Netflix on Tuesday announced it was cutting 150 jobs amid a slowdown in revenue and a decline in subscribers that has shaken the entertainment industry and triggered a reexamination of the streaming business.
Most of the job losses are in the U.S.
“As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company,” a Netflix spokesperson said in a statement. “So sadly, we are letting around 150 employees go today, mostly U.S.-based. These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues. We’re working hard to support them through this very difficult transition.”
The announcement comes after Netflix reported a loss of 200,000 subscribers in the first quarter for the first time in more than a decade. The Los Gatos, Calif.-based streaming service expects to lose 2 million more subscribers this quarter. After its earnings report, the company’s stock declined 35.1% to $226.19 on April 20, its biggest one-day drop since 2004.
Netflix is rethinking its business model, which long capitalized on providing a large library of content that was commercial free for a premium price of $15.49 a month for a standard subscription.
Netflix had been ramping up its staff during the pandemic, as consumers joined the streaming service in droves as they sought ways to entertain themselves at home. As of December, Netflix had about 11,300 full-time employees. The cuts represent about 1% of its global workforce. A little less than half of the staff is based in L.A.
Departments affected by the layoffs include recruiting, communications and the content side of the business. More cuts could come to other teams later this year.
Last month, the company laid off people in marketing-related jobs, including contractors who had been there less than a year.
“This felt more of a matter of when, than if,” said a contractor who was part of a team that ran social media content promoting LGBTQ storytelling. The contractor, who was not authorized to speak publicly, became aware of the layoffs first through the news, and hours later attended an all-hands meeting where a group of people were informed they were losing their jobs.
People who do business with Netflix are worried that the company’s troubles will slow the volume of content it produces and greenlights, ending an era of explosive programming growth.
Netflix said in a recent earnings call it would remain focused on distributing popular shows and movies. Netflix is expected to spend $18 billion on content this year and continues to add to its large library of programs.
“We have to have an ‘Adam Project’ and a ‘Bridgerton’ every month and to make sure that that’s the expectation of the service constantly,” said Ted Sarandos, Netflix’s co-chief executive and chief content officer, citing two popular programs on the platform, in an earnings presentation.
Netflix has recently slowed its development, according to several people who do business with the streamer.
One partner at an agency who declined to be named attributed the slowdown to risk-averse managers at Netflix who are scared of taking big bets after the earnings report.
“Everyone is looking over their shoulder there,” said the agency partner, who did not want to be named to protect business relationships.
Netflix has chosen to end some of its animated programs in development, including the Archewell Productions project “Pearl”; “Dino Daycare,” created by Jeff King; and “Boons and Curses,” created by Jaydeep Hasrajani.
The company is cutting 70 part-time jobs at the animation studio related to projects that aren’t moving ahead. Netflix also is reducing an unspecified number of freelance jobs in its social media and publishing group, as first reported by Variety.
“A number of agency contractors have also been impacted by the news announced this morning,” the company said in a statement. “We are grateful for their contributions to Netflix.”
Netflix is the dominant streaming subscription service, with 222 million subscribers worldwide. But over the years, the company has faced increased competition from rivals such as Disney+ and HBO Max.
Walt Disney Co. last week said Disney+’s subscriber count increased by 7.9 million, to 137.7 million, in its second fiscal quarter.
Subscribers’ sharing their Netflix passwords with people outside of their households has also hurt Netflix’s bottom line.
The company last month said it would explore adding a lower-cost ad-supported streaming option and ways to monetize password sharing.
Netflix is also investing in adding more mobile games that are free for its subscribers. The company has acquired several gaming-related companies including Glendale-based Night School.
So far, other rival streamers such as Disney+ have continued to report subscriber gains.
Fred Seibert, chief executive of FredFilms and a former senior executive of MTV and Hanna-Barbera cartoons, said he believes streaming remains a viable business.
“Netflix being this new disrupter that showed up into the media business, they were bound to stumble here and there,” Seibert said. “On the other hand, being the great innovators that they are, I can’t imagine that they’re not going to recover from this.”
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