New York and Los Angeles | The New York Times A lot seems to be going right for Netflix these days. The company remains by far the most-watched paid streaming service in the world, with more than 325 million subscribers.
Still, on Wednesday (14), Netflix laid off around 1,000 employees, approximately 6% of its staff — its biggest round of cuts in four years. And, on Thursday (15), he promoted an abrupt change in leadership, removing Bela Bajaria, who supervised all of the company's TV series, films, live events, sports and video podcasts, and replacing her with Peter Rice, a veteran of Fox and Disney.
Two interconnected factors helped drive the changes, which resonated throughout Hollywood this week. The company is not growing fast enough, as Ted Sarandos, the company's co-chief executive, recently said. Additionally, Netflix shares have plummeted more than 40% in the last year.
Netflix has seen the time viewers spend on its platform stagnate, while struggling to find new global hits to replace hit series like "Stranger Things", which ended last year. YouTube, one of Netflix's biggest competitors, increased its share of television time in the United States last year, while Netflix's share decreased, according to Nielsen.
In September, the streaming service had its worst Emmy performance in a decade, even though it spends more than three times what it did on content in 2016. And some of the biggest names Netflix had attracted with lucrative production deals have left for competitors.
The Duffer brothers, creators of "Stranger Things," joined Paramount last year. "Stranger Things" executive producer Shawn Levy announced last month that he was leaving the company for Disney. Director David Fincher, who brought "House of Cards" to Netflix and will release his most recent film, "The Further Mis-Adventures of Cliff Booth", on the service at the end of December, chose to let his contract with the company expire; and Noah Baumbach ("Marriage Story," "Jay Kelly") went to Warner Bros.
"Stocks are falling for a reason: There is a perception that engagement challenges will create headwinds to revenue growth," said Rich Greenfield, founder of research firm LightShed Partners.
Netflix's share price began to fall last year when the company made an audacious bid for Warner Bros.' studio and streaming businesses. Discovery. The possible acquisition, in which Netflix was willing to spend more than US$80 billion, seemed to contradict a central premise: that Netflix was doing very well producing successful films and series on its own and did not need to seek help outside the company. "We are builders, not buyers" was a phrase repeated by Sarandos for years.
But in announcing the deal, Sarandos said Warner Bros.'s efficient studio operation had made the difference. it would be a crucial asset for the company. "Our collection of projects under development is quite limited", he stated at the time.
In the end, Netflix lost the coveted deal to Paramount Skydance. At a Bloomberg conference last month, Sarandos acknowledged that "the deal itself has kind of messed up the company's narrative for investors."
But he said he didn't regret the attempt. "You have to be willing to put the company's narrative at risk for something that is good for the business in the long term," he added.
Worrying audience numbers contributed to this. Recently, Netflix stopped highlighting the number of subscribers in its reports and started reporting how much time each user dedicates to their programs. It is one of the few streaming services to release data in this way, and observers have been tracking the drop in numbers generated by series and films compared to the past.
Popular series, including "Treta", "The Night Agent" and "Avatar: The Last Airbender", recorded significant drops in audience in their most recent seasons, according to Netflix metrics. And no film released this year became a big hit, unlike last year, when "K-Pop Warriors" and "The Fresh Prince of Bel-Air 2" dominated the cultural scene and were big hits on the service.
Third-party metrics weren't much more favorable either. Netflix accounted for 7.8% of all television time in the United States in July, according to Nielsen, a drop of one percentage point from last year. YouTube's share exceeds 14%, while Disney's streaming services (4.7%), Prime Video (4.2%) and everyone else are far behind.
Sarandos acknowledged in a memo to employees on Thursday that he saw the change in the company's leadership as "an opportunity to take our catalog to another level", especially in the United States. He only informed the esteemed Bajaria of his resignation at the end of Wednesday, hours after the company announced the cuts, according to two people familiar with the conversation.
Bajaria, who joined the company in 2016 and succeeded Sarandos as content director in 2023, favored series and films aimed at the general public, a characteristic she once compared to a "gourmet burger" — content that was "sophisticated and commercial at the same time", she told The New Yorker magazine.
Now, Netflix is bringing on Rice, an experienced executive with three decades of experience in film and television. He was once a producer. He ran a film studio, Fox Searchlight. And he headed a broad television division at Disney. His time at Fox included directing independent hits such as "Little Miss Sunshine", "Juno" and "Slumdog Millionaire?", which won the Oscar for best picture in 2009.
Those who have worked with him describe him as both someone who knows how to function within a large organization and as someone who can talk to directors with complex personalities in ways that improve their work. When Rice was fired from Disney, director Danny Boyle, who worked with him on "Slumdog Millionaire?", praised him as "the best executive I've ever worked with."
"I always thought he was destined to run a big company," said Joe Pichirallo, a professor at New York University's Tisch School of the Arts and former Fox Searchlight executive, who described Rice's taste as sophisticated and approachable. He added: "A hamburger wouldn't fit my definition of Peter Rice."
