Competitive streaming market
Netflix is tightening its belt
5/12/2023 5:44 p.m
The streaming market is highly competitive. Like the competition, Netflix now wants to pay more attention to profitability. The company wants to save $300 million for this. There will be no additional layoffs.
Netflix appears to be looking to cut spending by $300 million this year to boost profitability in a competitive market. One reason the company is looking to cut costs is because it has postponed plans to tighten password sharing restrictions in the U.S. and elsewhere from Q1 to Q2, according to multiple sources.
In an internal meeting earlier this month, management urged employees to be careful with their spending, including when it comes to hiring. According to the people, there should not be a hiring freeze or additional layoffs. A Netflix spokeswoman declined to comment.
Across the streaming industry, companies have turned their focus to profitability after the past few years have seen subscription growth as a priority. Unlike competitors that are losing hundreds of millions of dollars every quarter in their streaming business, Netflix has been profitable for years.
Netflix last month raised its estimate of the free cash flow it plans to generate this year to at least $3.5 billion, after previously targeting $3 billion. This move was announced when the company announced its first quarter results.
Before banning password sharing, the company wants to take the time to determine which approach is best for customers and the company. As a result, the expected higher revenue from the change is now expected to materialize in the second half of the year, according to people familiar with the matter. The spending cut is only a small portion of Netflix’s overall spending. Last year, the company’s operating expenses were approximately $26 billion.