{"id":804623,"date":"2026-10-16T16:00:08","date_gmt":"2026-10-16T16:00:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/804623\/"},"modified":"2026-10-16T16:00:08","modified_gmt":"2026-10-16T16:00:08","slug":"why-did-netflix-just-make-a-huge-round-of-layoffs","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/804623\/","title":{"rendered":"Why Did Netflix Just Make a Huge Round of Layoffs?"},"content":{"rendered":"

\n\tIn 2025, Netflix<\/a> notched a net profit of $11 billion on a 16% increase in revenue, to $46.6 billion. It expects revenue growth to cool off this year, projecting an increase of 13%-14%, while the streamer is aiming to boost operating margin by 200 basis points, to 31.5%. It has a healthy balance sheet, with $9.1 billion in cash and equivalents and very manageable total debt of $14.4 billion as of June 30.<\/p>\n

\n\tSo why did Netflix, which is still throwing off a good chunk of change, this week lay off around 1,000 employees<\/a> \u2014 its biggest cutback to date?<\/p>\n

\n\tCompanies often make layoffs in crisis mode, such as when they\u2019re facing near-term revenue shortfalls and they simply can\u2019t make payroll. That\u2019s not the case here. But Netflix faces a festering pain point.<\/p>\n

\n\tSpecifically, investors are worried about the slowdown in its U.S.\/Canada region \u2014 which has raised questions about its long-term growth trajectory. For the second quarter of 2026, Netflix\u2019s UCAN revenue decelerated from 14% the prior quarter to 10% (partially due to its recent price hikes<\/a>). The company also issued Q3 revenue guidance below analyst expectations. Shares of Netflix are down 20% year-to-date on fears the streamer\u2019s days of double-digit gains are coming to an end.<\/p>\n

\n\tNetflix\u2019s 6% reduction in force and the move to boot chief content officer Bela Bajaria<\/a> \u2014 replacing her with well-regarded industry veteran Peter Rice, who hails from Disney and 21st Century Fox \u2014 signal its attempts to get in front of the issue.<\/p>\n

\n\tMultiple industry sources told Variety they think Bajaria is being made the scapegoat for Netflix\u2019s larger problems. But content is the main engine that powers Netflix\u2019s financials. As Variety\u2019s analysis of Bajaria\u2019s exit<\/a> noted, Netflix hasn\u2019t produced a \u201cculture-defining hit in the vein of \u2018Stranger Things\u2019 in quite some time.\u201d To be sure, 2025\u2019s \u201cKPop Demon Hunters\u201d took the world by storm, but that was produced by Sony Pictures Animation.<\/p>\n

\n\tBack to the all-important UCAN region: Total viewing hours in the U.S. and Canada declined in Q2, according to BMO Capital Markets analyst Brian Pitz. Netflix\u2019s parting ways with Bajaria and hiring Rice \u201csuggest[s] to us that engagement trends may have softened further in 3Q26E,\u201d Pitz said in a research note Friday. The change in content leadership prompted the Wall Street firm to lower revenue estimates for Netflix\u2019s Q3 and Q4 by around 1% each and to also reduce its 2027 revenue forecast by 1.5%. BMO\u2019s model, Pitz added, \u201cconservatively does not assume a UCAN revenue acceleration\u201d until 2029.<\/p>\n

\n\tNetflix co-CEO Ted Sarandos, in a memo to staff<\/a> Thursday about the executive shake-up, seemed to acknowledge that the company needs a more robust content lineup in the U.S.\/Canada region. Sarandos wrote that he sees \u201can opportunity to take our slate to the next level, especially in UCAN where we have an outsize impact in creating big, buzzy hits that our members love and drive conversation around the world.\u201d<\/p>\n

\n\tAnd what about the tranche of 1,000 employees being laid off? Sarandos and co-chief Greg Peters told staffers in a companywide memo the job cuts are part of giving it the means to \u201cinvest aggressively in high-impact areas to improve our service and further drive growth and innovation.\u201d<\/p>\n

\n\tNote that Netflix isn\u2019t alone in handing out pink slips. Disney \u2014 also profitable \u2014 has made three<\/a> rounds<\/a> of layoffs<\/a> in 2026 across different parts of the business. Unlike Netflix, Disney is wrestling with the ongoing deterioration of linear TV. But echoing Netflix\u2019s explanation for its RIF, CEO Josh D\u2019Amaro and CFO Hugh Johnston have told the Street they\u2019re looking to cut costs, including through layoffs, to \u201ccreate incremental capacity to invest for growth.\u201d<\/p>\n

\n\tNetflix\u2019s top brass will surely be asked for more detail on the restructuring (and their decision to swap out Bajaria for Rice) when it reports Q3 earnings next Tuesday, Oct. 20. That will be the kickoff to an intriguing quarterly earnings season for the entertainment sector, which will include the first print from David Ellison\u2019s freshly minted Skydance Corp.<\/a> \u2014 poised to ax thousands of staffers after the merger of Paramount and Warner Bros. Discovery.<\/p>\n","protected":false},"excerpt":{"rendered":"In 2025, Netflix notched a net profit of $11 billion on a 16% increase in revenue, to $46.6…\n","protected":false},"author":2,"featured_media":804624,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,392,56,54,55],"class_list":["post-804623","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-netflix","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/804623","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=804623"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/804623\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/804624"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=804623"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=804623"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=804623"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}