The Power Clash Behind the Crash in Netflix's Big Wake-Up Call

The Power Clash Behind the Crash in Netflix's Big Wake-Up Call ...

Before we get to the deep dive on the internal drama at the internecine battles among top leadership that one source calls "the Hunger Games," here's a look at the location.

The problem about schadenfreude is that the freude (joy) is usually savored when the schaden (the bad thing) happens to someone else. In the case of Netflix's ongoing debacle, the streamers competitors recognize that they are harmed themselves by the sudden realization that perhaps the sky isn't the limit when it comes to streaming. However, they are frothful about the bad news.

Yes, a top executive at one of Netflix's legacy-studio rivals, the news has dinged valuations and was bad for his company, but "it sure fucking feels good." This executive tells the story about almost every conversation about the streamer, saying, "It's not just the arrogance of declaring that you're the leader, not respecting executive contracts, and [poaching] everybody and their actions. "We were shocked and dissatisfied," says one of our

As Warner Bros. Discovery CEO David Zaslav highlighted in an earnings call on April 26 that he headed "a far more stable and competitive company." "Cable networks may be on the decline, but they still generate a lot of income.... Maybe try keeping the lights on. Maybe don't kill theatrical so fast."

While Netflix's competitors have room to expand, and Disney in particular has committed to growing a lot, agents and producers are concerned that the content bubble will come to an end, as is the unicorn who got to a book-worthy 94 episodes of a scripted show on Netflix. She replies, "Yes." (I interviewed her for my KCRW episode The Business.)

A top executive at a legacy company that has invested money into streaming suggests it. Wed all be insane not to give the spend a tough look, he adds, adding, Agents are flipped out more than anybody. Theyre taking it difficult.

Uncertain, whether Netflix's rocky journey is truly a measure of subscriber growth is not. In a time of war in Europe and rising inflation, it may be a little early to write an obituary.

Back to the drama. Several important Netflix creators have written a very solid understanding of what's wrong with the streamer's culture. They see a link between Netflix's problems and Cindy Holland's 2020 death, who played a significant role in launching the service's originals brilliantly and often expensively with House of Cards, Orange, among others.

According to these sources, Holland was the one who cultivated strong interpersonal relationships and took the time to offer thoughtful development notes while still making people feel safe and supported in pursuit of their passion endeavors.

A number of Netflix employees believe that Holland was superior to Ted Sarandos, the company's first content officer, who gave Netflix its identity as a home to buzzy, high-end shows. (It was also Holland who warned Sarandos, to no avail, that continuing to order specials from one of his comedy heroes, Dave Chappelle, would result in internal conflict and bad press.) "That service was built on the back of Cindy Holland's taste," one said. "I might give you a list

According to a former insider, Netflix had learned years ago that it would have to increase its volume of original shows substantially year over year to compete. It might anticipate the time when popular movies on the service, like Friends and The Office, would be reclaimed by the studios who founded them. And for a time, as Netflix ratcheted up its originals, it seemed like an unstoppable force, increasing its subscriber base even as some challenged its own economics.

Sarandos' volume strategy grew to be harmful to the culture and quality of the service, according to a former insider. It's difficult to say whether Netflix would have gone wrong by over-rotating to less expensive, less curated and less compelling or, perhaps, broader fare.

According to many sources, the arrival of former CBS and Universal Television executive Bela Bajaria in 2016 was a significant turning point. By then, Holland was to oversee 80 shows on the service, while Bajaria was responsible for 60. "That's why, too, because that's when the fear of capitalism took over." Holland declined to comment.

Bajaria, who also had responsibility for distributing television and documentary content from major U.S. studios, moved to Holland's scripted television domain in 2017, according to the CW. The film's 12 episodes had been rejected by the CW. In 2017, Bajaria took a 13-episode order to Insatiable, a dark, hourlong comedy pilot that had been rejected. One prominent Netflix supplier described the decision as "the beginning of the Walmart-ization" of the streamer. (

"It was called "Insatiable-gate within the halls of Netflix," a source says. "It caused total demoralization and chaos, but everybody knew it was a terrible thing Ted did," the source adds. "It started by looking to Bela as what the company should be," says the author.

According to a Netflix reporter in response to a request for clarification, "Bela is an exceptional creative executive with an eye for quality as well as shows that will appeal to many wide audiences." The major films Bajaria is credited for are the megahit Squid Game and Lupin.

According to sources, some Netflix executives continued to worry about the growing number of shows. "It was, 'Hey, guys,' says a former insider. And then there was Holland's concern about the lack of curation and quality control. "I wonder if a bonobo punch at a whiteboard full of titles as a means of deciding what projects to make would have more or less success than all of these other 'deciders' who want or don't."

A prominent creative who grew openly on Team Holland said, "They pitted Bela and Cindy against each other." A former Netflix insider says, "People would always say they didn't know who to go to [to pitch], but Ted loved that shady phrase, "There are many paths to yes."

The Queen's Gambit, a costly period piece that some insiders described as "Holland's Folly," was one of Holland's last projects for Netflix. According to sources, Bajaria and her staff were dismissive and even unpleasant to the content creators. (A Netflix spokesperson claims that the claims are incorrect.) When the series turned into a phenomenon, Bajaria was routinely credited for it in the media.

According to insiders, Holland wished to stick to Sarandos' costly Oscar campaigns, which he argued would be fine if one in ten shows worked. "This is one of the things that Cindy and Ted disagreed on for a while," this person says. "You're also losing the town. You cannot buy your way to an Oscar," Ted said.

Sarandos was promoted to Netflix's co-CEO in July 2020, according to some analysts. In the context of the pandemic, Sarandos said he was no longer interested in supporting Holland or anyone else. According to another source, Sarandos, who is said to be shy about confrontation, chose a public spot to avoid it. It was for him, however, but she was the subject of the operation.

Sarandos is thought to have given both Bajaria and Netflix director Scott Stuber staggering increases. While Netflix executives were notoriously well-paid, Holland had been making less than $10 million a year; Stuber and Bajaria were rewarded with salaries of between $16 million and $18 million, according to a source.

Although Holland had been criticized for excessive spending, Bajaria has established a reputation for reducing budgets. Multiple sources say that this has already been going on for at least a year at Netflix, and it is evidently intensifying. However, one unhappy Netflix creative says he doesn't blame Bela or, by implication, Stuber for this. "You cannot blame Bela for any of these things," this person says. "She now has bosses in Reed and Ted, and this fish stinks from the head

Another major Netflix talent believes that a "profound culture shift" commenced with Cindy's departure, but adds a major caveat. "Netflix was a gut-driven, risktaking, maverick culture," he adds. "Now it's more prudent and often indecisive. "But the Cindy era was therefore unsustainable as a business model. That's a fact."

The rumor has begun swirling about what Netflix will do to address its problems. Which heads will roll? Is it possible Hastings will sell? Is the streamer still a behemoth, according to the head of a rival company. I don't believe Netflix is a Blockbuster, he says. It's here to stay. But the idea that they could spend their lives in the world is gone.

A version of this story has been published in the May 27 issue of The Hollywood Reporter magazine.

You may also like: