The S&P 500 (SNPINDEX: ^GSPC) is down more than 7% over the past year, leading some to question which industries present the best option when looking for growth stocks.

The streaming video space expanded dramatically over the last decade. In 2014, an Insider Intelligence study showed that 43% of U.S. households subscribed to a major streaming service. By 2022, that figure had climbed to 83%. But with growth now slowing across the sector, deciding which streamer to back is not necessarily simple. Netflix (NFLX -0.02%) is the industry leader by market share, but is it also a smart investment? Let's break it down.

A rollercoaster 12 months

Netflix's fiscal 2022 first-quarter results surprised many when the company revealed it lost subscribers for the first time in more than a decade. The streamer also projected an even larger attrition in the subsequent quarter, leading to its share price cratering by 35%.

In a move to reignite growth, Netflix announced a crackdown on password sharing and a new lower-cost ad-supported tier. Netflix's $6.99 a month Basic with Ads plan launched in November 2022, and the company has introduced additional fees for multi-household account usage across multiple markets.

These efforts have seemingly had some effect, with Netflix reporting in fourth-quarter 2022 that it had reached 230.7 million subscribers, up more than 4% year over year. However, some believe the streamer will lose viewers again in 2023 -- particularly when it begins to tackle account-sharing in the U.S.

Insider Intelligence notes that password-sharing is popular among younger Netflix viewers, and projects that the company could see a 4.1% decline in viewership this year among U.S. users aged 18 to 24. For viewers aged 25 to 34, that decline is expected to be 2.1%.

A push into gaming

For Netflix stakeholders, the prospect of a decline among younger users is certainly something to monitor. After all, marketers have long coveted the 18-34 consumer bracket because of the potential to convert them into life-long customers. Fortunately for Netflix's investors, the company might have a strategy that speaks to that demographic.

Netflix stepped into the video game space in November 2021 when it launched a batch of iOS and Android games that were exclusively available for its subscribers. The streamer has also acquired several game studios, and more recently, outlined its ambitions to get into the cloud gaming space. That last piece is still some time away, but as Netflix co-CEO Ted Sarandos previously stated, the company firmly believes the future of gaming is in streaming.

Of course, Netflix is not the first company to make such a strong proclamation about cloud gaming. Alphabet's (GOOGL -1.40%) (GOOG -1.43%) Google, Amazon (AMZN 0.16%), and Microsoft's (MSFT -0.98%) Xbox division have all gotten into video game streaming in recent years, but the story is mixed. Google Stadia shut down in January 2023, and Amazon's library of Luna games is starting to thin. Microsoft has ostensibly had more success, counting approximately 20 million Xbox Cloud Gaming users -- though an undisclosed number of those players are using the service for free to engage in Fortnite battles.

Adapting to a changing landscape

Though Netflix is yet to enforce its password-sharing rules in the U.S., the company is clear that it understands what's at stake.

"We'll see a bit of a cancel reaction to that," noted Netflix Chief Operating Officer Greg Peters during the company's last earnings call. "And then, clearly, our job is to continue to grow value ... to have more amazing titles that people cannot wait to see."

For Netflix stakeholders, the possibility of the company reporting another subscriber drop could be a test of nerves. And with Netflix's gaming offerings yet to truly catch on with its customers, some may wonder if the streamer has what it takes to make a dent in the cloud gaming universe.

Even with all that said, it is still important to remember Netflix has a history of finding success in new sectors. After all, the company started life as a DVD rental-by-mail service and yet managed to segue into streaming video at a time when the technology was still nascent.

Investors should pay attention to Netflix's subscriber numbers over the coming quarters. If it shows a significant dip in users, then stakeholders may not have the stomach to wait for the company to make a big splash in gaming.