Netflix will lay off roughly 1,000 employees in its steepest cuts since 2022

Netflix will lay off roughly 1,000 employees, approximately 6% of its global workforce, in the steepest cuts at the company since 2022. Co-CEOs Ted Sarandos and Greg Peters announced the reductions in an email to employees on Wednesday.

The job cuts will mainly affect product, technology, legal, and human resources teams. Managers will tell employees whether their job has been cut “soon.” The memo stated Netflix’s mission is to entertain the world and requires discipline about prioritizing people and resources. Netflix said it did not have additional comments beyond the co-CEOs’ memo.

Growth under pressure

Sarandos told a Bloomberg Screentime conference last month that the company was “not growing as fast as I want.” Netflix’s viewing time has stagnated, and the main driver of new subscriber acquisitions has been its password-sharing crackdown and a cheaper, ad-supported tier. The platform has lacked water-cooler-type hits like “Stranger Things” and “Squid Game” that previously boosted subscriber growth and viewership. Netflix has been trying to expand beyond subscriptions and has diversified content into live sports, documentaries, and video games to compete for consumer attention.

Ross Benes, senior analyst at eMarketer, said Netflix has not been able to find another line of major revenue and remains reliant on a subscription business approaching a ceiling. “Eventually, because they’re nearing a ceiling with that, they’ll need another revenue stream to diversify, and that’s where it’s been more of a struggle,” Benes said.

Competitive landscape and consolidation

YouTube is cited as a major competitive threat to Netflix for viewer attention, and TikTok is also cited as a free platform attracting viewers away from the streaming service. The streaming industry is going through a period of consolidation. Paramount completed a $110bn acquisition of Warner Bros earlier this month to form Skydance. Netflix had pursued a deal with Warner Bros but was outbid by Paramount. The combined entity has plans to integrate Paramount+ and HBO Max streaming platforms. This year, Netflix faced doubts about its ability to sustain the growth that disrupted the US media industry by putting pressure on cable TV businesses.

The last major round of Netflix layoffs was in 2022, when it cut about 450 jobs after losing subscribers for the first time in more than a decade. Disney said last month it would lay off around 300 employees, the majority from HR and technology roles.

Market reaction and what’s next

Netflix shares, down about 25% so far this year, rose 0.7% on Wednesday. Netflix said it remains on track to deliver its full-year financial forecast. The company is due to report its latest quarterly results on 20 October. Netflix had about 16,000 employees at the end of last year. The Wall Street Journal first reported on the memo.