Netflix is writing a new script.
It abruptly replaced content chief Bela Bajaria last week just hours after a layoff of 1,000 employees that she helped engineer. By Monday, film chief Dan Lin lost his job, too.
The ousters of two of the company’s top creative executives are a sign that the streaming giant’s leaders feel the service needs to overhaul its content offerings.
Co-chief executive Ted Sarandos had complained internally for months that Americans were spending less time watching Netflix and that the service was short on new hit shows, people familiar with the matter said. He also has told colleagues that he wants the company, which has experimented with everything from videogames to podcasts, to strengthen its core TV and movie offerings.
On Tuesday, the company is set to deliver its third-quarter earnings and try to answer Wall Street’s questions about its strategy.
Problems at the company that ushered in Hollywood’s streaming revolution have been building for a year as it has struggled to come up with hits on the level of “Stranger Things” or “Squid Game.”
Like many media companies, it is struggling to attract audiences spending more time watching YouTube and TikTok.
Netflix’s stock has sagged since its failed bid launched last year for Warner Bros. Discovery’s film and TV studios and HBO Max, which investors saw as a sign of weakness for a company whose leaders long said they were builders, not buyers. Its stock is down more than 40% from a year ago, around the time the acquisition pursuit began.
Netflix’s struggles to keep viewers hooked have become increasingly apparent.
As of the end of September, Netflix hadn’t added net subscribers any month this year in the U.S., according to analytics firm Antenna. Antenna tracks U.S. consumer purchases of subscriptions through sources such as credit card bills, but doesn’t include those bought through wholesale bundles. Netflix hasn’t disclosed subscriber numbers since early 2025.
A Netflix spokeswoman disputed Antenna’s data, saying it is “not representative of Netflix’s business performance.”
Earlier this fall, Netflix launched a restructuring plan known internally as “Project Meridian.” Executives discussed cutting as many as 10% of the company’s roles, but settled on 6% after discussion with division leaders, according to people familiar with the matter.
Wednesday morning, Sarandos and co-chief executive Greg Peters sent a memo announcing the cuts. By 2 p.m. that day, those laid off lost access to their work email, according to people familiar with the matter. Hours later, Sarandos told Bajaria that she was out.
Netflix said Thursday it was replacing Bajaria with Peter Rice, a Disney and Fox veteran with extensive experience in film, television and sports. Rice will start this week and oversee a roughly $20 billion global content budget for scripted and unscripted series, movies, and live events including sports.
Lin was seen at the star-studded Academy Museum Gala on Saturday night with Sarandos, where Taylor Swift performed in front of Hollywood’s elite. Sunday night, he attended a screening event at Netflix headquarters for “La Bola Negra,” a movie considered to be an Oscars contender. On Monday, the company announced that Lin, who was previously a producer known for “The Lego Movie” and “It,” was leaving and Rice would take over until a new film head is chosen.
Industry giant
Netflix is still the most powerful force in subscription streaming. The rate at which U.S. subscribers cancel the service remains the lowest in the industry at just 2.1% in September, according to Antenna. In the second quarter, Netflix reported double-digit percentage revenue growth in every region.
Netflix is on track to deliver on its previously stated full-year forecast, according to an internal memo announcing the layoffs seen by The Wall Street Journal. It aims to deliver 13% to 14% revenue growth and operating margins of 31.5% this year.
The company has expanded its content offering to boost engagement. Some newer categories, such as live sports, have been more successful than others, such as videogames. Only 3.5% of Netflix’s subscribers play games monthly, according to a recent internal memo. That business is tracking about 10% behind its 2026 reach and engagement goals, the memo said.
Video podcasts and creator content allowed Netflix to add hundreds of hours of programming at a fraction of the cost of scripted series. During the company’s last earnings call, Sarandos emphasized that building up these new formats takes time and that they are “evolutionary, not revolutionary.”
Changing approach
Its engagement slump has resurfaced an old debate at the company: Were subscribers not watching more because of the programming from Los Angeles? Or because of the recommendation algorithm overseen by engineers in Northern California?
Overriding Netflix’s recommendation algorithm—known internally as “putting your thumb on the scale”—was long verboten, but in recent months, the practice has become more common as executives seek to boost viewership for certain shows and new types of content. More recently, the company has stopped pushing games and podcasts, focusing more on its core movie and TV offerings, said one of the people.
Additionally, executives have debated whether to change the release cadence of certain shows to improve engagement, according to people familiar with the matter. Netflix typically drops all the episodes of a season at once, while many competitors release new episodes weekly. Sarandos has resisted the change. Netflix data shows that members prefer an all-at-once binge versus a weekly cadence, according to the company.
Netflix has also discussed letting its customers subscribe to other services, like NBCUniversal’s Peacock, within its app and adding live channels. In France, Netflix has started giving subscribers access to the broadcaster TF1’s programming, which includes news.
In another change, it is starting to bet on major theatrical releases for some films after years of releasing most films directly online and giving a handful a few weeks on a limited number of screens. The company is releasing films including “Charlie vs. the Chocolate Factory” and “Narnia: The Magician’s Nephew” in theaters globally at least 45 days before they will be available to watch at home, the strategy typically used by traditional studios.
The day before the layoffs, Netflix launched the psychedelic trailer for “Narnia,” soundtracked by Led Zeppelin’s “Stairway to Heaven.” Its trailer quickly amassed nearly 80 million views on YouTube.
Write to Ben Fritz at ben.fritz@wsj.com, Jessica Toonkel at jessica.toonkel@wsj.com and Joe Flint at Joe.Flint@wsj.com