Netflix's culture stack used to say that culture is all about who gets rewarded and who punished. So, yes, people did get punished for their failures. The key here is what behavior led to a failure? We have to analyze consider the failure and the associated human behavior together and see if there is a lesson or a punishable pattern - this is where strong leadership is needed for a just assessment and action.
There is no rating. At that time, one either their job or not. There was no bonus either, as bonus contradicted to the no-rating system.
> How did they incentivize taking risks?
Taking calculated risk was also part of the culture. Good people actually wanted to take risks. So the incentive systems is to take road blocks away.
> Were Netflix employees from then valued very highly?
I think the success of the company and the quality of the employees make them marketable. Everything else is secondary.