Netflix’s plot to become cable hits a wall

Things aren’t going so smoothly for Netflix right now.

While the streamer is making more money and has more subscribers than ever, daily viewing hours are in decline according to Nielsen data, and its hit shows are struggling to retain audiences beyond the first season, Bloomberg reports. Engagement levels have become a frequent discussion topic among Netflix executives according to the Wall Street Journal, and investors are starting to worry.

All this could end up changing what Netflix offers to customers. The Journal reports that Netflix is now exploring a lineup of cable-style streaming channels, and that it may copy Amazon’s strategy of selling add-on subscriptions to other services like Peacock. Netflix is also planning to stream a selection of short-form videos in a nod to YouTube and TikTok.

These changes could advance Netflix’s goal of being the only streaming service you really need, but they may also lead it further astray from what you originally signed up for.

How Netflix is becoming more like cable

While Netflix used to compare itself to HBO, lately it’s been fashioning itself more like a miniature cable package.

It’s expanded into sports with exclusive NFL, MLB, and WWE coverage, and is reportedly eyeing rights to the next World Cup. Its focus on prestige TV has given way to reality TV, such that non-fiction now comprises more than half of Netflix’s original programming. And after a brief period in which studios pulled their old hits from Netflix, the streamer has returned to licensing more of them, giving broadcast TV shows like “Suits” a second life in streaming syndication.

The programming changes have dovetailed with aggressive price hikes. Netflix’s Standard plan has jumped from $14 to $20 per month over the past five years, and the Premium plan with 4K video now costs $7 per month extra. Sharing an account with someone outside the home, which Netflix used to allow at no added cost, now carries a $10 per month surcharge. That means a single household could be paying $37 per month for Netflix alone.

Even so, Netflix enjoys a unique hold on streaming subscribers, with the lowest cancellation rates in the industry even after it raises prices. As consumers try to control their streaming bills, they may look to cut other services before dropping Netflix, which in turn gives Netflix more latitude to expand its offerings and raise prices further.

The result will look a bit like basic cable in its heyday, with Netflix representing the de facto pay TV package in most peoples’ homes. But if it wants to keep growing like cable did, it needs to make sure people keep showing up to watch, and that’s where it’s running into trouble.

An unforeseen challenge

Theories abound for why Netflix’s engagement is stalling. Bloomberg’s Lucas Shaw mentions long gaps between seasons and the inherent limitations of binge releases. You might also blame a perception of quantity over quality or viewers’ reluctance to get into shows until they’re certain Netflix won’t cancel them.

The only trend that’s really new, though, is that viewers are finding other ways to fill their time.

Most notably, they’re turning to YouTube, whose share of U.S. daily TV viewing jumped from 8.1 percent in 2023 to 13.4 percent in 2026 according to Nielsen. Netflix’s share only increased from 6.9 percent to 7.8 percent over the same period.

Compared to Netflix, YouTube is low-friction. You don’t have to pay anything or sign up to watch, and the content seldom feels like a major commitment. This helps explain why Netflix is trying to bring in short-form video from publishers like Buzzfeed and Conde Nast: It’s an attempt, maybe a desperate one, to claw back some of that easy engagement.

Same goes with the rumor that Netflix might add a lineup of round-the-clock streaming channels. That may sound like a throwback to cable, but it would also be a nod to free streaming services like The Roku Channel and Pluto, which have done the channel-surfing thing for years. (The Roku Channel, by the way, has also seen a jump to 3 percent daily viewing share. Three years ago, it wasn’t even on Nielsen’s radar.)

As for those rumored add-on subscriptions to services like Peacock, that could just be another way for Netflix to prevent users from spending TV time elsewhere. It’s also a form of insurance against churn as Netflix continues to raise prices, as cancellation becomes more of a hassle when multiple services are involved.

Whether any of this would actually solve Netflix’s engagement issues is hard to say, but it’ll certainly complicate what Netflix is offering to customers. What was once a simple goal of serving up the perfect show may give way to a sprawl of viewing modes, content types, and subscription bundles. In its zeal to become cable, Netflix risks losing the gravitational pull that got it here in the first place.

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