Netflix said Tuesday it would cut 150 jobs as revenue fell and subscriber numbers tumbled, rocking the entertainment industry and prompting a review of its streaming business.
The company did not say which departments would be affected by the cuts, although most jobs in the US were lost
“As we explained on earnings, our slowing revenue growth means we also need to slow our expense growth as a company,” a Netflix spokesman said in a statement. “Unfortunately, today we are laying off around 150 employees, mostly in the US. These changes are primarily driven by business needs rather than individual achievement, making them particularly difficult as none of us want to say goodbye to such great colleagues. We are 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. Following its earnings report, the company’s stock fell 35.1% to $226.19 on April 20, its biggest one-day drop since 2004.
Netflix is rethinking its business model, which has long benefited from providing a large library of content that was commercially free for a premium price of $15.49 per month for a standard subscription.
Netflix had increased its staff during the pandemic, as consumers flocked to the streaming service in search of ways to entertain themselves at home. As of December, Netflix had about 11,300 full-time employees. The cuts represent approximately 1% of the global workforce. A little less than half of the workforce works in LA
Departments affected by the layoffs include recruiting, communications and the company’s content side. Further cuts could come to other teams later this year.
Last month, the company laid off employees in marketing-related jobs, including contractors, who had been there for less than a year.
“It was more a matter of when than if,” said a contractor who was part of a team that ran social media content to promote LGBTQ storytelling. The contractor, who was not authorized to speak publicly, first became aware of the layoffs through the news and hours later attended a meeting of all stakeholders with a group of people who were told they were losing their jobs.
People doing business with Netflix are concerned that the company’s troubles will slow the volume of content produced and give it the green light, ending an era of explosive programming growth.
Netflix said in a recent earnings call that it would remain focused on distributing popular shows and movies. Netflix is expected to spend $18 billion on content this year and is constantly expanding its large library of programming.
“We need to have an ‘Adam Project’ and a ‘Bridgerton’ every month and make sure that’s the expectation of the service,” said Ted Sarandos, Netflix’s co-CEO and chief content officer, citing two popular programs the platform in a prize presentation.
According to several people doing business with the streamer, Netflix has slowed down its development lately.
An agency partner, who asked not to be named, attributed the slowdown to risk-averse executives at Netflix who are afraid of making big bets after the earnings report.
“Everyone is looking over their shoulder,” said the agency partner, who did not want to be named to protect the business relationship.
Netflix has decided to end some of its animated programs in development, including the Archewell Productions project Pearl, Jeff King’s Dino Daycare, and Jaydeep Hasrajani’s Boons and Curses.
The company is cutting 70 part-time jobs at the animation studio related to projects not moving forward. Netflix is also cutting an unspecified number of freelance positions across its social media and publishing group, Variety first reported.
“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 increasing competition from rivals like Disney+ and HBO Max.
Walt Disney Co. announced last week that Disney+ subscribers grew by 7.9 million to 137.7 million in the fiscal second quarter.
Subscribers who share their Netflix passwords with people outside of their household have also impacted Netflix’s bottom line.
The company said last month it would explore 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 businesses, including Glendale-based Night School.
So far, other competing streamers like Disney+ have continued to report subscriber gains.
Fred Seibert, CEO of FredFilms and a former executive at MTV and Hanna-Barbera Cartoons, said he believes streaming remains a viable business.
“Netflix is this new disruptor that’s popped up in the media business, they’ve had to stumble here and there,” Seibert said. “On the other hand, as great innovators, I can’t imagine that they won’t recover from this.”