Though it does sound somewhat similar to the concept of "stack ranking", which a few companies (such as MS) are notable for having used as part of their annual review process in the past.
Stack ranking has always sounded to me like an absolutely poisonous thing to implement in an otherwise healthy office. But if the organization knows that it needs to implement a reduction in force regardless, then I guess it might make sense if management does not have a feel for who their best engineers are.
What it reduces is the tendency of less formal processes to give raises to those who ask and to stiff those who don't and to throw up the "your salary is confidential". All those things it avoids are known to create a high potential for bad company culture and moral.
As I understand it individuals were stack ranked within teams, so even if a team outperformed the company or industry average, individuals were still tagged as underperformers.
And generally it became a matter of politics, popularity, and self-promotion, not objective competence - which is hard to measure anyway.
To me, it seems like a fast road to madness.
As for Netflix - I can't imagine any company needs to be staffed entirely by ninja rockstar code demi-gods. Many development projects are mundane and by the numbers, and basic competence is fine. If you want to be disruptive, hire a core of creative innovators who can code. They probably won't be ninjas, but for product development, talented customer-oriented innovators are a really good thing in any business that sells stuff to real customers.