September inflation rises 3.7% year-over-year
Netflix is cutting roughly 1,000 jobs in its largest round of layoffs since 2022, according to a Wednesday morning email that co-Chief Executives Greg Peters and Ted Sarandos sent to staff. Most of the reductions are concentrated in the product, technology, legal and human-resources teams.
The decision sets Netflix apart from a wave of recent cost-cutting across technology and entertainment in one notable respect: the company is explicitly not attributing the layoffs to artificial intelligence. A person familiar with Netflix’s thinking told The Wall Street Journal that the company did not want to use “the AI boogeyman” as the cause, with the implication being that some companies are attributing layoffs to better technology when the underlying motive is ordinary cost discipline.
In the email, Peters and Sarandos framed the cuts as a reallocation tied to competitive pressures rather than a technology-driven reduction in head count. “Our mission—to entertain the world—is ambitious, and delivering on it requires us to be disciplined about where we prioritize our people and resources,” the executives wrote, adding that Netflix wants to “invest aggressively in high impact areas.”
Joe Flint, the Journal’s media and entertainment reporter based in the Los Angeles bureau, put the cuts in the context of a broader pattern. “We are seeing lots of cuts in the entertainment and tech space lately,” Flint said. “Each situation is somewhat unique, but if there is an overarching theme in entertainment, it is that the traditional avenues of growth in streaming—subscriptions and advertising—are becoming more challenging.”
The growth squeeze has shown up in usage data. Netflix has watched the amount of time users spend on its platform slow, a metric the company views as crucial and one that is reshaping programming strategy. The slowdown helps explain why Netflix and other streamers have moved toward more live content such as sports, which is also among the most expensive content to produce. The layoffs, in other words, are paired with a push into a costlier programming category rather than a withdrawal from premium content.
The economic backdrop for the announcement has hardened. The Labor Department reported on Wednesday that consumer prices rose 3.7% in September from a year earlier, above August’s 3.4% gain and the 3.6% rise that economists surveyed by the Journal had expected. Higher energy prices have been tightening their squeeze on consumers ahead of next month’s midterm elections, according to the report, adding a layer of macro pressure to the operating environment entertainment companies are navigating.
Separately, OpenAI pressed its legal fight with Apple over alleged trade-secret theft. In a Wednesday legal filing, the maker of ChatGPT claimed that a former employee who left for Apple sent himself more than 100 “highly confidential” files about at least one unreleased OpenAI device under development. Apple had sued OpenAI in July, contending that its own confidential information had been taken by employees who left for the AI rival.