The largest streaming service Netflix plans to remove at least 150 workers in the US after suffering significant loss of subscribers. In addition, major revenue losses burdened the company.
Netflix is cutting jobs to cut its operational costs. The company said that its revenue has been on a downward trend for some time. The decision will affect the company’s office in California, which makes up about 2% of the total workforce of Netflix in North America.
In a statement, Netflix management described the removal as “especially tough” and said they did not want to say goodbye to great colleagues. However, the company defended its decision explaining that letting go of their staff was not based on their individual performance but rather on the revenue losses that they’ve been feeling in the past months.
Netflix did not announce what departments would be losing workers.
The media giant announced that it had lost over 200,000 subscribers in the first quarter of 2022. This is a considerable decrease from last year. In addition, the company’s analysts project another 2 million quitting by the next quarter. The announcement sent shockwaves to investors leading them to withdraw – stocks were down by 35% in just a day.
Netflix has been a major player in the streaming industry for years, with more than 220 million subscribers around the globe. However, many other companies are emerging and challenging their authority as well. Streaming platforms like HBO, Amazon’s Prime Video, and Disney Plus, among others, are slowly catching the public’s eye.
The war between Ukraine and Russia has cost Netflix 700,000 subscribers. The company further explained that the ongoing conflict contributed heavily to their large losses throughout late 2021 and early 2022.
Netflix has been cutting back on the number of content they produce and releases. Earlier, they’ve also announced some cancellations like the animated series “Pearl,” which Meghan Markle created. The decision to cancel the show came from the goal of cheaper costs.
Analysts said that there was a significant increase in subscribers of Netflix during the pandemic. But they also discovered that despite the development, Netflix did not find new ways to grow its business.
For now, Netflix said that they are trying to find ways to increase their revenue.
Investigations up to counter password sharing
Netflix has announced that they are considering an investigation into cases of password sharing among households. This was after the number of their subscribers fell.
“Our relatively high household penetration – when including the number of households sharing accounts – combined with competition, is creating revenue growth headwinds,” said Netflix management.
More than 100 million households benefit from password sharing. CEO of Netflix, Reed Hastings, said that password sharing, while described as “something you have to learn how to live with” detracts customers from other countries and leads them not to want to subscribe.
CEO of Netflix, Reed Hastings, told investors they are now working super hard on counteracting its effects among US households. Several initiatives have already started in some parts of Latin America.
Netflix clarified that the crackdown would be customer-centric.
“If the schemes to counter password sharing move too fast and too aggressively, it also risks alienating a potential future audience – many who password-share beyond the household are not actually aware they’re breaking the terms of their subscription,” explained Dominic Sunnebo, an analyst at Kantar.