A recent analysis suggests that user churn could become the central threat undermining Netflix's massive subscriber advantage.

Despite maintaining its position as the streaming leader with over 325 million global paid members, the company's much-touted low user churn rate is now facing a test.

Over the past 12 months, Netflix (NFLX) stock has fallen by more than 40%. In April, the company's second-quarter performance guidance fell short of expectations, and its operating margin declined year-over-year.

More concerning to the market are emerging signs of weakening user engagement. Reports indicate that during their annual business review this spring, Netflix executives highlighted declining user participation as a key issue. Data shows that in April, Netflix's share of U.S. television viewership dropped to 7.8%, hitting a new low since May 2025.

The analysis points out that if user engagement continues to slow and customer churn rates begin to rise, Netflix's core structural advantage will gradually erode.

To address this challenge, Netflix is actively adjusting its strategy. This includes exploring the introduction of 24-hour live channels, considering bundling other third-party streaming services onto its platform, and even researching bids for the broadcast rights to the 2030 and 2034 FIFA World Cups.

The market anticipates that in the upcoming earnings call scheduled for July 16, investors will focus heavily on user churn in the U.S. market following recent price hikes, explanations for weak engagement trends, and the outlook for content spending beyond the 2026 fiscal year.

Despite facing near-term pressures, some analysis remains optimistic about Netflix's long-term prospects, viewing it as a company with profitable growth potential.