Nearly 150 employees were dismissed, most of them in the United States. A few weeks before this decision, Netflix announced a loss of subscribers for the first time in more than ten years.
Netflix announced on Tuesday (May 17) that it had laid off around 2% of its staff in a bid to save money after slowing growth in the hitherto booming streaming TV industry. Nearly 150 employees have been laid off, most of them in the United States, the spokesperson said, adding that Netflix has also reduced its spending on outsourcing. “These changes are driven primarily by business needs rather than individual performance, which makes them particularly challenging as none of us want to see such great colleagues leave”a Netflix spokesperson told AFP.
Read alsoNetflix will invest 40 million in French cinema in 2022
A few weeks before this decision, Netflix announced a loss of subscribers for the first time in more than ten years. “Slowing our revenue growth means we also need to slow our expense growth as a business”, explained the spokesperson. At the end of the first quarter, the streaming television service had 221.6 million subscribers, slightly less than at the end of December. To explain this erosion, Netflix puts forward the suspension of its services in Russia because of the war in Ukraine.
This decline of 200,000 subscribers, less than 0.1% of its total customer base, was enough to cause panic on Wall Street when the quarterly results were announced in April. CFO Spence Neumann then announced on a conference call that Netflix would “reduce” its spending over the next two years, while continuing to invest billions of dollars in the platform. The Silicon Valley-based company posted net income of $1.6 billion in the first three months, up from $1.7 billion in the first quarter of 2021.
100 million households watch but do not pay
Among other factors hindering its growth, Netflix has identified the fact that some subscribers share their account with people who do not live at home. Nearly 222 million households pay for a subscription, but accounts are shared with more than 100 million other households that do not subscribe to the service, estimates the streaming giant. Netflix is testing ways to make money from this account sharing, such as introducing a feature that allows subscribers to pay a little extra to add other households. “It was not a priority when we were growing rapidly, and now we are working hard on it”boss Reed Hastings said on an earnings conference call. “There are over a hundred million households already choosing to watch Netflix, they love the service, we just need to be paid to some extent” for these viewers.
Read alsoMovies and series to watch in March on Netflix
Netflix is also considering adding a new ad-supported discounted subscription, a model that Reed Hastings has long ruled out.
Netflix’s growth is finally suffering from intense competition from Apple and Disney.