Since Netflix stopped disclosing subscriber numbers in its earnings reports earlier this year, the company’s executives have shifted their focus to discussing innovation in advertising, A.I., and real-world ventures on earnings calls. The pivot signals Netflix’s gradual evolution from a pure streaming platform into a broader tech and entertainment powerhouse. On the scale of a crawl-walk-run spectrum, Netflix is “now squarely in the ‘walk’ phase,” co-CEO Greg Peters told analysts on the company’s third-quarter earnings call yesterday (Oct. 21). “We feel like we’ve established the fundamentals of the business now. Advertisers are excited about our growing scale,” he said.
Netflix’s advertising business, once considered a side experiment, saw its best quarter in the July-September period, proving it is now a reliable revenue stream in addition to subscription. Netflix said it doubled its U.S. upfront commitments, or pre-sold ad inventory for the coming year, during the quarter. Peters said Netflix’s in-house tech will soon support interactive ads that let viewers engage directly with campaigns.
Netflix is testing similar interactivity in live programming. Peters said the company is exploring real-time voting features for its expanding slate of live shows and events. This capability could debut in Star Search, the classic talent competition Netflix plans to revive in 2026.
For the July-September quarter, total revenue rose 17 percent year-over-year to $11.5 billion, while profit climbed 8 percent to $2.5 billion. Both figures came in below Wall Street expectations, primarily due to a one-time $619 million tax expense in Brazil, sending the company’s share price to fall 10 percent today. Without disclosing the exact subscriber number, co-CEO Ted Sarandos said the company now serves nearly a billion viewers globally.
Netflix is also delving deeper into generative A.I. to boost efficiency and creativity across its operations, from content localization and dubbing to personalized viewing recommendations. Recent examples include the use of A.I. in Happy Gilmore 2 to de-age characters in an opening flashback scene, and in Billionaires’ Bunker, a Spanish-language original created by the Money Heist team, where A.I. tools helped design sets and wardrobes.
In response to an analyst question about A.I. and tools like OpenAI’s video-creation platform Sora, Sarandos emphasized that Netflix isn’t concerned about A.I. replacing human creativity. “For what we do, it takes a great artist to make something great. A.I. doesn’t automatically make you a great storyteller if you’re not [one],” he said.
Beyond its advances in ad tech and A.I. applications, Netflix continues expanding its brand beyond the screen. The company is building a real-world ecosystem that spans merchandising, gaming, live events and new consumer experiences. Initiatives include a recent Spotify podcast partnership, a “Netflix House” entertainment center rollout, a Netflix-branded restaurant in Las Vegas, and new toy and collectibles collaborations with Mattel and Hasbro tied to KPop Demon Hunters.
