Their moat is in the content and licenses they've acquired.
You can't watch Stranger Things anywhere else. They make a lot of original content to widen their moat and keep eyeballs returning to their platform.
Netflix also currently has (I believe) exclusive streaming access to Breaking Bad (though you can "purchase" episodes on other platforms). And they maintain lots of these licenses to bolster their in-house content.
There will be more industry consolidation and eventually the content you want will live under one platform (when not sublicensed).
Of course they can. They already added ads. Have you not been watching?
> They have to continuously invest in content [...] They can't simply enshittify
Enshittification (as coined by Doctorow) has a very specific meaning. This is not it. They are only increasing their prices, and introducing ad supported packages for those who don't want to pay.
They are free to sell their content at any price they want, and we are free to leave at any time. No one is captive (unlike social media, as mentioned above, where you stay because all your friends stay).
Netflix (or any streaming service) users are not captive audience. The network effect for such services is next to nil.
If I don't like what Netflix offers, I will simply cancel my subscription. There is nothing that would keep me paying other than quality content.