Netflix is rewriting a new script.
Last week, the company suddenly replaced its content director, Bella Bajaria, just a few hours after having laid off 1,000 employees, a decision in which Bajaria had played a role. By Monday, film director Dan Lin also lost his job.
The departures of two top creative executives from the company indicate that the leadership of this streaming giant believes that the service needs a comprehensive adjustment to its content supply.
Insiders say that Co-CEO Ted Sarandos has been complaining internally for months that Americans are spending less time watching Netflix, and that the service lacks new popular shows. He also told his colleagues that he hopes the company, which has experimented in various fields from video games to podcasts, will strengthen its core television and film products.
On Tuesday, the company will release its third-quarter financial report and attempt to answer Wall Street's questions regarding its strategy.
The company that led the Hollywood streaming revolution has had issues for a year now, as it has struggled to produce hits on the scale of "Stranger Things" or "Squid Game."
Like many media companies, it struggles to attract an audience that spends more time watching YouTube.
Since the failed attempt to acquire Warner Bros. Exploration's film and television studios as well as HBO Max last year, the stock price of Netflix has been sluggish. Investors see this as a sign of the company's weakness, as its leaders have long stated that they are builders, not acquirers. Its stock price has fallen by more than 40% compared to a year ago, which was around the time when the acquisition efforts began.
The problem of making it difficult for audiences to become continuously addicted is becoming increasingly evident with Netflix.
According to analysis by company Antenna, as of the end of September, Netflix did not experience any month of net subscriber growth in the United States this year. Antenna tracks the purchasing of subscriptions by American consumers through sources such as credit card bills, but this does not include subscriptions purchased through wholesale bundled packages. Netflix has not disclosed the number of subscribed users since the beginning of 2025.
A spokesperson from Netflix refuted the data presented by Antenna, stating that it "cannot represent the business performance of Netflix."
Earlier this fall, Netflix launched a reorganization plan internally referred to as the "Meridian Project." Sources familiar with the matter said that executives discussed cutting up to 10% of the company's positions, but after discussions with heads of various departments, the final decision was to cut 6%.
On Wednesday morning, Salandos and co-CEO Greg Peters sent out a memo announcing layoffs. People familiar with the matter said that by 2 p.m. that same day, the laid-off employees were no longer able to access their work emails. A few hours later, Salandos told Bagaria that she had been fired.
Netflix On Thursday, it was announced that Peter Rice will replace Bajaria. Rice is a senior executive at Disney with extensive experience in film, television, and sports. He will begin working this week, overseeing a global content budget of approximately $20 billion, which includes scripted and unscripted series, films, as well as live events including sports.
On Saturday evening, Lin appeared at the star-studded Oscar Movie Museum gala alongside Salvador Sánchez, while Taylor Swift performed for Hollywood celebrities. On Sunday night, he attended a screening event organized by Netflix for La Bola Negra, a film considered a contender for the Oscars. On Monday, the company announced that Lin, who is best known for producing "The Lego Movie" and "The Joker," would be leaving, and Rice would take over related duties until a new film director is appointed.
Industry giants
Netflix remains the most powerful force in the subscription streaming media industry. Antenna states that in September, the rate of American subscribers canceling the service was only 2.1%, which is still the lowest in the industry. In the second quarter, Netflix reported double-digit percentage growth in revenue for each region.
According to an internal memo announcing layoffs, Netflix is on track to meet its previously announced annual forecasts. The company's goal for this year is to achieve a 13% to 14% increase in revenue and a operating profit margin of 31.5%.
The company has expanded its content offerings to increase engagement. Some newer categories, such as live sports, have been more successful than others like video games. According to a recent internal memo, only 3.5% of Netflix subscription users play games on a monthly basis. The memo states that this business is about 10% behind its coverage and engagement targets for 2026.
Video podcasts and creator content have enabled Netflix to add hundreds of hours of programming at a fraction of the cost of scripted series. During the company's most recent financial report conference call, Saldoros emphasized that building these new formats takes time, and that they are “progressive, not revolutionary.”
Change Strategy
Its declining engagement has reignited an old debate within the company: Is it because subscribers are not consuming more content due to the programming in Los Angeles, or is it because of the recommendation algorithm managed by engineers in Northern California?
Overturning the recommendation algorithm of Netflix – internally referred to as “playing tricks on the scales” – has long been prohibited, but in recent months, as executives have sought to increase the viewership of certain programs and new types of content, this practice has become more common. One of these individuals said that recently the company has stopped promoting games and podcasts, focusing more on core film and television products.
In addition, sources familiar with the matter said that executives also discussed whether to change the release schedule of certain programs in order to increase engagement. Netflix typically releases all episodes of a season at once, while many competitors release new episodes on a weekly basis. Salandos has been resisting this change. According to the company, Netflix data shows that members prefer to watch all episodes at once rather than having them updated weekly.
Netflix also discussed allowing customers to subscribe to other services within their applications, such as Peacock under NBC Global, as well as adding live streaming channels. In France, Netflix has already begun to allow subscribed users to watch programs from TF1, which include news.
Another change is that, after years of most movies being released directly online with only a few being shown in theaters for a limited period of weeks, the company has begun to bet on large-scale theatrical distribution for some of its films. The company is releasing films around the world in theaters, including “Charlie and the Chocolate Factory” and “The Chronicles of Narnia: The Magician’s Nephew,” which can only be watched at home at least 45 days later. This is a strategy commonly used by traditional film studios.
One day before the layoffs, Netflix released a psychedelic trailer for "Narnia." The trailer quickly garnered nearly 80 million views on YouTube.
