Netflix (NFLX.US) plans to lay off about 1,000 people, 6% of its total workforce, stepping up cost control efforts amid slowing growth.

Netflix (NFLX.US) announced on Wednesday that it plans to cut about 6% of its workforce, affecting approximately 1,000 people. The layoffs will mainly affect departments including product, technology, legal, and human resources. Although the company emphasized that its current business is still growing steadily and that it is on track to meet its full-year performance targets, against the backdrop of stagnant growth in user viewing hours and increasingly fierce industry competition, Netflix is further improving operational efficiency by optimizing staffing and resource allocation. According to an internal memo obtained by the media, Netflix co-CEOs Ted Sarandos and Greg Peters said in an email to employees that the company's mission to "entertain the world" is ambitious, and achieving this goal requires more prudent prioritization of personnel and resource allocation. The two said in the email: "Our business is performing strongly and continues to grow, and we remain on track to meet our full-year performance expectations. We will continue to actively invest in areas with significant impact to improve the service and further drive innovation." However, management also pointed out that in order to continue creating value for members, partners, employees, and investors, the company must make more targeted resource allocation decisions across its businesses. Netflix said it has no further comment beyond the information disclosed by the two co-CEOs in the internal memo. As planned, Netflix will release its latest quarterly earnings on October 20. It is worth noting that this round of layoffs comes just weeks after Sarandos publicly expressed dissatisfaction with the company's growth rate. At the Screentime conference held earlier this month, Sarandos admitted that Netflix's current growth rate "is not where I want it to be." In recent years, Netflix has faced a contradiction between growth and profitability. On the one hand, the company continues to achieve steady profits and maintains its position as the global leader in the streaming industry; on the other hand, its growth in user viewing hours has stagnated, and the main drivers of new subscription users have come more from cracking down on password sharing and launching a lower-priced ad-supported subscription tier. This means that although Netflix has successfully expanded its user base by adjusting its subscription strategy, how to continuously increase user engagement and drive growth in viewing hours remains an important challenge for the company. At the same time, the competitive landscape of the streaming industry is also changing. For a long time, YouTube has been Netflix's main competitor for users' viewing time. Now, with Paramount and Warner Bros. Discovery completing their merger, the newly formed media and entertainment giant Skydance (SKYD.US) is also becoming an important competitor for Netflix. The company plans to integrate its streaming platforms Paramount+ and HBO Max to further strengthen its competitiveness in the streaming market. In order to compete for consumers' limited entertainment time, Netflix has continued to promote content diversification in recent years, expanding into areas such as live sports events, documentaries, and video games, hoping to reduce its reliance on traditional film and television drama content. However, Netflix has recently still lacked phenomenal hit works like "Stranger Things" and "Squid Game" that can spark widespread discussion and significantly boost user viewing hours. Against this backdrop, how to enhance user stickiness through content innovation while controlling rising operating costs is becoming an important issue that Netflix management needs to balance. In fact, Netflix is not the only U.S. media and entertainment company to announce layoffs recently. Last month, The Walt Disney Company (DIS.US) also announced that it would cut about 300 employees, with most of the layoffs concentrated in human resources and technology positions, reflecting that the media and entertainment industry is further strengthening cost control. For Netflix, this round of layoffs shows that even though the company is still maintaining profitable growth, management is reassessing business resource allocation and directing more funds and manpower into areas that can directly drive product innovation and long-term growth. As Netflix is about to report quarterly results on October 20, investors will focus on the actual effects of its subscription business growth, user engagement, advertising business development, and cost control measures to judge whether the company can maintain its growth momentum in increasingly fierce streaming competition.