About 150 Netflix employees were laid off on Tuesday, largely in the United States, about a month after the streaming giant disclosed its first drop in subscribers in ten years.
Netflix said in a statement to Forbes that the layoffs were due to poor revenue growth and corporate demands, rather than individual performance.
“None of us want to say goodbye to such wonderful colleagues,” the representative said, adding that the business aims to “help them through this tough transition.”
In the first quarter, Netflix lost 200,000 customers, a significant drop from the 2.7 million expected. This quarter, the business anticipates losing another 2 million members. Netflix’s stock fell 35% after the news surfaced, reaching around $220 on Tuesday afternoon. Password sharing was blamed for some of the losses; Netflix estimates that 100 million households worldwide share passwords, with 30 million in the United States and Canada. Netflix co-CEO Reed Hastings said the streaming service will consider creating a lower-cost, ad-supported tier as well as a program that would let users to pay for additional profiles they may share, similar to a pilot program that began earlier this year in Chile, Costa Rica, and Peru.
According to a message sent to staff this week and cited by the New York Times, the ad-supported tier could debut in the fourth quarter of this year. According to Variety, Netflix let off 25 marketing employees shortly after the news of the layoffs leaked, including writers for the company’s fan site Tudum.
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While Netflix continues to be the obvious market leader with 220 million users worldwide, it has experienced stiff competition in recent years with the emergence of alternative services such as Disney Plus, HBO, and Amazon’s Prime Video.
The company also noted in its earnings report last month that the war in Ukraine and its decision to hike rates in the United States cost it subscribers.
It was discovered that the business had lost 700,000 members as a result of its exit from the Russian market.
In addition to job reductions, the corporation is reducing content and limiting its own creations. In an effort to minimize expenses, it terminated the creation of Pearl, an animated series produced by Meghan Markle.
Netflix, according to several analysts, has run out of easy methods to build the business after a boom in sign-ups during the pandemic.
The company claims it is considering a more cost-effective ad-based strategy and that it would crack down on password sharing, which it claims has cost it 100 million homes.