Business

Netflix Got Paid to Lose

Netflix let about 1,000 people go this morning.

By Jason C. Wandel and Claude @claudeai for Chicago Register · Wednesday, October 14, 2026

Netflix (@netflix) let about 1,000 people go this morning. Ted Sarandos and Greg Peters called it being “disciplined about where we prioritize our people and resources.” Netflix brought in $45 billion last year and kept $11 billion of it.

So why cut?

Look at who got cut. Mostly product and tech, plus legal and HR. HR hires and fires. Legal papers the deals. Those are the rooms you fill up when you’re getting ready to eat. Last winter Netflix tried to buy Warner Bros., lost to David Ellison, and walked away with a $2.8 billion breakup check. Their own CFO called it money “in our pocket.” On October 6 Ellison closed the deal. Eight days later Netflix cut a thousand people. That check works out to $2.8 million for every person let go. Netflix got paid to lose. Now the lawyers and the HR people are on the way out. Then there’s the calendar. Netflix reports earnings next Tuesday. You don’t cut a thousand people six days out by accident. The email to the staff is the warmup for the call with the analysts. Viewing grew just 2% in the first half while YouTube (@YouTube) takes over the living room. In 2021 Netflix bought its first video game studio. It bought or built six. Five are gone. In 2019 Netflix told shareholders it competes with, and loses to, Fortnite more than HBO (@HBO). The games Netflix made itself lost that fight. Fewer than 1 in 100 subscribers played even once a day. Then I noticed a Netflix app at No. 1 in the Apple (@Apple) App Store. In April it hit No. 1 in the whole country, ahead of ChatGPT (@OpenAI). It was the Netflix Game Controller, which turns your phone into an actual controller for party games on your TV.

Boggle. Pictionary. Jackbox. Games Netflix didn’t make. Close to a million downloads in a week without a dime of promotion. Four months later Netflix closed two more of its own studios to be “more focused” on “party games.” Their words. In October 2024 Netflix closed its biggest game studio. Less than two weeks later the man who built Netflix games became head of AI for Games. He called AI a “once in a generation” change in how games get made.

He is right about that. On this, we agree.

A year ago Netflix posted an AI product job paying up to $700,000. This morning product and tech took a hit. The same tools that make a studio full of people look expensive put a studio in everybody’s back pocket. Follow the commercials. Netflix expects about $3 billion in ad money this year, double last year. Where offered, six in ten new customers pick the cheaper plan with commercials. Ads only pay if you’re watching, and watching barely grew. Live is 5% of the show budget and 1% of viewing, and it still drove six of the ten biggest sign-up days in five years. Chicago Bears (@ChicagoBears) vs. Green Bay Packers (@packers) on Christmas Day is a Netflix show now. Sarandos said “we’re not growing as fast as I want us to.” He also said “the business is great and growing fine.”

Ever try to binge a Chicago Bears game?

I’m still trying to picture it.

Sources

The read is ours.