Netflix (NFLX 1.74%) has been on a roller coaster for a few years. The company's valuation climbed as the COVID-19 pandemic took hold, only to drop as inflation climbed.

But what might the company's future look like? Let's explore.

A focus on gaming

From Netflix's roots as a DVD rental service to its current position as the world's largest stand-alone video-on-demand streaming operator, movies and TV shows have always been at the heart of its business. But in recent years, the company has had its eye on another part of the entertainment industry -- video games.

In November 2021, Netflix launched a series of iOS and Android games that could only its subscribers could access. The endeavor was met by a relatively muted response, as reportedly less than 1% of the company's subscriber base engaged with its titles.

Despite this, Netflix seems to be in it for the long haul. The streamer has since announced its intention to expand into cloud gaming by streaming titles directly to a player's device via an internet connection.

 Netflix co-CEO Ted Sarandos told investors last year:

[W]e believe that the future of television, of films, and of games is streaming. And we're working hard to continue to grow our lead in this area, while we continue to bring healthy returns. And we can only do that by bringing the shows, the films, and games that people love.

For investors, Netflix's focus on the gaming sector may well be encouraging. According to Grand View Research, the global video game industry was worth just under $200 billion in 2021 and is projected to reach more than $500 billion by 2030. By contrast, the research company notes the worldwide video-streaming industry could be worth just under $420 billion by 2030.

Dealing with sub-accounts

Netflix started cracking down on password sharing last year by charging users in select markets an additional fee when it detected accounts were being accessed at more than one household. It was expected the streamer would introduce the policy in the U.S. during the first quarter of this year, but the company announced during its fiscal Q1 earnings call that it was delaying the move, in part because of what it had seen in other territories.

"[W]e felt, based on those results, it was better to take a little bit of extra time, incorporate those learnings and make this transition as smooth as possible as we can for members," said Netflix co-CEO Greg Peters. "So we are going to launch this new improved version broadly, including in the United States in Q2."

Peters acknowledged that Netflix had seen a "cancel reaction" when asking customers to pay extra for sub-accounts, but the executive suggested the churn was not likely to have a long-term impact on revenue. "[W]e build out of that, both in terms of membership and revenue as borrowers sign up for their own Netflix accounts, and existing members purchase that extra member facility for folks that they want to share it with," noted Peters.

While Peters' is sounding optimistic, investors may question the company's wisdom in holding back on the full rollout of its sub-account strategy -- particularly as there seem to be some near-term impacts. According to a Wall Street Journal report, Netflix is set to rein in its operating expenditures and content production costs this year by as much as $300 million. Unnamed sources for the report suggest Netflix is being forced to tighten its belt because the revenue that it expected to generate from sub-account charges won't materialize for some time.

Netflix 2026

Netflix's foray into gaming and its decision to combat password sharing could play out well for the company over the next few years. By 2026, the company may well have rolled out sub-account fees to the more than 190 markets it serves and might also be a serious player in the game streaming space. But of course, the inverse might also be true, particularly if missed account-sharing revenue means there's less money for Netflix to invest in its nascent gaming business.

Investors should pay attention to whether Netflix sticks to its Q2 schedule for introducing sub-account fees in the U.S. or opts for another delay. While such a move might not be fatal, it could shake stakeholder confidence about whether the company can take the risks it might need to realize its long-term potential.