Netflix might need to buy its way out of its biggest problem. And it won't come cheap.
Netflix conducted its deepest round of layoffs in years. But the job cuts don't address the streamer's biggest problem.
Netflix is facing significant challenges, requiring potentially expensive measures to overcome. The company has recently reduced its workforce by around 1,000 employees, representing 6% of its total staff, across product, tech, and HR departments. This is the largest round of layoffs since 2022. This news came as Netflix's stock price experienced a decline of nearly 42% over the past year and a 25% drop in 2026.
Despite these cuts, investor concerns about Netflix's future have not diminished, with the stock price only marginally increasing by 0.16% following the layoffs. Analysts suggest that job reductions alone may not be enough to address Netflix's problems. The company's main issue lies in subscriber engagement, a crucial factor for maintaining their massive user base of 325 million paid subscribers.
Netflix has been hesitant to disclose audience statistics, opting to focus on its new and popular shows instead. However, this approach may not be the best strategy. The company's long-term success has historically relied on enduring content, such as classic series with established audiences. Yet, this approach does not directly tackle the most significant risk Netflix faces.
Competing streaming platforms like TikTok, Instagram, YouTube, and traditional TV offer numerous alternatives for viewers. Netflix's recent employee reductions do not translate to cost savings. Instead, the company has increased investments in other areas, such as video podcasts. Netflix has secured deals with major podcast platforms like Spotify, securing popular shows like The Bill Simmons Podcast and The Rewatchables.
Podcast listeners tend to be highly engaged, returning frequently to consume content. Additionally, Netflix has made significant investments in live sports, negotiating deals with the NFL and securing exclusive rights to broadcast the 2030 World Cup. However, these sports ventures come at a considerable cost. While these initiatives showcase Netflix's efforts to diversify and capture audience attention, they may not be sufficient to address the underlying issues.
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