Coming Soon on Netflix: A New Netflix

Around noon on Wednesday, March 16, hundreds of Netflix Inc. employees gathered on the second floor of the Anaheim Hilton Hotel expecting to hear good news. The company had thrived during the pandemic. It added 36.6 million customers in 2020, a record, and its aggressive investment in original content paid off in 2021 with the French crime show Lupin and the South Korean thriller Squid Game, two of its most popular programs ever. Netflix had also broken through at Hollywood’s biggest awards shows, winning two of the top three Emmys and receiving 27 Oscar nominations, the most of any company. A couple of years into the streaming wars, it looked as if Netflix had not only survived but emerged stronger.

Co-Chief Executive Officer Ted Sarandos, who turned Netflix into an award-winning powerhouse, took the stage to open the company’s annual business review meeting after a brief sizzle reel recapping its many hits. But as soon as he ceded the stage to Spencer Wang, the vice president for finance, investor relations, and corporate development, the mood in the room began to darken, according to two people who were present but aren’t authorized to talk about it. Netflix’s growth had sputtered in recent months, putting the company on pace to lose subscribers for the first time since 2011. As executives followed Wang onto the stage to outline ways they could reverse the slide, many employees started to grasp that Netflix was in trouble. Its remarkable success over a 25-year history had instilled in staff a belief that it could never lose. A small DVD-by-mail service from Los Gatos, Calif., had seen into the future time and time again, outflanking much larger players to remake Hollywood in its image. This was the first time anyone could remember Netflix’s leadership saying that competition was negatively affecting the company’s streaming business in a significant way.