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Netflix’s Leadership Shake Up…Explained
(Welcome to the “Most Important Story of the Week”, my bi-weekly strategy column analyzing the most important (but often not buzziest) news story of the last two weeks. I’m the Entertainment Strategy Guy, a former streaming executive who now analyzes business strategy in the entertainment industry. Please subscribe.) Well, I had a simple article planned for this week. Called “Whoa, I Missed It!”, I’d take a gander at a few important-but-under-the-radar stories I didn’t cover while I wrote about all things “Skydance. (Formerly known as “the saga of Netflix trying to buy Warner Bros., but not Discovery, then Paramount-Skydance bought all of Warner Bros. Discovery”.) Alas, that article will have to wait. Netflix made news. Ironically, my “Whoa, I Missed It!” article would have mostly been about “content” strategy decisions, which is also what today’s article is about. But instead of the entire industry, this article will only cover Netflix’s decision to upend their film and TV content teams. Just that! So that’s the full topic of the day. I’m going to tackle the issue in the opposite direction of the way “stuff” flows: uphill. We’ll start at film, then move onto TV, and then onto the CEOs themselves, and the strategy questions that still remain. But we start with the numbers driving this. Let’s dive in. Subscribe Most Important Story of the Week - Netflix Upends Their Corporate Hierarchy I’ve got a lot of thoughts, but we’ll start with the most common response to yesterday’s article. Let’s Talk Stock Price More than one person, responding to what I published two days ago, pointed out that, well, actually, the thing driving Netflix’s actions is this: In short, stock price! Even if Netflix isn’t obsessed with their own share price—they probably are, but, for the record, my strategic advice to every CEO is to absolutely ignore stock prices, which will, ironically, probably help the stock price long-term—most everyone thinks they are. By the way, I prefer market capitalization to stock prices, because it’s a more apples-to-apples way to compare companies: But there’s an even better way to look at it, and it kinda casts some doubt on the entire push here: price-to-earnings. I have a long list of articles that I wish I had written, and chief among them is an article titled, “Am I Still a Netflix ‘Bear’?” meaning someone who thinks Netflix’s stock is overvalued. As of last summer, Netflix had solved their biggest problem—which for me (circa 2019) was the lack of free cash flow—but their stock was CRAZY overvalued. That’s this chart here: Why did Netflix’s stock price increase to a price-to-earnings ratio of 50 last summer? What financial metric changed so quickly? Nothing. Given that, historically, mature entertainment companies average 10 to 20, with 16 being the average, that increase made little sense. Netflix’s stock swoon these last eight or so months wasn’t irrational; the stock price rise last year was. So if you want a really hot Netflix take, here it is: Netflix’s stock price has been going down because the financial industry recovered its senses, not because of any strategic mistake. Yes, that would imply that cleaning house may have been a mistake. That’s why the charts yesterday are so important, because they show that Netflix did have a strategic problem (a lack of hits) and that’s what they moved to address. (One could also argue the industry drastically overrated Netflix’s growth prospects, but that’s a financial industry problem, not a Netflix strategy problem per se. Some growth estimates are just crazy. *cough* AI *cough*) Now, the last time Netflix’s stock price crashed—circa 2022—it gave them an opening. I’d argue Netflix insiders knew they needed to expand post-COVID-19 crisis, adding advertising, cracking down on password sharing, and dabbling in sports. But if they had done that when their stock price was high, it would give folks a reason to second guess their strategy. (Arguably, last year, when Netflix pursued the Warner Bros. merger, it gave the industry a chance to review their business.) Instead, after the 2022 fall, they had the opening to make strategic changes. We may see Netflix pivot again following this latest slide. For example, the “binge versus weekly” conversation is alive and well again. Same for expanding into theaters even more. And adding both linear channels and streaming bundles. And maybe more either social, user-generated, vertical, or creator content. But the first shift came with who is making the content calls. A Message from Our Sponsor Last winter Pulp Fiction was on Netflix. For those same 90 days, it was also free, with ads, on Pluto TV and the Roku Channel. That is not a glitch, and it is not rare. The title has run on 20 different US streaming services since 2019, across 80 separate windows, and for more than 600 of those days it sat on a paid subscription service and a free ad-supported one at the same time. Almost nobody can see this, because when a title leaves a service, the record that it was ever there tends to leave with it. Reelgood keeps that record, dated to the day rather than the month: 4MM+ movie, show and episode titles across 300+ services globally, with timestamped arrivals, departures and moves across