Streaming chaos: Struggling Netflix is ​​preparing for further staff cuts

After reporting that it will bleed paying subscribers all year long, Netflix appears to be bracing for another round of painful layoffs.

“It is expected that affected employees will be notified by the end of the week,” Variety reported. “It’s unclear which departments will be affected, but sources suggest the cuts could be similar in size to the round of cuts implemented in May.”

Back then, the streaming giant, which employs around 11,000 people worldwide, laid off 150 employees and dozens of contractors to cut costs. “As we explained on earnings, our slowing revenue growth means we also need to slow our expense growth as a company,” a Netflix official said in a statement.

In its most recent earnings report, Netflix said it suffered its first subscriber loss in over a decade. In addition to losing 200,000 subscribers in the first quarter, the company estimated it would lose another two million in the second quarter. The streaming pioneer currently has more than 220 million subscribers.

Netflix has acknowledged that rampant sharing of subscription passwords is a major headwind to growth. It has been estimated that more than 30 million homes in the US and Canada share passwords, while an additional 100 million homes do so worldwide.

“Our revenue growth has slowed significantly,” Netflix said in its 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,” it continued.

Netflix has started charging users in Chile, Costa Rica, and Peru an additional fee — between $2 and $3 per month — to share their accounts with up to two people. “For example, if you have a sister who lives in another city, you want to share Netflix with her, that’s great,” Netflix CEO Greg Peters said during the company’s earnings call. “We’re not trying to stop this sharing, but we will ask you to pay a little more to be able to share with her and for her to get the benefit and value of the service, but we also get the revenue generated from this ad.” are connected.”

It’s also been reported that Netflix is ​​aiming to bring back subscribers with a lower-cost, ad-supported tier that could be available as early as later this year. “Every major streaming company except Apple has or has announced an ad-supported service,” the company’s release reads, adding that HBO and Hulu have been able to “maintain strong brands while still offering an ad-supported service.” “.

Ethen Kim Lieser is a Washington-based financial and technical writer who has held positions at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters

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