In a stunning development for the streaming industry, Netflix NFLX is on track to achieve a milestone that seemed unthinkable just a few years ago. According to exclusive research from Omdia, part of TechTarget TTGT, presented at MIP TV London 2025, Netflix is projected to surpass Alphabet GOOGL-owned YouTube in total video revenues for the first time in 2025, marking a watershed moment in the digital entertainment landscape.

Revenue Projections Signal a Power Shift

While YouTube dominated the market in 2024 with $42.5 billion in revenues compared with Netflix's $39.2 billion, the tables are turning. Investors have responded enthusiastically to Netflix's performance, with NFLX shares surging an impressive 59.7% in the past year, significantly outperforming tech giants like Apple AAPL, Amazon and Disney, as well as the broader Zacks Consumer Discretionary sector.

1-Year Performance

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Netflix is projected to generate $46.2 billion in 2025, outpacing YouTube's expected $45.6 billion. This remarkable shift underscores Netflix's successful dual revenue strategy, generating $43.2 billion from subscriptions while building a growing advertising segment worth $3.2 billion.

The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $44.43 billion, indicating 13.92% year-over-year growth. The consensus mark for earnings is pegged at $24.58 per share, indicating a 23.95% increase from the previous year.

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YouTube, despite its massive reach of more than 2 billion users globally, will derive most of its revenues from advertising ($36 billion), with its premium subscription tier contributing $9.6 billion. This contrasting approach highlights Netflix's advantage in monetizing content directly through its subscriber base, which is expected to exceed 340 million paying members in 2025, with its content reaching more than 600 million users worldwide.

Strategic Growth Drivers

Netflix's ascension isn't happening by accident. The company has methodically executed a two-pronged growth strategy, which includes expanding its global subscriber base while simultaneously developing its advertising business since its late 2022 launch. This approach has transformed what was once a pure subscription service into a diversified entertainment powerhouse. The company’s price-tiered strategy has effectively captured market segments that previously found Netflix unaffordable.

The results speak for themselves. In fourth-quarter 2024, Netflix reported that its ads plan represented over 55% of new sign-ups across markets where it's available, with membership on ads plans growing approximately 30% quarter over quarter. This rapid adoption has Netflix executives projecting to double ad revenues again in 2025, following similar impressive growth in 2024.

Beyond advertising, NFLX's strategic expansion into gaming, live events, and international content production has created multiple growth engines propelling the company forward. These investments are yielding significant returns as Netflix continues to grow its share of screen time globally, cementing its position as the entertainment destination of choice for hundreds of millions of viewers.

However, the company's forward 12-month sales multiple of 9.1 exceeds its five-year median of 6.79, indicating that the stock may be trading at a premium to its historical valuation. Moreover, this multiple surpasses the Zacks Broadcast Radio and Television industry's forward earnings multiple of 3.89, suggesting that Netflix's valuation is stretched relative to its peers.

Price-to-Sales (Forward 12 Months)

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Content Slate Fuels Engagement and Growth

The company's content slate for 2025 looks exceptionally strong, featuring returning seasons of major hits like Squid Game, Wednesday, Stranger Things, Night Agent, Ryan Murphy's Monster, along with new films from acclaimed directors like Guillermo del Toro, Kathryn Bigelow, and Noah Baumbach.

The company's growing live programming segment, including WWE Raw, NFL games, and the recently secured rights to FIFA Women's World Cup in 2027 and 2031, provides additional engagement drivers. Their successful original film Carry-On demonstrated Netflix's ability to generate cultural buzz without theatrical releases, further cementing their industry leadership.

Increasing collaboration between YouTube, Netflix, and other industry players represents a maturing digital entertainment ecosystem where platforms can leverage each other's strengths.

A prime example is Netflix's use of YouTube influencers to promote hit series like Squid Game, driving subscriber growth through creator partnerships. This symbiotic relationship benefits both platforms, with significant audience overlap; 57% of YouTube users in the United States are also Netflix subscribers, while that figure rises to 67% in the United Kingdom.

Investment Outlook: Solid Buy Signal

Netflix's projected revenue dominance, expanding margins, and diversified income streams make it an attractive investment opportunity. The company expects to generate approximately $8 billion in free cash flow in 2025, creating substantial shareholder value. Their operating margin is projected to reach 29% in 2025, up from 27% in 2024, demonstrating impressive profitability growth alongside revenue expansion.

While the stock trades at a premium, Netflix's unique position at the intersection of technology and entertainment justifies this premium. The company's ability to outcompete both traditional media companies and tech giants like YouTube speaks to its exceptional business model and execution.

For investors looking to capitalize on the continued digital transformation of entertainment, Netflix represents a compelling opportunity. With its content leadership, expanding revenue streams, and improving profitability, 2025 could mark the beginning of Netflix's next chapter of market dominance, making now an ideal time to buy the stock. NFLX currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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