Plenty seems to be working for Netflix these days.
The company remains, by far, the most-watched paid streaming service in the world, with more than 325 million subscribers. It accounts for far more television viewing time than any of its traditional entertainment competitors, including Disney, Amazon Prime Video or Skydance. Its revenue is robust and profits are plentiful.
Yet on Wednesday, Netflix let go of roughly 1,000 employees, about 6 percent of its ranks, and its biggest round of job cuts in four years. And on Thursday, it made an abrupt leadership change, pushing out Bela Bajaria, who oversaw all of the company’s TV series, movies, live events, sports and video podcasts, and replacing her with Peter Rice, a Fox and Disney veteran.
Two intertwined factors helped drive the moves, which reverberated throughout Hollywood this week. The company isn’t growing fast enough, as Ted Sarandos, the company’s co-chief executive, said recently. And Netflix’s stock price has plummeted more than 40 percent over the last year.
“These are moves that Netflix has to make,” Mike Proulx, vice president and research director at Forrester, a research and advisory firm, said. “The company has to be acting in a more bold way, especially given what’s going on with its competition right now.”
Netflix has seen the time spent by viewers stall as it struggles to find new global hits to replace blockbuster series like “Stranger Things,” which ended last year. YouTube, one of Netflix’s biggest competitors, has seen its share of television viewing time in the United States increase over the last year while Netflix’s has declined, according to Nielsen.
In September, the streaming service had its worst showing at the Emmys in a decade, even though it spends more than three times on content now than it did in 2016.
And some of the biggest names Netflix had lured with lucrative production deals have left for competitors. The Duffer brothers, the creators of “Stranger Things,” decamped for Paramount last year. Shawn Levy, an executive producer of “Stranger Things,” announced last month he was leaving for Disney. The director David Fincher, who brought “House of Cards” to Netflix and will release his latest movie, “The Further Mis-Adventures of Cliff Booth” on the service at the end of December, opted to let a deal with the company lapse, and Noah Baumbach (“Marriage Story,” “Jay Kelly”) left for Warner Bros.
“The stock is down for one reason: There is a perception that their engagement challenges will create headwinds for revenue growth,” said Rich Greenfield, founder of LightShed Partners, a research firm.
“The only way Netflix is going to improve their stock,” he added, “is by proving that the slower engagement is not impacting revenue growth.”
Netflix’s share price slide began last year when it made an audacious bid for Warner Bros. Discovery’s studio and streaming business. The potential acquisition, on which Netflix was prepared to spend more than $80 billion, seemed to undercut a central premise that Netflix was just fine on its own producing hit movies and shows, and instead needed to look outside the company for help. “We’ve been builders, not buyers,” was a phrase Mr. Sarandos repeated for years.
But when Mr. Sarandos announced the deal, he said that the well-oiled studio business of Warner Bros. would be a critical asset for the company. “Our deep development pool is quite shallow,” he said at the time.
Netflix ultimately lost out on that prize to Paramount Skydance. At a Bloomberg conference last month, Mr. Sarandos acknowledged that “the deal itself kind of threw the business narrative off for investors.”
But he said he did not regret the pursuit. “You have to be willing to put the business narrative at risk for something that’s good for the long term of the business,” he added.
Even after Netflix abandoned its bid, the share price kept sliding.
Concerning viewership numbers have played a part. Netflix recently shifted its own reported metrics from subscriber figures to how much time each user is spending on its programs. It’s one of the few streamers to report data this way, and observers have watched as shows and movies generate lower numbers than before.
Popular television series like “Beef,” “The Night Agent” and “Avatar: The Last Airbender” had significant viewership declines for their most recent seasons, according to Netflix’s metrics. And no film released this summer became a breakout hit, compared with last summer when “KPop Demon Hunters” and “Happy Gilmore 2” dominated the culture and were big hits on the service.
Their statistics underscored just how much Netflix was struggling to maintain hits or find new ones. “In so many ways, this is a self-inflicted wound,” said Mr. Greenfield, observing that no other streamer reports this type of data.
Third-party measures have not been much kinder. Netflix accounted for 7.8 percent of all television viewing time in the United States in July, according to Nielsen, a full percentage point drop compared with last year. YouTube’s share is more than 14 percent, and other competitors like Disney’s streaming services (4.7 percent), Prime Video (4.2) and everyone else are far behind.
Mr. Sarandos acknowledged in a memo to employees on Thursday that he saw the company’s leadership change as “an opportunity to take our slate to the next level,” particularly in the United States.
He told the well-liked Ms. Bajaria about her firing only late in the day on Wednesday, hours after the company had announced the job cuts, according to two people briefed on the discussion. Ms. Bajaria, who joined the company in 2016 and succeeded Mr. Sarandos as the company’s chief content officer in 2023, favored big-tent shows and movies, a quality that she once likened to a “gourmet cheeseburger” — content that is “premium and commercial at the same time,” she told The New Yorker.
But between a poor performance at the Emmys — Netflix won just 16 this year, its lowest total since 2016, and well below Apple TV and HBO Max — and trouble finding a commercial blockbuster, the company was having difficulty on both fronts.
Netflix also has pivoted in many different directions over the last few months. It has signed up dozens of video podcasts and made deals with YouTube creators like Sean Evans.
“They recognized that they need to be in the creator business, and they’re leaning hard into it,” Mr. Greenfield said. “I think the greatest proof point that it’s working is that others are following.”
Netflix has explored becoming more of a streaming destination, and has absorbed a local broadcaster onto the service in France. It has had discussions with Fox and NBCUniversal about making deals to add Fox One and Peacock content as well.
Now Netflix is bringing in Peter Rice, a seasoned executive with three decades of experience in film and television. He’s been a producer. He’s run a film studio (Fox Searchlight). He’s run a sprawling television division (at the Walt Disney Company). His tenure at Fox has included the shepherding of indie hits such as “Little Miss Sunshine,” “Juno,” and “Slumdog Millionaire,” which captured the Oscar for best picture in 2009.
Those who have worked for him describe him both as someone who knows how to function inside a big operation and someone who can talk to complicated directors in ways that make their work better. When Mr. Rice was fired at Disney, the director Danny Boyle, who worked with Mr. Rice on “Slumdog Millionaire,” praised him as “the best executive I’ve ever worked with.”
“I always felt that he was destined to run a large company,” said Joe Pichirallo, a professor at N.Y.U.’s Tisch School of the Arts, and a former Fox Searchlight executive, who describes Mr. Rice’s tastes as both elevated and accessible. He added, “a cheeseburger would not fit in my definition of Peter Rice.”
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