Netflix pushes to improve U.S. content as growth slows in key market

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Netflix improves U.S. content

Highlights

Netflix's U.S. and Canada market delivered $5.6 billion and 44% of quarterly revenue, but growth lags company targets despite international strength.
Netflix replaces content chief Bela Bajaria with Peter Rice and cuts about 1,000 workers in its largest job reduction since 2022 to improve U.S. content performance.
Netflix stock has fallen 44% over 12 months and dropped another 6% after-hours as Q3 marks the third consecutive quarter of slowing revenue growth.

Management flags U.S. execution after earnings

As reported by Business Insider, co-CEO Ted Sarandos says on Netflix's third-quarter earnings call that the company needs better execution in the U.S., even as its broader global content strategy is largely delivering results.

Sarandos tells investors that programming from Latin America, Europe, the Middle East, Africa and Asia is largely working. He says the U.S. business is also working, but not growing as fast as it could or as fast as the company would like.

Netflix identifies the U.S. and Canada as its biggest market, accounting for about 44% of quarterly revenue at $5.6 billion. Sarandos says the U.S. produced some solid titles this year, but adds that other territories depend on more breakout hits from that market that can travel globally.

Leadership changes and market pressure

Netflix announced last week that it is replacing content chief Bela Bajaria, who has overseen the streamer's films and shows since 2023, with former Disney and Fox executive Peter Rice. The company is also moving on from film chief Dan Lin, with Rice set to oversee Netflix's movies until that role is filled.

Co-CEO Greg Peters says Netflix wants to move its content slate from very good to great. Alongside the executive changes, the company has cut roughly 1,000 workers in its biggest round of staff reductions since 2022.

Investor pressure remains elevated as Netflix shares enter Tuesday's earnings report down about 44% over the past 12 months. The stock falls 6% in after-hours trading after the company reports a third straight quarter of slowing revenue growth, while Wall Street remains concerned about engagement growth as Netflix competes with free streaming platforms such as YouTube.

S&P 500 losses and elevated volatility were recently driven by weakness in technology and semiconductor stocks, alongside worries about the durability of AI-related investment and the impact of higher borrowing costs. Our earlier coverage noted the index moving below key short-term moving averages, with analysts highlighting fragile sentiment and specific support/resistance levels that traders were watching for the next directional move.

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