A few months ago, Netflix began circulating an internal Google Doc containing revisions to the company’s culture memo. The document garnered some 10,000 comments from employees before the final product — published on Netflix’s jobs site — was released to the public earlier in May.
Notes included a directive for employees to “spend [Netflix] members’ money wisely” and a reminder that leaders also needed to be held accountable for following company values. But there was one section in particular, on “artistic expression,” that stood out to some staffers.
“Not everyone will like — or agree with — everything on our service,” the note specifies, ending with a message aimed directly at staffers: “Depending on your role, you may need to work on titles you perceive to be harmful. If you’d find it hard to support our content breadth, Netflix may not be the best place for you.”
The updated entry appeared to be a direct response to internal and public outcry at the streaming giant last October in response to The Closer, a Dave Chappelle comedy special that included multiple transphobic jokes. Though Netflix received plenty of public backlash and co-CEO Ted Sarandos admitted he “screwed up” his initial responses to staffers’ concerns at the time, the streamer has gone on to announce a deal with Chappelle for four more comedy specials and has taken a harder line toward what it deems as “artistic freedom” — even at the potential expense of its own staffers — as part of its company culture.
“In 2021, speaking out about what is in the best interest of the business was still a part of the culture,” a former Netflix employee tells The Hollywood Reporter. “With the re-write, … Netflix has made it clear that the new order is ‘if you don’t like it, leave.’”
While most organizations today typically have a document outlining values, Netflix stood out in 2009 when CEO Reed Hastings publicly released the company’s approach to management in the form of a 125-slide deck that included seemingly radical concepts at the time, like unlimited vacation and “avoid rules.” The deck, which was since revised into a formalized culture memo, served as the inspiration behind Hastings’ 2020 book, No Rules Rules.
But this month’s memo change comes during a period of major upheaval for Netflix, which is contending with a slowdown in subscriber growth as competitors like Disney breathe down the streamer’s neck. During the first quarter of the year, Netflix lost 200,000 subscribers and expects to lose an additional 2 million more in Q2 — losses that have cratered the company’s stock and have employees and investors alike worried about the future growth of the once high-flying and high-spending streamer. To help stave some of those losses, Netflix has begun experimenting in new areas of business, like advertising and video games — the former of which Hastings was once staunchly opposed to.
But as with any company trying to cut down costs, Netflix is reining in its spending growth and has implemented two rounds of major layoffs within the span of a month, with the latest round cutting 150 full-time staffers, or about 2 percent of the company’s total workforce, and several dozen contractors working in Netflix’s editorial division — some of whom were brought on just months ago and worked specifically on channels meant to serve underrepresented identities like Strong Black Lead, Con Todo, Most and Netflix Golden.
The social channels are all run within Netflix’s marketing division and are meant to elevate Netflix’s programming geared toward specific audiences and build strong communities with viewers. Strong Black Lead, for example, launched in 2018 as a way to promote Netflix’s programming featuring Black talent and creators and build a meaningful community with Black audiences year-round. Since then, the marketing brand has launched original video series, a podcast and has amassed 804,000 followers on Instagram and more than 253,000 followers on Twitter.
Following that success, Netflix’s marketing team went on to launch additional channels like Con Todo, for Latino communities; Most, for LGBTQ+ audiences; and, just recently, Golden, for the Asian diaspora. Each of those channels count several thousands of followers across Instagram and Twitter.
Netflix said the editorial cuts, which were made across all social channels — not just the identity-focused ones — are part of a larger strategy to have social content be created in-house, rather than by outside contractors. The company also let go a number of staffers in the family and animation divisions in the last round of layoffs and has dropped animated projects in the works from Ava DuVernay and Meghan Markle, though Netflix has said those series were scrapped due to creative reasons.
“We are making changes to how we support our publishing efforts, including bringing some of this important work in-house,” a Netflix spokesperson said. “Our social channels continue to grow and innovate, and we are investing heavily in them.”
Though the social accounts are still running, laid-off editorial staffers are questioning Netflix’s commitment to diversity, given that many of the contractors said they were encouraged to join Netflix because of its perceived focus on supporting writers, editors and creators from diverse backgrounds.
In addition to promoting the specific identity-focused social channels, Netflix has emphasized its commitment to inclusion with recent financial pledges, including by moving $100 million, or 2 percent, of its financial holdings to banks that support Black communities and creating a $5 million fund to invest in Black creators and businesses. The streamer has also focused on improving the diversity of its own staff; last year, Netflix said women made up half of its global workforce, while roughly half of its U.S. workforce were from the global majority, according to the company’s 2021 diversity report.
“There was so much talk about how Netflix was committed to diversity and inclusion, and I think a lot of us who were brought on really believed that,” a second former editorial staffer at Netflix who was impacted by the recent round of layoffs, notes. “The writers really make up a lot of the incredible content that you see on those channels and [bring] really broad, diverse perspectives, so it is a shame that we were all let go.”
It also didn’t help that, according to two contractors who spoke with THR, the two rounds of layoffs came with very little notice. (Netflix’s contractors are employed by outside agencies, and at least one of the agencies — Made by Fabric — appears to have shut down entirely following the recent round of layoffs.)
“They’re having to reimagine themselves,” a third former editorial staffer who was laid off in April adds of the changes at Netflix. “It’s just such a corporate thing [where] somebody high up who makes, you know, $10 or $20 million a year makes a bad decision or puts off dealing with a problem and people on the ground have to suffer because of it. That definitely sucks.”
That isn’t to say layoffs or firings at Netflix are particularly unusual at the streamer, which notably has a “keeper test” that guides the company’s approach to firing. (“If a team member was leaving for a similar role at another company, would the manager try to keep them? Those who do not pass the keeper test (i.e., their manager would not fight to keep them) are given a generous severance package so we can find someone even better for that position,” Netflix’s culture memo states.)
But with the most recent round of layoffs being determined by “business needs rather than individual performance,” as a Netflix spokesperson said at the time, employees noted the loss of trust among staffers. “This feels like they really lost control of the narrative, like it’s out of control,” another Netflix insider adds. “The trust has been eroded.”
As for how Netflix will handle future employee dissent, the updated memo regarding “artistic expression” will also be put to the test in light of a new comedy special from Ricky Gervais, which includes multiple jokes about trans women. Netflix has not responded to repeated requests for comment on Gervais’ special, and if the company’s handling of the Chappelle special is any indicator, it is likely that the streamer will once again come out in support of the comedian.
“It used to be part of the culture, and people saw that as empowering them to speak up and out. The new culture memo makes it clear that creative is now protected from having to listen to anyone’s opinions they don’t agree with,” the first former Netflix employee says. “It’s a real shame, because if they’re not listening to employees who are minority-affiliated, and they aren’t tracking viewer activity through this lens either, then they’re operating in a cultural black box.”
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