Yes the receiver HDMI output has to be connected to the TV HDMI-ARC input. ARC saves having to use the equally good optical audio output which would require a toslink optical audio cable,
You may also have to assign ARC to an input name in the Yamaha menu. Check the manual.
You may also have to turn the TV speakers off in the TV menu. Again check the manual.
Try using the TV tuner, another app, or another source connected directly to the TV to determine if the issue is Netflix.