Netflix has cut about 6% of its workforce and replaced two of its top programming executives, a sweeping restructuring that came just days before the streaming giant reported third-quarter earnings. According to Reuters, the layoffs swept through the company's California headquarters, with workforce reductions affecting thousands of employees and creating a roughly 120-basis-point drag on fourth-quarter operating margin.
The cuts hit product, technology, legal and human resources teams globally, according to CNBC. The shock also reached the content chief's chair, where co-CEO Ted Sarandos replaced programming leadership with former Disney executive Peter Rice, signaling a new strategy for tougher times. Sarandos said the company plans to focus on its core business of producing quality TV shows and movies to make Netflix a "must-have" service, calling the executive shakeup a step toward that goal.
The restructuring unfolded alongside a disappointing earnings report: Netflix issued a weaker-than-expected fourth-quarter profit forecast, cut its 2026 advertising revenue target to about $2.7 billion from $3 billion, and saw its shares drop 6% in premarket trading on Wednesday. At least 14 brokerages lowered their price targets on the stock, according to LSEG data cited by Reuters.
The company that shook up Hollywood two decades ago is now competing with a surge in viewership on YouTube and TikTok. Netflix has invested in video games, podcasts and live events to draw new viewers, and said it would continue expanding through licensing more third-party content. With the stock down more than 26% this year, investors are demanding proof the restructuring can reignite growth.
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