Netflix is slimming down as it gears up for a new streaming battle

Are you still watching? Apparently, not enough Netflix ( NFLX ) users are answering yes, or bothering to turn the streaming service on at all.

On Wednesday, the industry's leading premium streamer announced it was cutting 6% of its staff, or roughly 1,000 positions , marking Netflix's biggest round of layoffs since 2022, as it copes with a waning audience and a beaten-down stock price. The company's product, HR, tech, and legal departments will be the focus of the cuts, according to an email to employees from co-CEOs Ted Sarandos and Greg Peters.

Netflix has come under pressure from YouTube ( GOOG ) and other media rivals. A year ago, Netflix accounted for 8.8% of all TV viewing time in the US, while YouTube claimed 13.4%, according to Nielsen. This year, Netflix has fallen to 7.8%, with YouTube rising to more than 14%. Even Warren Buffett is watching nightly .

Netflix is also bracing for what a beefed-up Skydance will do , now that the media giant counts both Paramount and Warner Bros. as part of its massive streaming and movie portfolio.

The next era of the streaming wars pits larger, more consolidated companies against each other, even as Hollywood competes with an onslaught of teenagers and young adults who churn out video content for free on Instagram, TikTok, and YouTube.

Netflix, like everyone else, is also contending with the AI transition. And that the streamer has reduced headcount mostly in corporate functions is noteworthy. While there's little information about the whys of it all, our minds went immediately to AI's productivity potential, hitting the administrative side of the entertainment industry.

If that's the case, it would be an ironic turn for Hollywood, with its high-profile AI debate hinging mostly on writers and actors. Though many creatives have loudly opposed the use of AI in their processes, entertainment companies may be more willing to deploy tools in other departments, just like the rest of the more tech-savvy players in corporate America.

Regardless of whether this is AI or not — and we will know more when the company reports on Tuesday — this is a classic strategy of pivoting to efficiency and cost when margin needs to be found somewhere.

Shares initially rose on the layoff announcement before reversing to virtually unchanged.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban .