Netflix said on Tuesday it was cutting 150 jobs amid slowing revenue and falling subscriber numbers that have rattled the entertainment industry and sparked a re-examination of the streaming business.
The company did not specify which departments would be affected by the cuts, although most job losses are occurring in the United States.
“As we discussed on earnings, our slowing revenue growth means we also need to slow our cost growth as a business,” a Netflix spokesperson said in a statement. “Unfortunately, we are laying off approximately 150 employees today, mostly based in the United States. These changes are driven primarily by business needs rather than individual performance, which makes them especially difficult because none of us want to say goodbye to such great colleagues. We are working hard to support them in 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 an additional 2 million subscribers this quarter. Following its earnings report, the company’s shares 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 capitalized on providing a large library of ad-free content for a premium price of $15.49 per month for a standard subscription.
Netflix had beefed up its staff during the pandemic, as consumers joined the streaming service in droves as they sought ways to be entertained at home. As of December, Netflix had approximately 11,300 full-time employees. The cuts represent about 1% of its global workforce. Just under half of the staff are based in LA
Departments affected by the layoffs include recruitment, communications and the content side of the business. More cuts may be coming to other teams later this year.
Last month, the company laid off people in marketing-related jobs, including contractors who had been there for less than a year.
“It felt more like a question of when, than if,” said an entrepreneur who was part of the team that managed social media content promoting LGBTQ+ storytelling. The contractor, who was not authorized to speak publicly, was first informed of the layoffs by the news, and a few hours later attended a town hall meeting where a group of people were informed that they were losing their jobs.
People who do business with Netflix fear that the company’s problems will slow the volume of content it produces and the green lights, ending an era of explosive growth in programming.
Netflix said on a recent earnings call that it will remain focused on distributing popular shows and movies. Netflix is expected to spend $18 billion on content this year and continues to add to its vast 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 all the time,” Netflix co-CEO and chief content officer Ted Sarandos said, citing two programs. popular on the platform, in a presentation of the results.
Netflix recently slowed its development, according to several people who do business with the streamer.
An agency partner who declined to be named blamed the slowdown on Netflix’s risk-averse managers who are afraid to take big bets after the earnings report.
“Everyone is looking over their shoulder there,” said the agency partner, who did not want to be named to protect the business relationship.
Netflix has chosen to end some of its animation programs in development, including the Archewell Productions project “Pearl”, “Dino Daycare” created by Jeff King and “Boons and Curses”, created by Jaydeep Hasrajani.
The company is cutting 70 part-time jobs at the animation studio related to projects that are not moving forward. Netflix is also cutting an unknown number of freelance jobs in its social media and publishing group, as Variety first reported.
“A number of the agency’s 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 leading streaming subscription service, with 222 million subscribers worldwide. But over the years, the company has faced increased competition from competitors such as Disney+ and HBO Max.
Walt Disney Co. said last week that Disney+ subscriber numbers increased by 7.9 million to 137.7 million. Subscribers sharing their Netflix passwords with people outside their household also hurt Netflix’s bottom line.
The company said last month that it would consider adding a lower-cost ad-supported streaming option and ways to monetize password sharing.
Netflix is also investing in adding more free mobile games for its subscribers. The company has acquired several gaming-related companies, including Glendale-based Night School.
So far, other rival streamers such as Disney+ have continued to report subscriber gains.
Fred Seibert, CEO of FredFilms and former top executive at MTV and Hanna-Barbera cartoons, said he believes streaming remains a viable business.
“Netflix being this new disruptor that has emerged in the media business, they were bound to stumble here and there,” Seibert said. “On the other hand, being the great innovators that they are, I can’t imagine they’re not going to recover.”