Netflix (NFLX +0.37%) just had another phenomenal performance in 2025. The company’s revenue increased 16% year over year to $45.2 billion. Operating income soared 28%. And there are now 325 million subscribers.

With strong fundamentals like this, it might be a shock to learn that there’s one warning sign for Netflix investors.

Image source: Netflix.

Lagging the overall streaming market

Almost common knowledge these days is just how much streaming entertainment has taken over. In the U.S., a mature market, far less than half of all households still have traditional cable TV subscriptions. That’s down from a peak share of 88% penetration in 2010. Consumers are voting with their dollars and eyeballs and choosing the better user experience that streaming video offers.

According to data from Nielsen, streaming hours (excluding Netflix) represented 37.7% of total TV viewing time domestically as of the third quarter of 2025. This was up dramatically from a 24.8% share at the end of 2022, translating to a 52% growth rate.

It’s not all good news, though. Netflix, a company no one would argue dominates the industry, saw its share of TV time increase from 7.5% to 8.6% over the same time period. This equates to just a 15% expansion, much lower than the overall market.

Alphabet‘s YouTube is winning the race. Although it specializes in user-generated video, the main platform is notably ahead of Netflix in engagement.

This is a warning sign for investors. And it indicates that rivals are grabbing more viewer attention. Competition is stiff, not just from direct rivals but also from social media apps. And it doesn’t help that Netflix isn’t invested as much in live sports as its peers are.

Management is, unsurprisingly, still optimistic. “Given the still substantial amount of linear viewing globally, we believe there’s plenty of opportunity to expand our share of TV engagement,” Netflix’s Q3 2025 press release reads.

Netflix

Today’s Change

(0.37%) $0.31

Current Price

$83.47

Paying up for more eyeballs

Tracking engagement is important for the leadership team. This is still trending in the right direction. Subscribers watched 96 billion hours of content on Netflix in the second half of 2025, up 2% year over year.

That might not be good enough, however. Netflix wants to take over TV and film studios, HBO Max, and the content catalog from Warner Bros. Discovery at an enterprise value of $82.7 billion. Perhaps this deal is in play because Netflix is trying to buy its way into taking a leap forward when it comes to viewership.

It’s hard to be critical of Netflix since the stock has been a fantastic winner in the past. But investors should know that growth won’t be as easy to come by going forward.