of Netflix’s gaming strategy – recently compared the expansion of video games to the streaming service’s entry into Japan when only 2% of consumers were aware of the brand.
“We just celebrated the 10th anniversary in Japan… but it took us a long time. The game situation is no different than that,” he said at the Bloomberg Screentime conference earlier this month.
This problem is not unique to Netflix. Major media and entertainment companies other than Warner Bros. Discovery have struggled to turn blockbuster films into profitable video games.
Netflix’s main challenge in video games is its limited roster of iconic intellectual properties, unlike Warner Bros. Discovery, which owns iconic intellectual properties such as DC Comics, said Michael Pachter, managing director of strategic planning at Wedbush Securities.
