Netflix has cut 300 more employees – about 3% of its workforce – marking the latest round of major layoffs at the beleaguered streaming giant.
“Ted and I regret not having seen our revenue growth slow sooner so that we could ensure a more gradual readjustment of the business,” read a memo sent to staff Thursday by Netflix co-chiefs Reed Hastings and Ted Sarandos.
Approximately 216 affected personnel 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 says.
“We know that these two sets 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 in the future. And while we’re downsizing in some areas, we’re also continuing to invest heavily in our content and people: over the next 18 months, our employee base is expected to grow from approximately 1.5,000 to 11.5,000 ”, wrote Hastings and Sarandos.
A Netflix spokesperson said in a statement that the cuts were made so that “streamer costs increase in line with our slower revenue growth.”
In May, Netflix laid off about 150 employees due to “slowing revenue growth” rather than “individual performance,” a Netflix spokesperson said at the time. Of the employees affected last month, 106 were based at Netflix’s Los Angeles office, according to a filing with 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 working across the company’s social media and publishing channels, including those dedicated to identities under -represented as Strong Black Lead, Con Todo, Most and Netflix Gold.
The staff cuts came shortly after a fresh round of layoffs that resulted in the loss of several contractors and full-time employees working at Tudum, a Netflix fan site run by the company’s marketing division. The company had launched Tudum last December to produce consumer-facing digital content on its own titles like bridgerton, stranger things, Love is blind and Sell sunset.
The move comes as Netflix continues to struggle and respond to an increasingly difficult streaming environment, where it competes with tech giants like Amazon Prime Video and Apple TV+ as well as platforms from studio conglomerates like Disney+, Hulu, Paramount+, HBO Max, and Discovery+. (In Nielsen’s April “State of Play” streaming survey, approximately 46% of respondents said “finding the streaming video content they want to watch is more difficult because there is too much streaming services available”.)
On April 19, Netflix revealed that it had lost 200,000 subscribers in the first quarter of the year, well below its own expectations for subscriber additions. The last time Netflix disclosed a loss of subscribers was in late 2011, and for much of the past decade the company has been seen as a growth story that has led the industry towards a streaming-focused present. The streamer, which has around 222 million subscribers worldwide, also gave a lower forecast for its next quarter, saying it was preparing to lose another 2 million subscribers.
And he responded by looking for ways to control costs and rekindle subscriber growth.
Asked on a conference call about content spending of around $18 billion for this year, Sarandos said, “We will continue to increase content spending over previous years.” CFO Spencer Neumann added that Netflix is ”reducing” its “content and non-content spend growth” while “continuing to grow our spend and invest aggressively.”
The company also said it was working on ways to crack down on password sharing, noting that 100 million households share the service. And it signaled aggressive expansion outside of its core subscription business model by introducing mobile games – including adaptations of its own series like The Queen’s Bet 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’ve left a big customer segment off the table, which is people who say, ‘Hey, Netflix is too expensive for me and I don’t mind advertising,'” said Sarandos during a June 23 panel at the Cannes Lions with Kara. Swisher. “We add an advertising level; we do not add ads to Netflix as you know today. We’re adding an ad tier for people who say, “Hey, I want a lower price and I’ll watch the ads.”
Since Jan. 3, the first day of trading in 2022, shares of the streaming giant have fallen about 70% from $597.37 per share to $177.39 per share on June 23.
On June 14, the service received a stock downgrade from Benchmark analyst Matthew Harrigan, moving the company from “hold” to “sell” with a price target of $157. A few days earlier, Goldman Sachs analyst Eric Sheridan had downgraded the company from “neutral” to “sell” and reduced his price target for the company from $265 to $186, saying: “We are concerned about the impact of a consumer slump as well as increased levels. competition” from streaming rivals.
Alex Weprin contributed to this report.