Netflix's biggest layoffs to date: Read letter

Netflix is reducing its workforce by approximately 1,000 workers, marking its largest round of layoffs since 2022, according to a person familiar with the decision. Co-CEOs Ted Sarandos and Greg Peters informed staff about the cuts on Wednesday. The company is facing challenges such as slowing engagement growth and a declining stock price, which has fallen over 30% in the past six months and over 40% in the past year.

The layoffs primarily affect employees in the product, technology, HR, and legal departments. This move follows in the footsteps of other major media companies, including NBCUniversal and Disney, that have also recently implemented workforce reductions. Netflix's decision to cut staff comes just before the company is scheduled to report its third-quarter earnings on October 20.

Sarandos stated in September that the company was not growing as quickly as desired and is working to expedite progress. Last quarter, Netflix met Wall Street's earnings expectations, but the company announced it would begin publishing detailed engagement reports annually rather than bi-annually. The shift to annual reporting raised concerns among investors, as engagement is a key indicator of subscriber loyalty and willingness to pay higher prices.

Netflix's stock price has dropped significantly this year, and its engagement growth has slowed. The company generated 7.8% of TV viewership in the US during July, according to Nielsen data, which is lower than YouTube's 14.2% share but higher than Disney's streaming platforms at 4.7%. However, Netflix's overall viewership has increased by 2% in the first half of the year, with 97 billion viewing hours.

Despite this, Netflix's share of streaming viewership has decreased from 9% in December to its current level, likely due to the popularity of shows like "Stranger Things."