Netflix Co-CEO Ted Sarandos: Engagement Grew Just 2% Last Quarter

Netflix's global engagement rose just 2% in its latest reported period — a number co-CEO Ted Sarandos openly calls a problem for the $281 billion company.

"Overall, we're not growing as fast as I want us to, and we're working on making that move faster," Sarandos said at a Bloomberg conference in Los Angeles this week. "We are, though, also doing things that create a lot of headwind to that number."

The engagement figure stands out because revenue keeps climbing at double-digit rates in every region. Netflix remains the world's largest streaming service, according to Forbes. But Sarandos is not satisfied with the pace of growth in how much people actually watch.

Why is Netflix spending $1 billion on live programming?

To rekindle growth, Netflix is pushing beyond its traditional on-demand mix of scripted films and television into live entertainment — sports, wrestling, comedy and major cultural events. Sarandos said the company devotes 5% of its roughly $20 billion annual content budget, about $1 billion, to live programming.

The strategy is not designed to maximize hours watched. Live shows account for only about 1% of Netflix viewing. Instead, they serve a different commercial purpose. They attract new subscribers, give existing customers a reason to stay, and create more valuable ad inventory.

Live shows can also make Netflix feel less like a library people visit intermittently. That matters for churn — and for broadening the business beyond its historical reliance on movies and series.

What is happening in movie theaters?

Netflix is widening its theatrical ambitions and promoting movies with major built-in audiences.

Sarandos said Greta Gerwig's Narnia: The Magician's Nephew will get a wide theatrical release in 2027 before arriving on Netflix, followed later that year by the animated Charlie and the Chocolate Factory.

According to Deadline, Netflix plans to show Narnia exclusively in theaters for 50 days and Charlie for 47 days — substantially longer than the limited runs traditionally associated with Netflix originals.

The sequel to KPop Demon Hunters will get an even larger rollout. Sarandos told Deadline that audiences should expect a "very broad" theatrical debut for the follow-up, which he said would be a "big, broad, global" release.

Netflix appears to see four-quadrant movies — films capable of attracting children, parents, younger adults and older viewers — as especially suited to the big screen. KPop Demon Hunters falls under that category, Sarandos told Variety last month. He added that Netflix released more than 30 films in theaters last year, tailoring each run by title, city, marketing spend and number of days in theaters.

How does AI fit into the growth plan?

Netflix is expanding its use of AI to make film and TV production faster and less expensive.

In March, the company acquired InterPositive, an AI filmmaking technology firm founded by Ben Affleck, for $587 million. The technology targets mainly post-production work — adjusting color, adding visual effects, reframing shots. It cannot generate an entire film from scratch.

On Netflix's second-quarter earnings call in July, Sarandos said Netflix had already used AI on about 300 titles for planning and visual effects.

The picture that emerges is a company with double-digit revenue growth in every region but a co-CEO unsatisfied with demand itself. Whether $1 billion a year in live programming, longer theatrical windows and AI-driven cost cuts can lift engagement beyond that 2% will define Netflix's next growth chapter.