Netflix’s Engagement Slide Puts YouTube Competition in Focus

YouTube now captures nearly twice Netflix’s share of U.S. television viewing, a gap that is sharpening investors’ concerns about whether the streaming leader can keep audiences engaged without spending more.

In July, YouTube reached a record 14.2% of U.S. TV viewing, while Netflix’s share stood at 7.8%, according to Nielsen data cited by HSBC. YouTube’s share rose 0.8 percentage point year over year; Netflix’s fell 1 point. HSBC analyst Mohammed Khallouf said on Sept. 22 that Netflix’s original shows were drawing a weaker reception, making a near-term rebound in engagement unlikely.

The figures do not prove viewers are swapping one service for the other. YouTube’s mix of creator videos, music and other formats differs from Netflix’s scripted series and films. But the competition is shifting onto the same screen, where both platforms seek hours of attention, subscription or advertising dollars, and a place in viewers’ routines.

YouTube is pushing deeper into that contest. HSBC said it is offering top creators financing, larger payouts and priority promotion in exchange for exclusivity, while a new “Shows” feature gives episodic content a more TV-like home. That approach may raise the cost for Netflix if it wants to build its own creator-content library, Khallouf argued. He also flagged fatigue among streaming customers: U.S. households’ monthly spending on subscription video services reached $70 in 2025, up 22% year over year, according to the note.

Investors have little patience for evidence of weaker viewing. Netflix’s first-half hours watched rose just 2%, while second-quarter revenue increased 13% to $12.6 billion. That contrast matters: hours are not the same as sales, but engagement helps support renewals, pricing and the value of Netflix’s ad tier.

HSBC cut Netflix to Hold from Buy and lowered its price target to $76 from $96. The call followed Wells Fargo’s Sept. 18 downgrade. By Sept. 23, Netflix shares were down 11% for September and 23% for 2026, even as the S&P 500 was up 13%, Yahoo Finance reported. The central question is not whether YouTube is popular. It is whether Netflix can turn a weaker viewing trend around without inflating content costs or diluting the distinctive programming that keeps subscribers paying.