scorecardHow Netflix, Hollywood's most innovative disruptor, is facing disruption with layoffs, streaming competition, and subscriber loss
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How Netflix, Hollywood's most innovative disruptor, is facing disruption with layoffs, streaming competition, and subscriber loss

Natalie Jarvey   

How Netflix, Hollywood's most innovative disruptor, is facing disruption with layoffs, streaming competition, and subscriber loss
Tech7 min read
Since launching original programming a decade ago, Netflix has become a disruptive force in Hollywood.    Rafael Henrique/SOPA Images/LightRocket via Getty Images
  • Netflix has been disrupting the business of Hollywood since the streamer started making original shows in 2013.
  • But now Netflix is being disrupted by increased competition, a stock price plunge, and subscriber loss.

Netflix, the disruptive streaming company whose innovative strategy and meteoric growth remade the entertainment industry, is facing some challenges of its own. After it lost subscribers for the first time ever earlier in 2022, the company's stock price tumbled.

Though Longtime Netflix bears like Wedbush analyst Michael Pachter were somewhat vindicated by this development, its impact has rippled through the company. Layoffs hit employees through the spring — first, at Netflix fan site Tudum, then in two additional rounds that affected hundreds of employees and full-time contractors.

With Disney reporting stronger results, including subscriber growth in its first quarter, Netflix has found itself on the back foot — and its troubles have sent shock waves through Hollywood's creative community. Writers, producers, agents, and more stakeholders spoke to Insider about concerns that the company might reduce its creative ambitions, production budgets, and content spend along with its workforce.

Read more about Hollywood insiders fears that Netflix's golden creative age is over after explosive growth created 'a quality control issue'


But Netflix moved quickly to reset the perception that its dominant position in Hollywood was at risk. In addition to announcing plans for an ad-supported tier, set to launch later in 2022, the company also began work to develop live streaming capabilities.

Read more about who Netflix might hire to run its advertising business

Netflix even made a play for the US rights to Formula 1 racing, the streamer's first foray into live sports (Disney's ESPN eventually won the bid).

In May, Netflix launched one of its most ambitious live event yet, a massive comedy festival that featured performers from Dave Chappelle to Amy Schumer in venues across Los Angeles — it was a massive logistical undertaking that served to promote the Netflix brand and also highlight the streamer as a supportive creative home for top comedians, even controversial ones.

Read more about how Netflix staged its massive 11-day comedy festival with more than 300 stars

The company also published a new update to its famous culture memo, affirming its commitment to both representation anD artists' freedom of expression — principles that could occasionally come into conflict, according to one expert. "Sometimes content can harm individuals and communities," said Y-Vonne Hutchinson, cofounder and CEO of ReadySet, a boutique consulting firm focused on diversity, equity, and inclusion.

Read more about how Netflix's overhauled culture memo could create conflict at the company

As competition for streaming subscribers has intensified, Netflix has also broadened its appetite when it comes to new shows. Insider reviewed internal Hollywood agency documents that revealed some series on the streamer's 2022 wishlist: a female "Jack Ryan," its own version of "New Girl," and an "American Idol"-style reality competition.

Read more about what Netflix is looking for in its next series, according to leaked agency documents

At Netflix, disruption starts with its content

It was just a decade ago that Netflix released its first original series, Norwegian mob drama "Lilyhammer," but in that time the streamer has challenged the entertainment industry with its global approach to making, marketing, and distributing content.

Netflix, which started as a DVD-by-mail business, is now the global leader in subscription streaming entertainment, ending 2021 with 222 million paid members. The company's success in streaming has pushed legacy media businesses including Disney, Warner Bros. Discovery, and NBCUniversal to pursue direct-to-consumer strategies of their own.

And Netflix hasn't stopped there, in recent years expanding its domain to include publishing, live events, gaming, and other adjacent businesses.

Read more about how Netflix's video-game strategy is starting to take shape

With its headquarters in Los Gatos, California, Netflix has always been product- and data-driven. This has kept it steps ahead of the rest of Hollywood when it comes to creating consumer-facing experiences.

For example, after years of offering almost no data about its viewership, Netflix unveiled a list of the platform's most popular shows and movies in the US and around the world. In 2021, Netflix went a step further and introduced a Top 10 website to share information about its most-viewed titles. Though what's offered is only a piece of the full picture about how people consume content on the platform, the site unveils more data than any other streamer provides.

Read more about why new viewership data gives Netflix an advantage over Disney+ and other players in the streaming wars

How Netflix first disrupted the TV screen and moved into merch and more

When Netflix first arrived in Hollywood, its rivals valued it as a platform for their long-forgotten back catalog shows and movies. The checks Netflix wrote for library titles in those early days helped prop up revenue at the studios. But soon it became clear that the company's appetite for content would encompass more than just licensed programming.

