Netflix Promises Better U.S. Programming as Investor Concerns Grow
Results Heighten Investor Concerns
Netflix’s third-quarter report showed revenue growth at its slowest pace in years. The company also reduced its ad revenue forecast to $2.7 billion, down from the previously projected $3 billion.
Investors have focused on view hours growth, which measures how long people watch Netflix. The company’s stock was down more than 40% over the past year, according to the Wall Street Journal, and dropped almost 6% after the latest results. The article says the earlier decline began after Netflix’s unsuccessful plan to buy Warner Bros. Discovery, which is now part of David Ellison’s Skydance.
U.S. Programming in Focus
Netflix executives acknowledged concerns about slowing view hours growth and said they want to improve the company’s U.S. programming. Sarandos said, “We do need better execution in the U.S.”
Sarandos said Netflix could strengthen its slate, particularly with popular shows that attract viewers beyond the United States. He also said the U.S. business is working, but growing more slowly than the company would like.
Leadership Changes and Layoffs
Netflix announced last week that it would lay off around 1,000 employees, its largest headcount reduction in roughly four years. Co-CEO Greg Peters described the cuts as a “hard trade-off” intended to support long-term growth.
Chief content officer Bela Bajaria was replaced by former Disney executive Peter Rice. Film-unit head Dan Lin was also ousted, and no replacement for him has been announced. Variety reported that Lin had clashed with Ben Affleck over AI use in a Netflix release, but it is unclear whether that reported dispute contributed to Lin’s departure.
Filmmakers and Upcoming Releases
Netflix has also seen several prominent filmmakers move on. The Duffer Brothers, creators of Stranger Things, are now with Paramount; David Fincher reportedly plans to leave when his contract expires next year; and Noah Baumbach is heading to Warner Bros.
Executives said Netflix’s upcoming releases include the NFL’s first Thanksgiving Eve game, a new Quentin Tarantino movie and the Spanish-language film La Bola Negra, described as an early Oscar contender. Sarandos said the company does not need a fundamental strategy change, but must improve how it executes in the U.S.
Key points
- Netflix lowered its ad revenue forecast to $2.7 billion from $3 billion.
- The company’s stock fell almost 6% after its third-quarter report.
- Netflix plans to cut around 1,000 jobs and has changed programming leadership.
- Executives say improving U.S. programming and execution is a priority.