Netflix, Spotify See Revenue Growth Moderate to 10-16% Amidst Market Saturation

Streaming industry leaders Netflix and Spotify are increasingly focusing on profitability and diversified revenue streams as their core subscription growth moderates, typically seeing annual revenue increases in the 10-16% range. This shift reflects a maturing market where rapid, exponential expansion is becoming less feasible for established players.

Netflix, once characterized by hyper-growth in subscriber numbers, has transitioned to a strategy emphasizing average revenue per user (ARPU) and operational efficiency. The company reported a 15.6% revenue growth in 2024, driven by initiatives like its ad-supported tier and a crackdown on password sharing. Its global market share stood at 21-23% in 2025, maintaining a leading position despite intense competition. The company's focus has moved from aggressive subscriber acquisition to maximizing value from its existing base and expanding into new areas. Netflix's ad-supported plan attracted over 91 million monthly active users by Q1 2025, with 55% of new sign-ups choosing this option, aiming to sustain revenue growth and improve operating margins.

Similarly, audio streaming giant Spotify reported a 10% year-on-year revenue growth in Q2 2025, alongside an 11% increase in monthly active users (MAUs) to 696 million and a 12% rise in paid subscribers to 276 million. Despite these gains, the company missed its revenue and operating profit targets for the quarter, largely due to underperforming ad-supported revenues. CEO Daniel Ek acknowledged that the ads business had been "moving too slowly." Spotify is also exploring new avenues, such as audiobooks, and aims for significant global subscriber expansion, with Ek targeting 10-15% of the world's population. However, the company faces challenges including rising royalty costs and legal disputes, such as a lawsuit from the US Mechanical Licensing Collective regarding its premium service reclassification.

The trend observed in both companies aligns with broader shifts in the entertainment and media industry. As market saturation leads to "subscription fatigue" among consumers, streaming services are compelled to diversify their business models. This includes a greater emphasis on advertising revenue, content differentiation, and strategic international growth, particularly in emerging markets where potential for new user acquisition remains higher. This strategic evolution is encapsulated by the observation from X user @saila, who stated, > "People watch these videos and get outraged without understanding the why. Certain companies: - Netflix - Spotify - etc Have a massive cash-cow. They have little to no reasonable expansion path to double/triple their growth (+15% & +16%)."