How to Interpret the Latest Round of Downsizing – Quartz

Like a well-placed karate chop stranger things Season 4 Netflix fan favorite Murray Bauman (played by actor Brett Gelman) is stepping down from a number of jobs. The company is laying off another 300 employees after cutting 150 employees in May. This latest round of layoffs, first reported by Variety, will primarily impact the company’s US operations.

The news of the job cuts came just hours after Netflix co-CEO Ted Sarandos confirmed new details about the company’s plans to begin rolling out ad-supported content to compete with a similar offering from Disney+ that later launched will appear this year.

“We left a large segment of customers off the table,” Sarandos said during an interview at Thursday’s advertiser-focused Cannes Lions International Festival of Creativity. “We’re adding an ad layer, we’re 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 look at ads.’”

Competition and economic turmoil are driving Netflix to evolve with the market

The new belt is being tightened as Netflix tries to slow the decline in subscribers it reported in the first quarter of 2022 as competition mounts from rival streamers that have used pandemic lockdowns to boost their business models. Adding to Disney+’s aggressive new ad-supported efforts, Apple TV+ managed to win the first Best Picture Oscar produced by a streaming service for its film codadespite Netflix’s long leadership and billion-dollar investments in its film division.

Aside from competition in the market, Netflix, like many premium subscription companies, now faces the added challenge of record inflation, leading consumers to reassess how much money they’re spending on subscription spending. Adding a lower-cost, ad-supported tier to Netflix may ultimately allow Netflix to regain its subscriber growth trajectory while adding a new revenue stream to its bottom line.

Consumers are ready for advertising on their streaming TV, cinemas have already proven it

Along with hybrid releases, ad-supported subscription TV is another way streaming services are entering the domain of traditional cinemas. Advertising shown to audiences in movie theaters (including pre-movie videos, lobby displays, and kiosks) has long been a source of revenue for theater chains.

With the pandemic lockdowns largely in the rearview mirror, cinema ad revenues are expected to return to pre-pandemic levels, hitting around $450 million in the US, according to a report by media news outlet Magna.

Now that streaming subscriptions have been normalized, the industry’s switch to ad-supported options is not only economically well-timed, but could lift all revenue streams by tapping into marketing budgets that theaters have long been excited about.

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