Netflix Inc. is laying off about 150 employees, according to an internal memo sent out on Tuesday and confirmed by the streaming giant.
Most of the cuts, including some at executive level and in the animation department, are taking place in the US, accounting for about 1.3% of the 11,300 employees reported at the end of 2021. The cuts had been expected since Netflix NFLX,
reported last month that the number of subscribers worldwide fell by 200,000 in the first three months of the year – the first such drop in more than a decade – and executives said they were trying to cut costs.
“As we explained on earnings, our slower revenue growth means we also need to slow our expense growth as a company. Unfortunately, today we are laying off around 150 employees, mostly in the US,” a Netflix spokesman said in a statement. “These changes are driven primarily by business needs rather than individual performance, 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.”
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Netflix had already laid off about 25 employees in the past month and cut members of the editorial board of the in-house publication Tudum, which had started just a few months earlier.
“Our revenue growth has slowed significantly, as reflected in our results and guidance below,” Netflix executives said in a quarterly letter to shareholders. “Streaming is gaining linearly, as we predicted, and Netflix titles are hugely popular around the world. However, our relatively high household penetration – judging by the large number of households with accounts – combined with competition creates headwinds for revenue growth.”
During a subsequent earnings call with analysts, Spencer Neumann, Netflix’s chief financial officer, said the company wants to be “prudent about cutting back some of that spending growth over the next two years to reflect the realities of the company’s top-line growth.” .
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Recently, Netflix has felt increasing competition from media giants like Walt Disney Co. DIS.
Apple Inc. AAPL,
Comcast Corp. CMCSA,
and Paramount Global PARA,
and AT&T Inc. T,
all of which have entered the video streaming market. Netflix was also hit hard by the war in Ukraine, which resulted in the removal of 700,000 customers in Russia; inflation that has forced consumers to limit their streaming usage; and the inevitable drop in streaming ads as COVID restrictions have been lifted in recent months.
At the same time, Netflix spent $17 billion on content in fiscal 2021.
To generate more revenue, Netflix plans to offer a cheaper streaming plan with ads, probably later this year, while cracking down on subscribers who share their accounts with non-paying viewers.
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