Netflix gives downbeat outlook as streaming hits dry up

Netflix’s shares slumped after the company reported its slowest revenue growth in three years and gave a downbeat outlook for the rest of the year, as it struggles to draw in new subscribers.

“We know there’s some investor concern about our view hours growth,” co-chief executives Ted Sarandos and Greg Peters wrote in a letter to Netflix shareholders, citing intensifying competition from rivals. The pair are pinning their hopes on a former Disney executive to reignite its creative juices.

Netflix’s shares were down 5 per cent after it released third-quarter results at the end of the trading day.

The world’s dominant video-streaming group has slashed about 1,000 jobs over the past week, including firing its content and film chiefs, as viewership growth has plateaued and the company fails to deliver hits that break through culturally.

Sarandos and Peters last week hired Peter Rice, a former top executive at Disney and Fox, as part of a dramatic internal shake-up that they hope will deliver more must-watch shows to hook viewers.

They said they aimed “to accelerate growth in view hours as well” and they were “confident we’ll do that by relentlessly focusing and executing against the aforementioned strategy”.

Wall Street has been relentlessly focused on Netflix’s viewership figures amid a lacklustre film and TV slate, with the streaming company failing to deliver a Stranger Things or Squid Game-esque hit this year. Its have fallen more than 40 per cent over the past 12 months.

Netflix on Tuesday said revenue growth would continue to moderate in the fourth quarter, and at $13.4bn would fall short of Wall Street’s consensus, according to Visible Alpha. It added net income of $2.8bn would be nearly $300mn short of analysts’ expectations in the final three months of 2026.

Netflix blamed severance costs tied to its lay-offs last week for the lower than expected fourth-quarter earnings and noted its advertising growth had been slower than projected.

Sales in the third quarter grew 12 per cent from a year prior to $12.9bn, meeting Wall Street’s forecasts but were its smallest annual rise since 2023. Profits rose 44 per cent to $3.7bn, eclipsing expectations.