Netflix has cut another 300 employees – about 3% of its workforce – marking the latest round of major layoffs at the streaming giant.
“Ted and I regret that we didn’t see our revenue growth slow earlier so that we could ensure a more gradual readjustment of the business,” read a note sent to staff Thursday by Netflix co-heads Reed Hastings and Ted Sarandos.
About 216 affected employees were in the United States; 30 employees were cut in Asia-Pacific countries; 53 in Europe, the Middle East and Africa; and 17 in Latin America, the memo said.
“We know these two rounds of layoffs have been very difficult for everyone – creating a lot of anxiety and uncertainty. We plan to return to a more normal course of business going forward. And as we scale back in some areas, we also continue to invest significant amounts in our content and people: over the next 18 months, our employee base is planned to grow from ~1,500 to ~11,500,” Hastings wrote. and Sarandos.
A Netflix spokesperson said in a statement that the cuts were made so that “streamer costs are growing in line with our slower revenue growth.”
In May, Netflix laid off about 150 employees due to “reducing revenue growth” rather than “individual performance,” a Netflix spokesperson said at the time. Of those employees impacted last month, 106 were based in Netflix’s Los Angeles office, according to a file from the California Department of Employment Development. In addition to full-time employees, many of whom were in the animation department, Netflix also cut dozens of contractors who worked on the company’s social media and publishing channels, including those dedicated to underrepresented identities like Strong Black Lead, Con Todo. , Most and Netflix Gold.
The staff cuts came on the heels of another round of layoffs that resulted in the loss of several full-time contractors and employees who worked at Tudum, a Netflix fan site run by the company’s marketing division. The company debuted Tudum last December to produce consumer-facing digital content over its own titles, such as Bridgerton, Stranger Things, Love is blind and Selling Sunset.
The shift comes as Netflix continues to grapple with and respond to an increasingly difficult streaming environment where it is competing with tech giants like Amazon Prime Video and Apple TV+, as well as studio conglomerate platforms like Disney+, Hulu, Paramount+, HBO Max and Discovery+. (In Nielsen’s April “State of Play” streaming survey, about 46% of respondents responded that “it’s harder to find the streaming video content they want to watch because there are so many streaming services available.”)
On April 19, Netflix reported that it had lost 200,000 subscribers in the first quarter of the year, falling far short of its own subscriber addition expectations. The last time Netflix reported a loss of subscribers was in late 2011, and for much of the last decade, the company has been seen as a growth story that has propelled the industry to a streaming-focused present. The streamer, who has around 222 million subscribers worldwide, also gave a lower forecast for the next quarter, saying he is preparing to lose another 2 million subscribers.
And it responded by looking for ways to control costs and revive subscriber growth.
When asked on an earnings call about a content spend of approximately $18 billion for this year, Sarandos said, “We will continue to increase content spend over previous years.” CFO Spencer Neumann added that Netflix is “stepping back” on its “content-spend and non-content-spend growth” while “still increasing our spending and still investing aggressively.”
The company also said it is working on ways to crack down on password sharing, noting that 100 million households are sharing the service. And it signaled aggressive expansion outside of its core subscription business model through the introduction of mobile games – including adaptations of its own series like The Queen’s Gambit and money theft — as well as plans for a cheaper, ad-supported tier. (Netflix’s “basic” subscription plan is currently $9.99, while its “standard” tier is $15.49.)
“We leave a large segment of customers off the table, which are people who say, ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos said at a June 23 panel at Cannes Lions with Kara . Swisher. “We are adding an ad layer; we are not adding ads to Netflix as you know it today. We’re adding an ad layer for people who say, ‘Hey, I want a lower price and I’ll watch ads.’”
Since January 3, the first day of trading in 2022, the streaming giant’s shares have dropped about 70% from $597.37 a share to $177.39 a share on June 23.
On June 14, the service received a stock downgrade from Benchmark analyst Matthew Harrigan, dropping the company from “hold” to “sell” with a target price of $157. Days earlier, Goldman Sachs analyst, Eric Sheridan, downgraded the company from “neutral” to “sell” and cut his price target for the company from $265 to $186, saying, “We have concerns about the impact of a consumer recession as well as heightened levels. competition” from streaming rivals.
Alex Weprin contributed to this report.