Netflix Is Shaking Up Its Content Leadership. Here's What Needs to Happen Next.
Key Points
Netflix is cutting 1,000 jobs, its largest workforce reduction since 2022.
Shares of Netflix have fallen nearly 50% in the past year.
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Netflix (NASDAQ: NFLX) is making major changes in hopes of regaining dominance in the attention economy over the coming quarters. The problem isn't Netflix's financials right now. The real issue is that engagement is declining, and Netflix's content feels a bit stale.
Netflix fired its content chief and a few other top executives while cutting 1,000 jobs. This is the largest job reduction and shake-up since 2022. It's been a long time since a hit show, like Stranger Things, propelled the streaming giant to new heights of relevance.
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The streaming giant has tried hard to deepen subscriber engagement. From live events and podcasts to gaming, the company is doing what it can to keep eyeballs logged in longer.
Thus far, it's not working well. Hours watched per subscriber are down 4% from a year ago, and viewing of Netflix's top 100 originals has fallen 20%.
The company needs to focus on delivering a few well-made movies and shows to its audience. People are overwhelmed by choice, but a few genuine hits could start to claw back market share from the consistently growing rival YouTube, which Alphabet owns.
Ultimately, I think Netflix needs to put the ancillary bets on the back burner. It was clear from the third-quarter report's lack of focus on live programming, podcasts, and gaming mentions that these growth channels aren't where Netflix should be investing its time or money. Netflix's dominance was built on must-watch television series and movies.
The incoming leadership team likely already knows this, and I wouldn't be surprised to see these changes coming soon. For long-term investors, Netflix shares have dipped nearly 50% over the past year. This presents an opportunity to buy the stock at a reasonable price before the new content leadership puts their ideas to work in 2027.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Netflix. The Motley Fool has a disclosure policy.
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