Netflix laid off 300 employees Thursday in the latest round of cuts as the company responds to a drop in revenue and the first loss of subscribers in more than a decade.
The Los Gatos, Calif.-based streaming giant didn’t say which departments were affected by the cuts. The layoffs, which account for about 3% of Netflix’s workforce, primarily affected the company’s employees in the U.S. and Canada, but also affected teams in Latin America, Asia Pacific, and the Middle East and Africa. The people who were shown the door included vice presidents, directors, managers and contributors.
“Today, unfortunately, we laid off around 300 employees,” a Netflix spokesman said in a statement. “While we continue to invest significantly in the business, we have made these adjustments to allow our costs to grow in line with our slower revenue growth. We’re so grateful for everything they’ve done for Netflix and are working hard to support them through this difficult transition.”
The company cut 150 full-time jobs at various units in May, shortly after reporting a loss of 200,000 subscribers last quarter. Additionally, Netflix laid off dozens of contractors, some working on social media accounts, to promote the company’s diverse programming.
The streaming service expects to lose 2 million more subscribers this quarter as Netflix faces a more competitive streaming environment. The rise of Disney+, HBO Max, Paramount+, and other streamers has increased the pressure on Netflix to make more successful programs.
Netflix stock is down 70% so far this year. Shares fell 23 cents, or less than 1%, to $178.66 in midday trade.
The dramatic slowdown comes after Netflix subscriber numbers soared early during the COVID-19 pandemic, when entertainment options outside the home were limited. Netflix is the far leader in subscription-based streaming video, with 222 million paying members. Its closest competitor is Disney+ with almost 138 million subscribers.
The layoffs come as Netflix tried to protect its profit margins after executives misjudged how competition and other factors in the streaming market would affect revenue following the early rise of the pandemic.
Chief Financial Officer Spence Neumann said in a recent call to discuss earnings that the company hopes to maintain 20% operating margin over the next two years. Wall Street analysts, who have focused almost obsessively on subscriber numbers during Netflix’s rise, have begun to turn their attention to more traditional metrics like profitability and revenue as the streaming market matures.
In a memo to employees Thursday morning, obtained by The Times, Netflix co-chief executive Reed Hastings apologized on behalf of himself and fellow co-CEO Ted Sarandos for not acknowledging the company’s revenue woes earlier which he said would have allowed for “a more gradual rebalancing of the business”.
According to the email, the layoffs affect 17 employees in Latin America, 30 in Asia Pacific, 53 in Europe, Middle East and Africa, and 216 in the United States and Canada. “Every level was equally affected by these changes – approximately 3% of VPs, directors, managers and individual employees were fired today,” Hasting wrote.
He also said that women still make up 51% of Netflix’s workforce worldwide, and black people continue to make up 50% of its US and Canadian divisions. The statement comes after the earlier round of cuts affecting social media accounts dedicated to LGBTQ community and people of color content led some observers to question Netflix’s commitment to diversity and inclusion.
Hastings tried to strike an upbeat note in the email, saying the company plans to expand its employee base by 1,500 to 11,500 over the next 18 months, assuring employees of “a clear plan to leverage our revenue growth through paid.” Accelerating allocation again globally and a cheaper ad-supported tier in the larger advertising markets.”
In addition to the layoffs, Netflix has promised to improve its business and get more subscribers by offering a cheaper version with commercials and experimenting with ways to make more money from password sharing.
Despite the job losses, Netflix has said it will continue to spend massive sums on film and television content, with an expected budget of $17 billion this year. While the company has had big hits like Squid Game and the new season of Stranger Things, there’s a growing recognition of the need to focus on bigger and better movies and series.
Matt Brennan contributed to this report.
https://www.latimes.com/entertainment-arts/business/story/2022-06-23/netflix-lays-off-300-workers-amid-subscriber-losses Netflix lays off 300 workers amid subscriber losses