Netflix announced on Tuesday that it has laid off about 2% of its staff in a bid to save money after slowing growth in the hitherto booming streaming TV industry. “These changes are driven primarily by business needs rather than individual performance, which makes them particularly challenging because none of us want to see such great colleagues leave,” a company spokesperson told AFP.
Nearly 150 employees have been laid off, most of them in the United States, the spokesperson said, adding that Netflix has also reduced its spending on outsourcing.
A few weeks before this decision, Netflix announced a loss of subscribers for the first time in more than ten years, also suffering from intense competition from Apple and Disney. “Slowing our revenue growth means we also need to slow our expense growth as a business”, explained the spokesperson. At the end of the first quarter, the streaming television service had 221.6 million subscribers, slightly less than at the end of December.
To explain this erosion, Netflix puts forward the suspension of its services in Russia because of the war in Ukraine. This decline of 200,000 subscribers, less than 0.1% of its total customer base, was enough to cause panic on Wall Street when the quarterly results were announced in April.
CFO Spencer Neumann then announced on a conference call that Netflix would “reduce” its spending over the next two years, while continuing to invest billions of dollars in the platform. The Silicon Valley-based company posted net income of $1.6 billion in the first three months, up from $1.7 billion in the first quarter of 2021.
Among other factors hindering its growth, Netflix has identified the fact that some subscribers share their account with people who do not live at home. Nearly 222 million households pay for a subscription, but accounts are shared with more than 100 million other households that do not subscribe to the service, estimates the streaming giant. Netflix is testing ways to make money from this account sharing, such as introducing a feature that allows subscribers to pay a little extra to add other households.