SVOD, AVOD, TVOD and vMVPD. Licensing teams price against every prior window. Rights teams check what a licensee actually delivered, and when. Pick a title you think you know: data.reelgood.com/title-availability Film - Dan Lin Want to know why I don’t opine on individual film or TV executives, especially new hires? Dan Lin. As I always caution, it’s really, really, really tough to predict which executives will succeed in new roles and which won’t. The successful head of co-production/finance partner, Rideback, Lin was considered for the head of DC Studios job before taking the job as the head of Netflix. By all accounts at the time, this was a smart hire. (That’s my read of the news coverage anyways.) But now that Netflix has fired Dan Lin, we got a slew of news stories about how he was doing a terrible job. In sports media, Bryan Curtis, new Substack writer/podcaster from The Ringer, calls this the “now you tell us” story, when you only hear the bad news after a star athlete leaves a sports team. In this case, now they tell us that Dan Lin was bad with talent after he got kicked out the door. So was Dan Lin a flop? It’s actually tough to say. While film moves faster than TV, even two years isn’t really enough time to evaluate a person’s output. The new head hasn’t really taken control. As Emily Horgan noted, it takes much longer than two years to produce animated films, so yeah, it’s definitely too early to judge in that domain. As for live-action films, I just published an article by Brandon Katz called “Netflix’s Summer of Bummer”, but I’d point out Netflix had a bad summer two years ago too. Arguably, their best summer came from KPop Demon Hunters last year and Happy Gilmore 2, the latter of which I saw credited to Lin. Then, the stories came out that Dan Lin clashed with talent, both Ben Affleck and Greta Gerwig, classic “now they tell us” factoids to explain his firing. This may have been true, but also should have been expected given that he was given the mandate to bring budgets back in check, especially after Rebel Moon. So if he made folks upset, well, that’s what he was hired to do! But also, he was described as “well-liked” at his hiring! In that case, I’m a bit sympathetic to Lin, since he may have been undercut by senior leadership, as often happens. Basically, a CEO hires a subordinate to be their “bad cop” and keep budgets in check, but then when talent complains, the CEO ends up undercutting them. That’s how I think you end up with a Narnia movie as expensive as any of the other flops, along with a film executive the town no longer likes. As a result, I think that Netflix is now executing a classic “hire the opposite” move by hiring Peter Rice. This phrase comes from my experience following football and basketball coaching decisions, where teams generally hire the opposite of who they just had. If you have an offense-minded head coach, hire the defensive guy. Or in college football, if you have a strong recruiter, then you pivot to an “X’s and Os” type of guy. Or in pro basketball, if you have a very analytically minded coach, you hire the player-friendly guy. I see that here. After dropping Scott Stuber—arguably a talent-friendly executive with lax budget control—Netflix hired the business guy to keep costs in check. Now Netflix is pivoting back to Peter Rice and presumably a more talent-friendly regime. (Disney, by the way, has done this twice: hiring business guys to succeed talent-friendly Bob Iger. It didn’t work out last time.) When it comes to Peter Rice…we’ll see! Maybe he works out, but maybe he doesn’t. I’d actually say the biggest problem is that Netflix still hasn’t solved its “IP Problem”, in that they don’t own much IP, so they just have a lower hit rate. The new executive won’t solve that. (Though buying Lionsgate would help.) Share “Content” - Bela Bajaria I almost published yesterday’s article after this column, but ended up flipping the order, because it told the story so well. So if you want the data for why Netflix is looking at TV to fix their problems, it’s in that article, this graph in particular: I know I just wrote that it’s often hard to judge executives, but Bajaria ran TV for six years and film for three and a half more. That’s more than enough to judge hit rates, and Netflix needs more hits. That’s the story. Since 2023, Netflix hasn’t had as many hit shows as it used to, and many of its previous power house TV shows have ended their runs (Stranger Things most of all). Also, many shows from 2020 to 2022 probably pre-dated Bajaria’s tenure. (That said, one thing may have been outside of Bajaria’s control, which I explain below.) Let’s lump some content strategy thoughts about Netflix and TV into one place: We’re just getting started with this issue, but the rest is for paid subscribers of the Entertainment Strategy Guy, so if you’d like to find out… Why I partially blame Squid Game for Netflix’s latest troubles… What is “the football trap”... Why it might not be the TV shows or films’ fault at all… What change I don’t think Netflix will make... How Bela Bajaria evolved Netflix’s TV strategy in smart ways… Whose departure likely submarined Bajaria’s final few years… One sneaky explanation for Netflix’s content struggles... And a whole lot more... ...please subscribe! We can only keep doing this great work with your support.
