The restructuring document had a name, Project Meridian, which is what companies call a plan when they want the plan to sound like a project rather than a decision. By the time it was executed last week, about 1,000 people had been let go, roughly 6 percent of the staff. The version discussed internally at the start would have taken 10 percent.
Then the two executives who ran content left. Bela Bajaria, who had overseen the global television slate, and Dan Lin, who ran film, departed in sequence. Peter Rice, who spent years running television and film at Fox and then at Disney, will take Bajaria’s role this week and will control a content budget of about 20 billion dollars.
The company reports third-quarter results after the close on October 20, and the timing of the reorganization is not subtle. Netflix shares have fallen more than 40 percent over the past year, and the earnings call is the first opportunity management will have to explain a reshuffle that removed the two people most closely associated with the programming strategy of the past five years.
The proximate cause is growth, or the absence of it. Data from Antenna, which tracks subscriptions through payment records, shows that Netflix added no net subscribers in the United States in any month this year through September. The company has said that the third-party data does not represent its actual business, and it stopped disclosing subscriber counts at the start of 2025, a decision that removed the most closely watched number in streaming from public view.
What it still reports is engagement, and the numbers there are more mixed than the subscriber line ever was. Monthly churn in the United States was 2.1 percent in September, which for a service with more than 300 million paid members worldwide is a manageable rate and a costly one. The games business, which the company has described as a long-term bet, reaches about 3.5 percent of subscribers each month, roughly 10 percentage points behind the internal target for 2026.
Inside the company, Ted Sarandos has raised the same point repeatedly in meetings, according to people familiar with the discussions: Americans are watching fewer hours, and there has not been a hit large enough to change the trend. He has also resisted moving to a weekly release schedule, which is the lever every competitor has pulled and the one most likely to stretch engagement across a calendar rather than a weekend.
The layoffs and the executive changes are the first real admission that the model built for the years of adding members does not fit the years of keeping them. Netflix spent a decade hiring for volume, commissioning hundreds of titles a year and paying top of market for talent, because each new subscriber in a growth market justified almost any content budget. In a market where net additions are zero, the same budget has to be defended quarter by quarter.
That is where Rice comes in. His reputation was built at Fox and Disney on franchise management and on cost discipline, and his mandate covers the largest single line item in the company. The logic of hiring an executive from the studio system is that the studio system knows how to make fewer things and sell them harder, which is a different skill from commissioning at volume.
The economics of streaming have converged on an uncomfortable arithmetic. Revenue per member grows slowly, through price increases that carry a churn cost, or through advertising that carries a fill-rate cost. Content spending is fixed in the short term by contracts already signed. The gap between the two is the margin, and the only fast lever on it is headcount and output.
Netflix has pulled the levers available. It introduced an advertising tier, raised prices in most markets, added live sports and events, and pushed into games. Each of those moves helped revenue and none of them restored the growth rate the shares were priced for in 2021. The stock’s decline over the past year reflects a market that has stopped valuing the company as a growth asset and started valuing it as a mature media business with a subscription wrapper.
The comparison that hurts is not with other streamers. It is with the rest of the technology sector, where capital is being committed to artificial intelligence at a scale that makes a 20 billion dollar content budget look modest, and where investors have been willing to accept negative cash flow in exchange for a story about future capacity. Netflix has the opposite problem: it generates cash and lacks a growth narrative.
The reorganization also carries a risk that the company has not addressed publicly. The people who greenlit the shows that built the library are the ones leaving, and the institutional knowledge about which projects are worth pursuing and which are worth killing is not written down anywhere. A new executive with a cost mandate and a studio background will make different choices, and some of them will be wrong in ways that take two years to appear on the screen.
Analysts who cover the company said the cuts are sensible and the strategy is unclear. Reducing headcount by 6 percent saves a few hundred million dollars a year against a content budget twenty times that size. It signals seriousness to investors without changing the underlying trajectory, which is the definition of a gesture in a business that needs a product.
The earnings call on Tuesday will be judged on three things: whether advertising revenue is growing fast enough to offset slower subscription growth, whether the company will give any engagement disclosure that substitutes for the subscriber count, and whether Rice describes a strategy that is more specific than doing less.
Netflix built the streaming business by spending ahead of demand and being right about where the demand would go. The past year has been the first in which the company spent ahead of demand and was early.
