From Screen Time to Play Time: Can ads and games power Netflix’s $120 billion valuation
Netflix’s $120B market surge faces a test as it bets on ads and gaming for growth. While its ad-supported tier gains users, revenue impact is modest. Gaming, a $1B investment, has yet to drive engagement.
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Netflix’s blockbuster year on Wall Street marked by a $120 billion surge in market value is about to face a defining test, Reuters reported. When the streaming giant reports its third-quarter results on Tuesday, all eyes will be on whether its high-stakes bets on advertising and video gaming can sustain the momentum that once made it a market darling.
As per a report by Reuters, analysts expect Netflix to post its fastest revenue growth in more than four years, powered by a stellar content slate that includes “KPop Demon Hunters”, now the platform’s most successful movie ever and the second season of “Wednesday”. The final season of “Stranger Things,” due later this year, is also expected to drive subscriber engagement through the festive quarter.
Still, beneath the surface of this content-fueled optimism lies a deeper question: Can Netflix’s new revenue engines, ads and gaming, deliver long-term profitability?
The Ad Tier: Early Promise, Big Potential
Since its launch, Netflix’s ad-supported tier has quietly emerged as a powerful growth lever. It now accounts for over half of new sign-ups, with nearly 94 million users as of May. Yet, despite this growing base, its financial contribution remains modest.
Reuters reported, analysts estimate the ad tier generated around $662 million in revenue in the September quarter, a small slice of Netflix’s expected $11.5 billion topline, up 17.2% year-on-year.
Industry watchers believe the ad tier could become Netflix’s biggest growth driver in 2026, as marketers flock to its premium inventory and global scale.
Gaming: A Billion-Dollar Bet That’s Yet to Pay Off
If advertising is Netflix’s near-term growth play, gaming is its long-term moonshot but one that has yet to pay off, as reported by Reuters. The company has invested roughly $1 billion in acquiring studios and developing more than 120 mobile titles, from “GTA: San Andreas” to “Squid Game: Unleashed”.
Despite that, the results have been underwhelming. Research firm Omdia estimates gaming has increased user engagement by less than 0.5% since launch. The problem, analysts say, lies in Netflix’s lack of iconic IP compared to rivals like Warner Bros. Discovery, whose DC Comics and film universes lend themselves more naturally to games and merchandising.
Co-CEO Greg Peters has likened the slow build to Netflix’s entry into Japan, a market that took a decade to crack. “It took us a long time to get there,” Peters said at the Bloomberg Screentime conference. “The gaming situation is not dissimilar.”
Wall Street remains cautiously optimistic. With the company no longer disclosing subscriber numbers, investors are shifting focus to revenue growth, profitability, and engagement. Netflix’s net profit is expected to jump 27% to $3.01 billion, signaling robust operational discipline.
As Netflix turns the page to its next growth chapter, advertising might be its most bankable storyline yet while gaming remains the high-budget subplot still searching for an audience.
