The news: Netflix laid off 6% of its global workforce on Wednesday, or approximately 1,000 employees, per Wall Street Journal reporting.

The layoffs are the company’s first since 2022, when it reported its first-ever subscriber loss and subsequently launched an ad-supported streaming offering.

This time, lagging engagement is a likely culprit. Though the company’s revenues were up 13.4% YoY in Q2 and subscriber churn remains low, time spent on the platform is crawling—and the layoffs show Netflix may be concerned about maintaining revenue growth. Its stock is down 23% this year; the company reports Q3 earnings on October 20.

Zooming out: After failing to secure a Warner Bros. Discovery acquisition, Netflix was left without a clear lever to pull for growth. To reverse slowing engagement, it’s turned to a number of media formats with high growth rates, including live video podcasts, sports events, and even vertical video. But those efforts haven’t moved the needle yet.

Netflix’s current original content strategy includes pumping out multiple first-season shows and original films each year. But that appears to be under review; Bloomberg data showed that viewership between a Netflix show’s first and second seasons falls significantly, and co-CEO Ted Sarandos recently admitted the company isn’t growing as fast as he would like. The layoffs included film vice president Doug Belgrade, who had been at the company since 2024.

Implications for marketers: Slow engagement growth doesn’t change the fact that Netflix’s audience is still substantial, and rapid ad revenue growth shows marketers are still spending.

But as with the last round of layoffs, rising pressure could prompt a major restructuring at the streaming leader. Ad plans will likely remain stable for now, but a major change to Netflix’s business model could be on the horizon.