Netflix can’t fire its way out of this downward spiral

Netflix co-CEOs Ted Sarandos and Greg Peters assured investors this week that they have nothing to be concerned about. Sure, the company was going to lay off 1,000 employees, downsizing its product, tech, and legal departments, and was ousting its chief content officer, film chairman, and film vice president. But it had also hired a new COO — “one of the most effective at-scale operators in the entertainment industry,” Sarandos said — to turn things around.

Though executive shake-ups aren’t uncommon, having so many of them back to back would send a concerning message even in the best of circumstances. With Netflix, however, the situation looks undeniably grim given the streamer’s recent troubles with missed ad revenue targets, sluggish growth, and a failed attempt at acquiring Warner Bros. Losing WB to David Ellison’s Paramount was a huge blow — that merger would have given Netflix an easy way to expand its catalog, grow its user base, and build a more established presence in movie theaters. The company now has to navigate those challenges on its own while also figuring out why its current content slate hasn’t resulted in record profits.

While Netflix has put out some well-received fare like East of Eden, Adolescence, and The Diplomat, the company is well known for canceling series before they’ve even had a chance to build an audience. People frequently complain that they rarely see advertisements for Netflix’s new projects, but when they do, it tends to be for weird misfires like The New Stanford Prison Experiment and Wonka’s The Golden Ticket. In each of the recent executive firings, you can see Netflix trying to signal to investors and the public that it has a clear understanding of what hasn’t been working with its output from the past few years. There’s no denying that Netflix’s recent lineup has been lackluster, but these issues feel like they’re endemic to the company itself rather than something that can be blamed solely on a trio of executives.

Sarandos insisted to investors that Netflix’s “content around the world is largely working,” but he admitted that the company needs “better execution” in the US, where business is “just not growing as fast as it could or as fast as we’d like.”

Netflix’s push into more markets around the globe was largely led by Bela Bajaria, who led TV and content at Netflix over the past decade. Bajaria ushered the streamer into a new era of being a hub for unscripted programming, sports, and internationally produced projects. Bajaria is part of the reason that a Netflix subscription gives you access to WWE and Lupin as well as Bridgerton.

On paper, Bajaria did exactly what she was hired to do. She expanded and diversified Netflix’s library of content, hoping to attract more people to the platform. Bajaria was instrumental in the production and rollout of international series like Money Heist and Squid Game — the latter of which became a global phenomenon and boosted subscriptions while also winning the streamer a few Emmys. Netflix’s current approach to acquiring and distributing international programming has been so successful that Sarandos said the company has no plans to change its strategy. But it seems that success was not enough to protect Bajaria’s job.

In a statement about incoming COO Peter Rice’s hiring and Bajaria’s dismissal, Sarandos thanked her for her “dedication, innovation, creativity and leadership” and said he was grateful for “everything she’s done to help Netflix entertain the world.” But that gratefulness didn’t exactly gel with recent reports that Bajaria is being used as a scapegoat and was axed with little notice.

Film chairman Dan Lin — who joined Netflix in 2024 and reported directly to Bajaria — exited Netflix in a somewhat similar fashion to his former boss. After years of courting filmmakers with massive production deals, Netflix hired Lin to help it rein in its spending. Lin had a strong track record of producing financial hits for other studios, like Warner Bros.’ The Lego Movie and Disney’s live-action Aladdin. Lin also appointed Doug Belgrad as VP and tasked him with overseeing Netflix’s lineup of original content. By all accounts, Lin did exactly what Netflix courted him for, and his mind for austerity was aligned with the company’s larger goals. But as The Hollywood Reporter notes, Lin’s brusque personality could sometimes lead to friction with some of the high-profile talent Netflix is in business with, like Narnia: The Magician’s Nephew auteur Greta Gerwig and AI startup InterPositive founder Ben Affleck.

While much of Netflix’s recent programming is the product of Bajaria, Lin, and Belgrad’s leadership, they were not the only people responsible for turning the streamer into what it is today. In recent years, Netflix has also gotten into podcasts and gaming — initiatives that have often felt like desperate attempts at clawing back attention from rivals like YouTube, TikTok, and any one of the free ad-supported television platforms on the market. The fact that there are so many other different services that Netflix’s subscribers might prefer to spend more time on is one of the biggest challenges. And many of these competitors have become more attractive to customers as Netflix has continuously raised its prices.

Aside from introducing ad-supported tiers, forcing subscribers to pay more has been Netflix’s primary method for revenue growth. Netflix isn’t unique in that regard — all of the major streamers are doing it — but it has undoubtedly soured some people on the platform at a time when its offerings haven’t always felt like they justified their price. Even when Netflix has stumbled its way onto unexpected gems like KPop Demon Hunters, the company doesn’t always seem to have the strongest game plan to capitalize on their success. Rice’s hiring does suggest that Netflix knows it has to do things differently, and his past may provide some insight into the streamer’s future plans.

Before coming to Netflix, Rice served as 21st Century Fox’s president until the studio was acquired by Disney. Rice became Walt Disney Television’s chairman in 2019 and oversaw production for a number of the company’s networks, including ABC and FX. And after being fired by Bob Chapek in 2022, Rice pivoted into producing projects like Jason Reitman’s Saturday Night, 28 Years Later, and the upcoming Elden Ring movie. Rice’s roots in traditional studio film development points to Netflix getting even more serious about screening its films in theaters. The streamer already has plans to give The Magician’s Nephew and the KPop Demon Hunters sequel sizable theatrical runs, and it is currently trying to secure Javier Calvo and Javier Ambrossi’s La bola negra an Academy Award at the upcoming Oscars.

Having a larger presence in movie theaters won’t solve all of Netflix’s problems, but it could help shift the way that people perceive the platform and its catalog. And in Sarandos’ assertion that Rice has a deep understanding of talent relationships, you can hear that the co-CEO is banking on his new COO to convince filmmakers that Netflix is where they need to bring their latest ideas. Rice’s hiring makes for a compelling narrative about Netflix finding its way forward by relying on the instincts of an industry veteran known for effortlessly jumping between the film and TV worlds. But that narrative doesn’t feel quite as convincing when you look back at the way Netflix’s partnerships with directors like David Fincher, Shawn Levy, and Noah Baumbach resulted in some pretty terrible projects.

In order for Netflix to really turn the ship around, it has to realize that content is only one piece of the puzzle. Splashy new movies and series won’t mean much if people don’t feel that the service is financially accessible, but Netflix’s vague allusions to “improving” monetization suggest that the service is only going to get more expensive. Right now, Netflix needs to be focused on demonstrating that it has a clear plan for how it can move into the future. The company can start by acknowledging the larger issues with its business model instead of simply throwing executives under the bus.