Netflix faces internal tensions as dual-CEO structure meets growth pressures
Netflix’s co-CEO model is under strain amid layoffs, a failed Warner Bros. bid and disagreements between Hollywood and Silicon Valley teams over strategy and product direction.
Netflix is dealing with internal friction between its Los Angeles-based content executives and Silicon Valley engineers as the company seeks to expand beyond streaming. The tension has intensified since co-founder Reed Hastings stepped back in January 2023 and handed leadership to co-CEOs Ted Sarandos and Greg Peters. Sources familiar with the company said the dual-CEO arrangement sometimes leads to unclear vision and costly missteps, such as the recent foray into video games, which resulted in the closure of several studios.
“With two CEOs, it’s hard to have a singular vision,” said a former Netflix executive who requested anonymity.
A person close to Netflix disputed the notion of a culture war, arguing that the two leaders bring complementary perspectives and make decisions together. Management professor Henning Piezunka noted that having two senior leaders can provide a “powerful” division of labor when disagreements arise.
The company’s challenges are compounded by a failed $82.7 billion bid for Warner Bros., a 6 % staff reduction that included senior content executives, and slowing growth as the U.S. subscriber base nears saturation. Analyst Laura Martin of Needham & Co. said Netflix needs a plan to revive revenue beyond producing hit shows.
Recent internal disputes have involved the rollout of NFL games, marketing of titles, and the push into gaming, where Peters and Sarandos reportedly disagreed on priorities. The TF1 partnership in France also highlighted differing views, with Peters supporting the deal and Sarandos initially opposing it.
Despite a 44 % rise in net income to $3.7 billion in the latest quarter, Netflix’s share price fell from $109 to $65.85 after the Warner bid was withdrawn. Sarandos told investors that the company does not need a fundamental strategic shift but must develop more globally appealing U.S. content.
“Their advertising growth has been very slow … and the video game business has been disappointing,” said Martin. “The market is maturing and they need a Plan B, and they don’t really have a Plan B right now.”