Netflix has a problem layoffs can't solve

The good news for Netflix: It’s been here before.

In 2022, after years of breakneck growth and go-go spending, the streamer suddenly lost subscribers.

Cue layoffs, a hasty pivot to an ad model it had always criticized, and tons of industry schadenfreude.

But it turned out that Netflix’s growth problems were overstated.

Or at least, that its growth problems weren’t a sign of opportunity for its streaming rivals.

Years later, Netflix’s position at the top of paid streaming services remains unchanged.

Meanwhile, Wall Street has grown tired of watching would-be competitors like Paramount and Warner Bros.

Discovery struggle to make headway — which is why both of those companies are now owned by the Ellison family.

The bad news for Netflix: The levers it pulled four years ago no longer seem available.

It has already done the ads thing, and the live sports thing — another move they had previously sworn off.

A foray into video games doesn’t seem to have produced much at all.

Meanwhile there has been a steady series of reports indicating that not only is Netflix’s subscriber and revenue growth slowing, but its existing subscribers are finding the service less engaging than in the past.

Netflix responded to that one by arguing that its engagement was just fine, really — and then announced it would make it harder to understand its performance by cutting back on the audience data it provides to the outside world.

Most concerning: Wall Street and the rest of the media industry have started catching up to the fact that Netflix’s competition isn’t just other paid streamers, but giant platforms — YouTube, Instagram, and TikTok.

Those companies may not have the next “Stranger Things,” but they don’t have to.

They have unlimited content that costs them either nothing (Instagram and TikTok) or nothing upfront (YouTube).

And they provide it to consumers for free, in a never-ending river of clips.

It’s very hard to compete with that, though you can see Netflix trying: YouTube has a lot of video podcasts, so now Netflix is doing that, too.

None of that has convinced Wall Street, which is why Netflix stock is down 43% over the last year.

Some of that was a reaction to the company’s pursuit of HBO and Warner Bros. — an uncharacteristic mega M&A swing that investors hated.

But after Netflix bailed on that one, shareholders remain skeptical.

That may be why Netflix stock isn’t moving on Wednesday, after the company announced it is laying off 6% of its workforce.

Cutting heads can cut Netflix’s costs and improve its margins.

But it doesn’t help the company grow — or help it compete with ruthless Big Tech platforms.