Before Thursday's call, I set out three tests for Netflix's second quarter: what happened to viewing hours, whether management would argue that raw hours understate the value of its audience and whether a free, advertising-funded version of Netflix would enter the discussion.

The call answered all three, one of them almost word for word.

Netflix Views Viewership Differently

Viewing hours grew 2% in the first half of 2026, co-CEO Greg Peters said in the company's earnings interview, adding 1.5 billion hours and slightly improving on the 1.5% growth recorded a year earlier.

That is growth, but not much of it. Before giving the figure, Peters reframed the debate, saying, “There is not a linear relationship between view hours and revenue and profit, because all hours are not created equal.”

Live programming is his clearest example. Peters said it will consume 5% of Netflix's content budget this year but produce only 1% of viewing hours, even though six of the company's 10 biggest sign-up days over the past five years came from live events.

That argument arrived precisely on schedule. Netflix is now asking investors to judge engagement not only by how long people watch, but also by what that viewing does for subscriptions, advertising and customer loyalty.

Peters described the company's framework as........

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