Netflix’s Summer of Bummer
(Welcome to the Entertainment Strategy Guy, a newsletter on the entertainment industry and business strategy. I write a weekly Streaming Ratings Report and a bi-weekly strategy column, along with occasional deep dives into other topics, like today’s article. Please subscribe.) Today, I’ve got a guest post from longtime friend of the newsletter, Brandon Katz. I’ve been trying to find time all summer to look at Netflix’s straight-to-streaming film slate, but between a pre-planned trip and Nielsen moving up their streaming data timeline, I’ve been swamped. So I reached out to Brandon, one of my favorite fellow analysts, to write about it. And I feel like he captured the tone and data focus of the newsletter perfectly. You can connect with Brandon on LinkedIn and Twitter. Enjoy! Don’t worry, folks. You’re in safe hands with me. To ease any anxieties about an interloper in ESG’s domain, I’ll start by stealing one of his best framing devices: headlines. Box office flops are covered in the same way the Teenage Mutant Ninja Turtles eye pizza: with cartoonish insatiability. I would know. I’m a former reporter who wrote nearly identical headlines: Yet, intentionally or not, streaming misses get treated with kids gloves, filtered through a rosy lens: In the last six years, U.S. streaming viewership has become nearly as transparent as the box office, but the data often arrives weeks later, in a number of less intuitive metrics, and with nary an official budget to be found. This plays into the Wall Street-whispering narratives major streamers have been cultivating for years. They get a pass in a way that theatrical studios simply don’t. Subscribe Netflix’s Summer Slate Not a single Netflix original film released between May and August this year opened above 20 million U.S. TV hours, per Nielsen. That benchmark usually serves as the EntStrategyGuy’s floor for a streaming hit on Netflix. None of these films enjoyed a hit-cementing single week of 20-plus million hours during their runs. Netflix’s two best films were true crime docs, Maternal Instinct (16.5 million hours) and The Crash (19.7 million), the best overall week for a film this summer. Great for most other streamers, but not necessarily what we’re used to seeing from Netflix. For an overly-dramatic comparison, Happy Gilmore 2 opened last summer to around 47 million hours (celebrity cameos, baby!). Zooming out, the picture looks even worse. In 2026, Netflix’s five biggest scripted summer films posted the lowest average (28.6 million hours) and median (28.8 million hours) eight-week viewership totals of the past four years. Now, it’s unrealistic and unfair to expect Netflix to deliver a _KPop Demon Hunters-_sized hit every year. But it’s also not ideal to see the size of their hits shrinking over the last few summers. Let’s quickly run through some of the notable summer misses. Jennifer Lopez and Brett Goldstein’s perfectly fine romcom, Office Romance, fell off the charts after 20 million hours in its first two weeks. Top films usually last for four-plus weeks. Starry titles ideally don’t decay that fast either. Homegrown star Millie Bobby Brown couldn’t prevent the snappy Enola Holmes franchise from diminishing returns. At 14.3 million U.S. hours, the third film posted roughly half of what the first two films did in their first two weeks. What’s on Netflix calculated that per-day global views were down nearly 60% from the second movie. The Whisper Man did okay with more than 36 million hours over its first four weeks. But I expected a little more juice from a film featuring Robert De Niro, Michelle Monaghan, and Adam Scott. Kevin Hart’s Ladies First collected just 11.2 million hours total across two weeks. That’s a big miss for one of Netflix’s go-to stars. Plopping into the same bucket are Sunny Sandler’s Don’t Say Good Luck (10.3 million in two weeks) and John Cena’s Little Brother (17.5 million). Meanwhile, English-language originals Color Book (June 19), In the Hand of Dante (June 24) and Heartstopper Forever (July 17) never sniffed Nielsen’s Top 10 at all, despite needing only 2 to 5 million hours to land in the top ten most weeks. (By my count, eleven English-language scripted original films released between May and August did chart). It’s only fair to mention that Swapped (1-May) posted nearly 42 million U.S. hours over five weeks (the longest Netflix original run this summer) and is currently their eighth most-watched English-language film ever worldwide. Remarkably Bright Creatures (37 million, 4 weeks) and Voicemails for Isabelle (27 million, 4 weeks) weren’t bombs either. Still, overall, I think it’s fair to say this was a quieter summer season than we’re used to seeing from the market-leader. You might not realize that given the language commonly used in public analysis. The Twist Despite the starkly black-and-white tone of the coverage, here’s the twist: when many box office bombs arrive on streaming, their viewership looks a whole lot like many of Netflix’s supposedly successful summer releases. Hmm, where have we heard that one before? Masters of the Universe topped out at $65 million stateside against a $170 million budget_._ I’ll admit, Skeletor ripping sleeveless curls as a gym bro and bodyslamming Adam’s co-workers was funny. But, much to the chagrin of my bank account, my laughter doesn’t launch franchises. Yet the He-Man reboot opened to 19.6 million