the industry

What Does Netflix Do Next?

Netflix co-CEO Ted Sarandos. Photo: Kevin Dietsch/Getty Images

Netflix co-CEO Ted Sarandos last week said Dave Chappelle was responsible for supplying the streamer with its “stickiest” and most-watched stand-up special ever, 2019’s Sticks & Stones. But while the comic may be good at driving viewership, his obsession with trans people has plunged Netflix into one of its biggest PR nightmares ever and sparked a major internal backlash among employees angered by their company’s continued support of Chappelle. All of a sudden, the Qwikster debacle from a decade ago seems almost quaint.

In fairness to Netflix, the response to that 2011 mess represented a far more existential threat than anything that has happened so far. For starters, even though the streamer is being pilloried by critics and in certain quarters of social media, there hasn’t been any substantial, or at least immediately measurable, fallout from the company’s decision to stream and vocally support The Closer, the controversial special that features Chappelle’s latest transphobic rant. Netflix stock has not tanked, and no major consumer boycotts of the service have been announced, at least not yet.

Instead, the epicenter of the current crisis is within the company’s own (largely virtual) walls. Staffers angered by the events of the past two weeks feel the company has breached their trust: After Sticks & Stones came out, Netflix execs seemed to promise the company would handle future Chappelle specials with more caution and consideration, according to a report from Bloomberg’s Lucas Shaw. That clearly didn’t happen. Frustrated, some employees have called for a daylong walkout this Wednesday, while others have taken to leaking confidential internal data about Netflix production costs and viewership. One was even fired for leaking, a move that resulted in even more bad PR for the company. (Netflix hasn’t said who the leaker was, but The Verge reported the staffer was Black, trans, and pregnant.)

While the ripple effects of the Chappelle controversy have so far been mostly limited to internal Netflix affairs, it’s not impossible to imagine the scandal eventually having an impact on the company’s bottom line. The next few days could be key: One of the goals of Wednesday’s walkout is to raise awareness of the issue among the wider public and perhaps put pressure on Netflix to take action to address the concerns of trans employees and allies. Here are some key unanswered questions ahead of tomorrow’s work stoppage:

➽ Will Sarandos and Netflix founder and co-CEO Reed Hastings address the Chappelle situation during this week’s quarterly earnings report? Netflix reveals its third-quarter financial results on Tuesday afternoon, and as part of that process, key execs at the streamer will field questions from a Wall Street analyst. Because reporters won’t be involved, it’s not unthinkable that the whole controversy goes unmentioned. But if Sarandos and Hastings want to cool things down ahead of the Wednesday work stoppage, this would be a good venue: It’s the first time either will be on-camera at a major event since the backlash started. Of course, given how execs at Netflix have made things worse with every public utterance, they might simply be best served by saying nothing.

➽ What will the walkout look like, and how will we know how many employees participated? While some Netflix staffers are back in their offices, most are still working remotely. Trans activist Ashlee Marie Preston has called for Netflix staffers and outside supporters to gather outside the company’s Hollywood headquarters on Wednesday morning. Per an Instagram post announcing details of the event, a “list of firm asks” will be made to Sarandos, while some celeb supporters are expected to participate in a taped PSA. But Netflix is a global company, so much of Wednesday’s walkout will likely take the form of a virtual protest with support seen online as participants post their objections on Twitter and other social-media platforms.

➽ Will any of Netflix’s major talent partners lean on the company? At the moment, very few major stars or producers with deals at Netflix have publicly spoken against the streamer’s decision to platform Chappelle’s anti-trans rhetoric. But what happens if, during Wednesday’s planned employee walkout, a bunch of Netflix talent — folks with big followings — starts posting condemnations of Chappelle and Netflix? Until now, Sarandos has positioned himself as a champion of artistic integrity and a defender of free speech. That narrative could shift if many of the people Sarandos believes he is fighting for come out and say, no, actually, this isn’t about “freedom” after all.

Of course, even if a slew of boldface names suddenly start expressing solidarity with Netflix employees, it probably won’t have much of an impact unless they back it up with threats to stop working with the streamer. If that happens, Sarandos may suddenly become a bit less strident with his “defend Dave at all costs” philosophy.

➽ Short of pulling The Closer from Netflix, what can Sarandos do to address the concerns of staffers upset by the company’s actions? While one civil-rights group, the National Black Justice Coalition, has asked the streamer to remove Chappelle’s latest special, it is worth noting that others, including GLAAD, have not. And Netflix staffers who have spoken off the record to reporters about the issue have held back from asking the company to deplatform Chappelle’s work. Instead, it seems what some employees want is an explanation of why the backlash to Sticks & Stones didn’t prompt Netflix execs to better prepare for the response to The Closer.

Indeed, while Netflix has a well-earned reputation for giving top creators such as Ryan Murphy and Shonda Rhimes near-total creative control, the company still engages in conversations with talent and does make its opinions known. Nobody expects that Netflix would ever give a stand-up (even one less powerful than Chappelle) creative notes about a comedy special or demand to see an outline before it was filmed. But the company could have, in theory, asked Chappelle to meet with members of the trans community — or perhaps even Netflix’s own trans employees — to engage in a dialogue about why they believe his speech puts them in danger. Or, barring Chappelle himself participating in such a conversation, Sarandos and other Netflix execs might have met with employees to discuss what steps could be taken before The Closer’s release to the public. Perhaps it’s naïve to think any sort of middle ground could be found, but given what happened after 2019, it’s a bit of a head-scratcher as to why senior Netflix management seems to have chosen “do nothing” as the best course of action.

Even more mystifying: Having made the decision to release The Closer despite knowing what the internal reaction would be, Sarandos then issued not one but two memos positioning himself as an artists’-rights warrior while dismissing the opposition inside the company as a mere “disagreement.” Rather than taking time to engage in an extended dialogue with the staffers who were upset by the Chappelle special, Sarandos twice decided to offer lectures about why his course of action was the proper one. That’s his right as co-CEO, of course; Netflix is not a democracy. And it is worth noting that on Friday, after both memos were leaked, Sarandos did participate in a real conversation with staffers via a town-hall meeting, one in which he took “pointed questions” from upset employees.

But such damage-control efforts won’t easily erase the harm already done to the tech giant’s relationship with trans staffers. Netflix is a company that believes its workplace culture is so radically different, so much better than average, it posts a detailed outline of its philosophy on its public website. And one of the core tenets of the Netflix Way is that employees should always “listen well and seek to understand before reacting.” I am not privy to every meeting and conversation Sarandos has had with staffers about the Chappelle situation, but it sure seems as if the Netflix boss didn’t try to understand their objections before he responded. The question now: Will Sarandos put in the work to better understand why so many of his employees — and many of his customers — are so angry?

How Will Netflix Clean Up Its Latest Mess?