The streamer launched original programming with a focus on prestige projects from high-profile creatives — series like "House of Cards" and "Orange Is the New Black" came to define its early slate of originals. But over the years, Netflix has systematically moved to conquer each major genre, from documentaries to standup specials to reality TV to YA programming.

Netflix's first reality show launched in 2017 — "Ultimate Beastmaster" was a global competition series in the vein of "American Ninja Warrior" that put contestants on complicated, flashy obstacle courses shaped like a literal beast. Netflix has since minted reality hits from "Love Is Blind" to "Selling Sunset."

Check out the pitch deck that sold Netflix on "Ultimate Beastmaster," the streamer's first reality show

The company also made a big investment in original programming for kids, in a bid to create loyal viewers and potentially reduce subscriber churn. But like its competitor Disney, Netflix is increasingly leaning into existing IP for its kids shows.

"A real hit in the kids space needs a lot of years to build an audience. It needs like 5, 6, 7 seasons to really get its sea legs and then be able to sell backpacks at Walmart," said Cyma Zarghami, the former president of Nickelodeon who now runs kids-focused media company MiMo Studios.

Read more about how Netflix and other streamers are fighting to find the next 'CoComelon' amid a streaming war for kids content

Today, the streamer makes and distributes hundreds of original titles each year, minting global hits out of shows including "Stranger Things" and "Bridgerton" and movies from "Red Notice" to "Don't Look Up."

Netflix has also upended the notion that international programming doesn't resonate with US audiences, turning South Korean thriller "Squid Game" and Spanish drama "Money Heist" into two of its most-watched shows.

Read more about the reasons 'Squid Game' became a global phenomenon, according to a Netflix marketing exec

Netflix has been able to ramp up international production because it kept tabs on global content trends for years. After slowly moving into a few markets outside the US, the company in 2016 launched a large-scale expansion, making its service available in 130 countries all at once. It now operates in every country except China, North Korea, Russia, and Syria.

Read more about how Netflix's 'Squid Game' is part of a robust international TV strategy that's far ahead of rivals, especially in South Korea

In September 2020, Netflix — which is led by co-CEOs Reed Hastings and Ted Sarandos — promoted longtime entertainment executive Bela Bajaria to the role of global head of TV. She had previously overseen the company's local-language originals and her promotion, which led to the departure of Netflix veteran Cindy Holland, signaled that the company would prioritize international programming going forward.

Now, all of Netflix's rivals — including Disney+ and HBO Max — are increasing their global programming efforts.

View our full interactive chart of Netflix's top leaders

Netflix is expanding into publishing, events, and other consumer businesses

As Netflix's constellation of original IP grows, the company has been looking for new ways to boost fandom around the world, including with large-scale live events like Tudum, which streamed for fans globally in September 2021, and the more selective The Queen's Ball: A Bridgerton Experience, which is touring the US and Canada.

Read more about how 'Bridgerton' live events boost a broader strategy to retain subscribers and build fandoms

Netflix's first attempt at adapting its IP for the physical world was through merchandise. It now sells "Stranger Things" cassette players and "Squid Game" track suits at Walmart in just another example of how it's looking to create touchpoints with fans.

Read more about Netflix's partnership with Walmart to sell 'Squid Game,' 'Stranger Things,' and 'Ada Twist' merch

Netflix also has moved aggressively into publishing, hiring former Condé Nast employees to create fandom site Tudum, which releases news about upcoming Netflix titles and interviews with stars.

Read more about how Netflix hired Condé Nast and Time Inc. journalists to build a 'fandom engine' to market its shows

With Tudum, Netflix is now competing directly with fan sites like, which obsessively tracks the comings and goings of programming on the service. The streamer also is going up against children's publications like Highlights with Netflix Jr. magazine, which it will ship to the homes of viewers with young children. And it's tackling Hollywood trade publications like Variety and The Hollywood Reporter with Queue, which is edited by Vanity Fair alum Krista Smith and pushes awards contenders with photos and profiles.

Read more about the 'Netflix stan' who runs the website What's on Netflix

Awards is an area where Netflix has made a particularly sizable investment. Though its studio rivals also spend lavishly to give their films and TV shows the best shot at nabbing Oscars and Emmys, Netflix has gone a step further. It owns highly visible billboards around Los Angeles and hosts premieres at the theaters it purchased there and in New York.

That Apple TV+ beat Netflix to become the first streamer to nab the best picture Oscar — with its 2022 win for "CODA" — is a signal of how much Netflix is still seen as an interloper by many in Hollywood.

Read more about how Netflix built Hollywood's noisiest awards operation in its quest for the best picture Oscar