hours (from a Wednesday five-day opening instead of just one weekend), on par with Hoppers on Disney+ (19.4 million). It put up nearly 47 million hours over its first six weeks, bigger than all of Netflix’s summer releases. Pretty darn healthy and likely to land among the 25 most-watched movies on streaming this year. Sticking with Amazon, The Sheep Detectives just barely broke even at the box office with $133 million worldwide (and only $66 million domestic). I never expected cloven-hooved, cud-chewing mammals to be able to bring me to tears. Yet that’s exactly how I found myself at the end of this surprisingly affecting movie (#NoShame). It was likely the unexpected quality in a family-friendly film that powered its streaming over-performance. Sheep Detectives delivered a solid run for Prime video netting 26.2 million hours! How about franchise IP? Star Wars: The Mandalorian & Grogu had the lowest opening ($81 million) and lowest-grossing Disney-era live-action Star Wars film ($178 million domestic). One day before release, its Heat score (19.8%)—audiences who list their interest as a 7/7—fell behind blockbusters Wicked (21%), Superman (23%), Fantastic Four: First Steps (23%), Michael (23%), Toy Story 5 (26%) and Avatar: Fire and Ash (27%), according to Greenlight Analytics. The urgent enthusiasm just wasn’t there. On streaming, Mando opened to weeks of 12.1 million, 6.1 million and 2.7 million hours (21 million total) over its first three frames. Not the numbers Lucasfilm was hoping for nor the numbers of a streaming hit. But they’re in the same vicinity as some Netflix summer releases with $345 million at the global box office to offset a smidgen of the pain. Final Thoughts So why oh why does this nuance gap exist? Four key reasons: Data Literacy: A “$100 million opening” just makes sense. After decades of box office reporting, even casual movie fans are well-versed in the benchmarks of hits and home runs. There’s an immediate shorthand. But “16.5 million” hours doesn’t land nearly as cleanly. Despite leaps of progress, the streaming ratings era is still in its infancy compared to theatrical. The EntStrategyGuy and I met thanks to a late 2010s group chat of data nerds hungry to find a shred of certainty in nebulous streaming performance. I’m not surprised to see “No. 1 on Netflix” still getting misconstrued out in the wild. Timing: By Friday morning, we have the box office’s Thursday night previews totaled, allowing us to better project the weekend’s expectations. From there, ticket sales are reported daily. By Sunday, the film’s fate is usually finalized, at least in terms of public perception. In streaming, Nielsen recently improved its delay to…two weeks. The medium isn’t forced to contend with instant gratification as harshly. Financials: Theatrical film budgets are a mere Google away. Profit and loss is calculated in the cold and unforgiving naked light of day for all to see. But finding the vast majority of streaming exclusive movie budgets requires the forensic investigation skills of a Criminal Minds detective. Also, it’s very difficult to calculate how much revenue/value a straight-to-streaming films provides a streamer. This is why there are so few stories about streaming original movies “losing X amount of money”. On top of that, marketing budgets are far greater for theatrical movies than streaming exclusive movies, which leads to earlier and better awareness. This then translates to a wider pool of potential interest. Narrative Control: Netflix is the only major streaming service to publish weekly first-hand viewership data and annual engagement reports. Naturally, some headlines borrow their first-hand framing**.** Other streamers benefit from their comparative lack of transparency. They may occasionally announce vague performance platitudes such as Apple TV’s Mayday becoming its “biggest film debut on the platform to date over its first 18 days,” and that it ranked No. 1 with left-handed viewers in its first weekend. (Fine, I made up that second one). But, for the most part, they keep first-hand viewership shrouded in mystery to avoid bad press. Especially for outlets that demand multiple articles per day from their writers, it’s an easy (and understandable) way for some reporters to hit their daily article quota by just repeating what the streamers have told them. TL:DR version: Streaming-exclusive movies are asked to do different things than theatrical movies, but that doesn’t mean they should escape judgment. Both still need to draw enough eyeballs to justify their cost within the proper performance contexts. The more cleanly we can inject a little nuance into streaming analysis, the better we’ll understand the audience and content trends that drive this industry. And that’s what all of this is really about: knowing what audiences actually want! Brandon Katz is the Director of Insights & Content Strategy at Greenlight Analytics where he focuses on evaluating the ever-fluid media landscape to unearth understanding, opportunity and value. Greenlight Analytics is the entertainment intelligence consulting company redefining how Hollywood finds, understands, and activates audiences. Prior to joining Greenlight Analytics, he served as the senior entertainment industry strategist at Parrot Analytics, and as a full-time entertainment industry reporter covering the Xs and Os of Hollywood, most notably with TheWrap and the Observer.