Netflix has announced its action of having laid off two per cent of its staff following the growth slowdown of the global streaming service.
A spokesperson from the streamer told BMA sources that “the changes are primarily driven by business needs and not individual performance, making the decision a tough one considering that the company has to release great employees.”
The majority of the 150 employees laid off are based in the United States. Additionally, Netflix has also drastically cut contractor expenditure.
This move is owed to the recent report by Netflix whereby it lost 200 000 subscribers, which was the first loss in more than a decade. The spokesperson referenced the loss as the main reason for the layoffs, noting that “the slowing revenue growth has meant we have to slow our cost growth”.
In the first quarter of this year, Netflix had reported that it had 221.6 million subscribers, a number slightly less than the final quarter of last year. According to the streamer, the decline was due to Russia’s suspension of its services due to Moscow’s invasion of Ukraine.
Spence Neumann, the Chief Financial Officer at Netflix, says the company will continue with its cost-cutting plans for the next two years whilst it intends to invest billions of dollars towards the growth of the platform.
Earlier, the streaming service company had reported a net income of US$1.6 billion in the recently ended quarter, compared to US$1.7 billion in the same period a year earlier. Netflix believes the decline in revenue is due to subscribers sharing accounts with people not living in their homes, hampering its growth. Also, another factor that Netflix has identified as a factor crippling its growth is the intense competition from Disney and Apple.
Netflix is considering adding a lower-priced subscription plan subsidised by advertising, a model that the Chief Executive, Reed Hastings, had long overlooked.