Netflix has cut an additional 300 employees — about three percent of its workforce — marking the next round of massive layoffs at the beleaguered streaming giant as it seeks to stem slowing growth.
“Both Ted and I regret not seeing our revenue growth slow earlier so we can ensure a more gradual business adjustment,” read a note sent to staff on Thursday from Netflix co-chiefs Reed Hastings and Ted Sarandos.
About 216 of the affected staff were in the United States and the Canadian region, 30 employees were laid off 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 business path 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 set to grow by ~1.5K to ~11.5K,” Hastings wrote.
In May, Netflix laid off about 150 staff due to “slowing revenue growth,” rather than “individual performance,” a Netflix spokesperson said at the time. In addition to full-time employees, many of whom are in the animation department, Netflix has also cut dozens of contractors working on the company’s social media and publishing channels, including those dedicated to underrepresented identities such as Strong Black Lead, Con Todo, Most and Netflix Gold.
The staff cuts came shortly after another round of layoffs that saw the loss of several contractors and full-time staff working at Tudum, the Netflix fan site run by the company’s marketing division. The company debuted with Tudum last December to produce consumer-facing digital content about its own titles such as Bridgerton, Foreign Body, Love is blind and Selling Sunset.
The move comes as the company continues to grapple with and respond to an increasingly difficult and competitive streaming environment, as Netflix competes with tech giants like Amazon Prime Video and Apple TV+ as well as studio conglomerate platforms like Disney+, Hulu, Paramount+, HBO Max, Discovery+. (In Nielsen’s April “State of Play” streaming survey, about 46 percent of respondents answered that “it’s harder to find streaming video content they want to watch because there are too many streaming services available.”)
On April 19, Netflix revealed that it had lost 200,000 subscribers in the first quarter of this year, well below expectations of adding its own subscribers. The last time Netflix revealed it lost subscribers was in late 2011, and over the last few decades the company has been seen as a growth story that is leading the industry towards streaming-focused gifts. The streamer, which has about 222 million subscribers globally, also gave a lower forecast for the next quarter, saying it was preparing to lose another 2 million subscribers.
And it has responded by finding ways to control costs and revive customer growth.
When asked about revenue on content spending of around $18 billion for the year, co-chief Ted Sarandos said, “we will continue to increase content spending compared to previous years.” CFO Spencer Neumann added more nuance to the statement, adding to the call: “We are pulling back on some of our spending growth in content and non-content spending, but are still increasing our spending and are still investing aggressively.”
The company also said it was looking into ways to crack down on password sharing, noting that 100 million households share the service. And it has signaled its aggressive expansion beyond its core subscription business model, including introducing mobile games — including adaptations of its own series such as Queen’s Bet and Money Theft — and plan for cheaper, ad-supported rates. (The “basic” subscription plan is currently $9.99 while the “standard” tier is $15.49.)
“We’ve left a huge customer segment behind, namely the 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 added an ad level; we don’t add ads to Netflix as you know it today. We added an ad tier for people saying, ‘Hey, I want lower prices and I’m going to watch the ad.’”
Since January 3, the first day of trading in 2022, the streaming giant’s shares have fallen about 70 percent this year, from 597.37 per share to 177.39 per share on June 23.
This month, the service received a stock downgrade from Benchmark analyst Matthew Harrigan on June 14, dropping the company from “hold” to “sell” with a target price of $157. A few 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 around the impact of the consumer recession as well as the increased level of competition” from rival streaming.