Hollywood

Netflix Disrupted Hollywood. Now YouTube Is Disrupting Netflix

Netflix is preparing to cut 5 per cent of its staff as YouTube takes its viewers and Skydance takes Warner Bros. The disrupter of Hollywood now looks like one of its studios.

Husam Sam Asi 10 October 2026, 13:03 · Updated 11 October 2026, 13:58

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Netflix is preparing to cut about 850 jobs, roughly 5 per cent of its workforce, in a restructuring that could be announced as early as next week, Puck reports. Netflix has declined to comment. Its shares have fallen 42 per cent in a year, its third-quarter results are due on 20 October, and on 6 October the studio it tried to buy, Warner Bros., passed to David Ellison’s Skydance.

Seven years ago this was the studios’ story: slowing growth, a nervous Wall Street, a younger rival eating the audience and a round of sackings to steady the share price. Netflix wrote that script for old Hollywood. It now plays the lead.

The disrupter meets its own

In 2018 Netflix overtook Disney in stock-market value. A year later the studios began pulling their films from its service to launch platforms of their own, a move that threatened to put Netflix in an existential crisis. Netflix won that war. The studios lost billions chasing it, and Warner has been sold three times in eight years.

The rival that hurts arrived from another direction. In July YouTube took 14.2 per cent of all television viewing in America, a record. Netflix took 7.8 per cent, down from 8.8 per cent a year earlier. YouTube commissions almost nothing it shows. Its users make the programmes and share the advertising, which brought in $11.1 billion in a single quarter. Netflix, which spends about $20 billion a year on content, expects $3 billion from adverts in the whole of 2026. The analysts at MoffettNathanson rank YouTube as the world’s largest media company, ahead of Disney.

Netflix’s own numbers tell the same story. Its members watched more than 97 billion hours in the first half of the year, a rise of 2 per cent. Steve Cahall of Wells Fargo calculates that the average member watches about 8 per cent less than three years ago. Revenue growth in the US and Canada has slowed from 18 per cent to 10 per cent in three quarters, even after a price rise to $19.99 a month. Stranger Things has ended and nothing has taken its place. Netflix has “lacked big original series and it’s showing”, Cahall wrote.

Netflix reinvents cable television

Netflix last cut jobs in 2022, after its first loss of subscribers in more than a decade, and recovered by selling adverts and policing shared passwords. Those cards have been played. Now it signs YouTube creators and video podcasts, tries vertical video, stages American football and wrestling and, the Wall Street Journal reported in July, has discussed themed live channels and a bundle with Peacock: the cable package it spent a decade dismantling. Hollywood once copied Netflix. Netflix now copies YouTube and, for good measure, old television.

Ted Sarandos, its co-chief executive, admitted on 30 September: “Overall, we’re not growing as fast as I want us to.” He insists that “the business is great and growing fine” and that Netflix is “in the professionally produced content business”. Live events, he said, take 5 per cent of the content budget and deliver 1 per cent of the viewing.

The studio that got away

Warner was meant to be the answer. Last December Netflix agreed to pay $82.7 billion for the Warner Bros. studios, HBO and HBO Max: Harry Potter, Game of Thrones, the DC superheroes and a century of films. A company that had built its library title by title went shopping for ready-made franchises. In February Paramount Skydance bid $31 a share, Netflix declined to match it and left with a $2.8 billion break fee. “That was the top price point where I thought we could return value to our shareholders with that asset,” Sarandos said. Investors cheered and the shares jumped almost 9 per cent before the market opened. The relief has worn off: at about $71, they stand 43 per cent below their 52-week high.

Skydance now owns two film studios, HBO, CBS, CNN and streaming services with more than 200 million subscribers, which it plans to merge into one. Asked how big a rival that makes, Sarandos said: “I don’t know if one and one is two, or one and one is one and a half, or one and one is three.”

Every studio has its own Netflix

The pandemic was Netflix’s finest hour. Cinemas closed, the studios had nothing to sell a housebound audience, and Netflix added a record 37 million subscribers in 2020. A new lockdown would find Disney+, Peacock, HBO Max and Paramount+ already installed in the living room. That advantage has gone for good.

The rivals also have other tills. Disney’s theme parks earned $3 billion in operating profit in their latest quarter, more than four times the profit of its streaming arm. Skydance has broadcast and cable networks, though they come with about $80 billion of debt. Netflix has one product, and when viewers drift to YouTube there is no roller-coaster to pay the bills.

Netflix is a long way from the knacker’s yard. It made $4.2 billion in operating profit in the second quarter on a margin of 33 per cent, has more than 325 million paying members and is worth about $300 billion to Disney’s $185 billion. On 2 October Disney licensed the Ice Age films and Percy Jackson and the Olympians to Netflix. This is the Disney whose former chief executive Bob Iger once likened such deals to “selling nuclear weapons technology to a Third World country”. The studios still need Netflix’s audience.

The change lies in what Netflix has become. Wall Street values its shares at about 22 times earnings, the same multiple it gives Disney. The market now prices Netflix as a studio: rich, mature, defensive and frightened of the young.

Film-makers should worry. Netflix paid for The Irishman when no studio would give Martin Scorsese an estimated $160 million, and it gave Alfonso Cuarón’s Roma a home. A Netflix that counts its pennies will write fewer cheques of that kind, and Skydance, with its debts, prefers sequels. The company that taught Hollywood to fear the future has met it. The future is free, much of it is made in bedrooms, and it belongs to Google.

Sources: Puck; TheWrap (layoffs); TradingKey; The Motley Fool (Nielsen); Barrett Media; Netflix second-quarter shareholder letter; TheWrap (MoffettNathanson); TheWrap (via Yahoo Finance, downgrades); NPR; TheWrap (via Yahoo Finance, live channels); The Hollywood Reporter (via Yahoo Finance); AFP (via The Peninsula); Netflix; Yahoo Finance; StockTitan; Digital TV Europe; The Desk (Disney); The Desk (Netflix); What’s on Netflix; The Motley Fool (valuation).