Netflix, Inc. (NFLX) Business Profile

What it does

Netflix is an entertainment service that offers TV series, films, games and live programming across genres and languages. Its members can play, pause and resume viewing, watch at different times and places, and change their plans.

The company was founded in 1997 and is headquartered in Los Gatos. Ted Sarandos and Greg Peters are co-Chief Executive Officers and Presidents.

Netflix provides a streaming service built around content it produces, licenses and distributes. Its service also includes games and live programming. The company continuously changes its user interface, recommendations and infrastructure to help members find content. It operates its own Open Connect network to deliver a high volume of content over the internet.

Netflix’s business is to entertain audiences across countries, cultures, languages and tastes. It operates as one segment, rather than separate reportable businesses for streaming, games, advertising or live programming. The company also uses intellectual-property rights covering its technology, business processes, content and related consumer products and experiences.

How it makes money

Netflix primarily earns recurring monthly membership fees for streaming content. It offers several streaming plans whose prices vary by country and by plan features. As of December 31, 2025, paid plans ranged from the U.S. dollar equivalent of $1 to $37 per month, while extra-member subaccounts ranged from the U.S. dollar equivalent of $2 to $9 per month. The company may change prices and test other plan and price variations by country.

Netflix also earns revenue from advertisements on its streaming service, consumer products, live experiences and other sources. These sources other than monthly membership fees were not a material component of revenue in 2025, 2024 or 2023. The company aims to offer a range of prices, including an ad-supported subscription plan.

Revenue for the year ended December 31, 2025 increased 16% from the prior year. It was reported on 23 October 2026 that fiscal Q3 2026 revenue grew 11.8% year over year.

Netflix discontinued reporting membership numbers during 2025 and focuses on revenue and operating margin as primary performance metrics. Its 2025 operating margin increased by approximately three percentage points from the prior year, as revenue growth outpaced growth in cost of revenues, sales and marketing, and general and administrative expenses. Net income increased $2,270 million, primarily because operating income increased, partly offset by higher income-tax provision.

Customers and how it sells

Netflix serves members of its streaming entertainment service in multiple countries. Its plans vary in price and features by country, and its programming and user interfaces are adapted for cultural and language differences. The company seeks to offer content across different countries, cultures, languages and tastes.

Members access Netflix through its internet-delivered service. Delivery costs include its Open Connect equipment, cloud-computing costs and other third-party costs of delivering content over the internet. Netflix also works with consumer-electronics manufacturers, multichannel video programming distributors, mobile operators and internet service providers as marketing partners.

The company does not identify a single customer as a material concentration in the supplied information. It was reported on 22 October 2026 that Netflix had more than 300,000,000 members worldwide.

Netflix had approximately 16,000 full-time employees as of December 31, 2025. About 68% were in the United States and Canada, 16% in Europe, Middle East and Africa, 12% in Asia-Pacific, and 4% in Latin America. It also has content-production employees whose number can fluctuate and who may be covered by collective bargaining agreements.

Suppliers and costs

Netflix depends on studios, content providers and other rights holders to license content and related rights, including music-performance rights. License periods, terms and conditions vary. It also uses third-party intellectual property in creating content, merchandising products and marketing its service.

Content is the central cost category. Cost of revenues mainly consists of content-asset amortization, plus content acquisition, licensing and production costs, streaming delivery and other operating costs. Original content, particularly content Netflix produces and owns, requires cash payments earlier than the associated amortization expense.

Other costs include talent arrangements, music rights, production costs, participations and residuals; Open Connect equipment, personnel and cloud computing; customer service and payment-processing fees; and marketing and corporate personnel costs. In 2025, content amortization increased $1,121 million and other cost of revenues increased $1,116 million, primarily driven by non-income-tax assessments in Brazil. The company does not expect those Brazil non-income taxes to materially affect future operating results.

Competitive position

Netflix competes for consumers’ leisure time with linear television, streaming entertainment providers, including providers of pirated content, video-gaming providers, open-content platforms, social media and other entertainment sources. It also competes with entertainment-video providers and content producers for licensed content and original-content projects.

It was reported on 22 October 2026 that Netflix faced intensifying competition from YouTube and TikTok for viewers’ attention. It was also reported on 23 October 2026 that Disney competes more directly for subscribers, while a Disney licensing agreement brings current and library titles to Netflix. The company states that consumers can maintain relationships with multiple entertainment sources, while it seeks to be chosen in their free time.

Our reading: The content catalog, user interface, recommendations and Open Connect delivery network are sources of differentiation, but their strength depends on continued content investment and members choosing Netflix among many entertainment options. [item1; item7]

Our reading: Intellectual-property rights support Netflix’s technology, content and associated products, while third-party licensing remains necessary for some programming and related rights. [item1]

Our reading: The advertising business does not yet provide an established competitive advantage because Netflix has limited operating experience in advertising and identifies execution, measurement, technology and advertiser-retention risks. [item1a]

Growth opportunities

Netflix’s stated strategy is to grow globally within its operating-margin target. It seeks to improve the member experience with content, user-interface changes and a range of pricing plans, including an ad-supported plan. It also seeks to drive conversation around content and make it easier for members to choose programming.

Membership growth, price increases and advertising revenue drove the 16% revenue increase in 2025, partly offset by foreign-exchange changes net of hedging. The company expects to continue investing significantly in global content, particularly original content. It also states that it may periodically raise additional debt capital and make strategic acquisitions and investments.

Netflix’s service includes games and live programming alongside TV series and films. It was reported on 22 October 2026 that the company planned to expand its library by licensing more third-party content. It was also reported on 22 October 2026 that Netflix planned to offer NFL games on Thanksgiving Eve and Christmas Day, plus the Tyson Fury versus Anthony Joshua fight.

It was reported on 22 October 2026 that Netflix wanted to launch its advertising tier in 15 additional countries in 2027. The company’s advertising revenue depends on attracting and retaining advertisers, advertising technology and measurement, ad inventory, member engagement, and advertising-sales capabilities.

Structural risks

• Netflix’s business could be adversely affected if its efforts to attract and retain members do not succeed. Consumers have multiple entertainment alternatives and can choose other services during their free time.

• Advertising revenue may not grow as Netflix expects. The company has limited operating experience in advertising, and results depend on advertiser demand, member engagement, advertising technology, measurement, privacy rules, third-party providers and the ability to build advertising sales and technology teams.

• Studios, content providers and rights holders may refuse to license streaming content or other rights on acceptable terms. Netflix’s content commitments are long term and largely fixed, which can limit operating flexibility and affect liquidity and results.

• A disruption of, or unauthorized access to, Netflix or third-party computer systems could degrade service, expose or destroy member and corporate data, or result in theft of intellectual property and digital content assets.

• International operations expose Netflix to economic, political, regulatory and other risks. These include content quotas, investment obligations, levies, ownership restrictions, censorship, data and privacy rules, local-content requirements, trade policy, broadband availability and currency controls.

• Netflix may lose key employees, be unable to hire qualified employees, or fail to maintain and improve its company culture.

Bottom line

Our reading

Our reading: Netflix is a global, subscription-led streaming entertainment business, with advertising and other revenue sources that were not material to revenue in 2025. [item1; item7]

Our reading: Its operating model combines recurring membership fees with substantial content spending, including cash requirements that can precede content amortization. [item7]

Our reading: The business faces competition for leisure time and depends in part on third-party rights holders, while its service technology, content offering and global delivery network are relevant sources of differentiation. [item1; item1a; item7]