Another 300 employees have been let go as the company struggles to curb costs while revenue growth slows.
Netflix has laid off an additional 300 employees this week, as the once dominant streaming service contends with a declining subscriber base and a decline in stock value. The loss represents about 3% of the company’s total employees.
“Today we sadly let go of around 300 employees,” Netflix said in a statement Thursday. “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth. We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition.”
In May, Netflix laid off 150 employees, including executive-level employees at its Drama Series, Spectacle and Event TV, and Comedy Series Divisions.
In an internal email sent to staff Netflix Global Head of HR Sergio Ezama confirmed the May layoffs, saying “As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly US-based.”
At the time, Netflix (NFLX) – Get Netflix Inc. Report said more rounds of layoffs would be coming later this year, as the company cuts back on spending. The layoffs are reportedly across multiple departments in the company, according to Variety, with the majority of the losses coming from the United States.
Netflix Has Taken A Beating This Year
In an April earnings call, Netflix revealed that it lost 200,000 global subscribers in the first quarter of the year, and that it expected to lose another 2 million global net paid additions over the three months ending in June.
This represented the first major drop for the company in more than a decade, and signaled that the “pandemic boom” it experienced in 2020, when people suddenly had a lot of time on their hands and nothing to do but watch television, had finally worn off.
As a result of the drop in subscribers, Netflix missed the $7.93 billion in revenue originally projected by analysts. The company’s stock price has been trading at its lowest levels since 2018. Shares are down nearly 70% year to date.
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Why Is Netflix’s Stock Declining?
The last decade saw the shift from traditional television and cable to streaming services, and Netflix was the undisputed King of the Streaming Era, in part because they got their first.
The company’s vast back catalog of old television shows, helped get consumers used to the idea of binging entire seasons of television, and eventually acclimated audiences to watching new episodes of shows like “Orange Is The New Black” in one session.
But eventually, media companies such as Universal (CMCSA) – Get Comcast Corporation Class A Common Stock Report (which is owned by Comcast), Disney (DIS) – Get The Walt Disney Company Report (which worked with Netflix to make a series of Marvel shows) and Warner Bros (WBD) – Get Warner Bros. Discovery Inc. Report (which owns HBO) began to realize it didn’t make business sense to help a competitor grow in popularity.
So they took back recognizable titles like “Friends” and “The Office,” and began making their own competing streaming services such as the world-beating Disney+, as well as Peacock and HBO Max.
Netflix knew this day would come, and began spending wildly in hopes of finding material that would keep audiences from churning out, which is industry speak for watching for a month and then canceling a subscription and moving onto something else.
While this strategy resulted in zeitgeist-capturing hits like “Bridgerton” and “Squid Game,” the throw it all against the wall approach eventually led to a lot of forgettable shows and films, diluting the value of the brand in the process.
So now Netflix has spent too much for too little return as competition heats up, and the idea continues to build that the company has hit a natural ceiling on how many people are going to sign up for Its service.
But the company isn’t going down without a fight. It’s began making moves to crack down on password sharing, which could potentially save it $1.6 billion annually, and CEO Reed Hastings has indicated that a cheaper, advertising supported tier will be available by the end of the year, which could help boost revenue and subscriber totals.
And if all else fails, there’s still the second half of “Stranger Things” later this summer. It probably won’t turn the company’s fortunes around, but at least it’ll replace the bad headlines for a few days.
