Netflix faces mounting challenges in keeping users engaged

As Netflix prepares to report its third quarter earnings, the streaming giant is facing a fall in user engagement, and slowed growth.

Netflix co-CEO Ted Sarandos had acknowledged that growth is not on par with his expectations — even if the company reports steady revenue and profits. Netflix is expected to post slow third-quarter revenue growth, according to data compiled by LSEG.

The streaming giant also recently saw a change in leadership, as content head Bela Bajaria left the company, to be replaced by former Disney executive Peter Rice. Netflix also announced the departure of film head Dan Lin.

Furthermore, the company laid off around 1,000 workers, or about 6% of its global workforce.

Though Netflix has pushed for stronger advertising and raised subscription prices in order to unlock value through commercials, market research firm Apptopia reported that downloads in the US and Canada fell 20%.

Netflix shares, meanwhile, are down by about 26% this year.

Mr. Sarandos proposed live programming as one way to achieve more growth, as more streaming companies focus on live sports events. Some media experts point to the absence of a new and steady “hit” show that becomes a visible part of pop culture and garners an international fan-following.

The streaming giant competes with Amazon, Apple, and Disney when it comes to creating premium new shows and movies that pull in new subscribers and retain older ones. Netflix competes with YouTube in a fierce market for lower-cost content, creator-led offerings, and vertical-format episodes.

For their part, Netflix users have expressed disappointment with short show runs, cancellations after just one or two seasons, and increasingly expensive ad-free subscription tiers.

Others feel that popular shows excessively space apart their seasons, leading to a drop-off in interest.