Photo: Netflix
On Tuesday, the largest streaming service Netflix announced that they have cut off over 150 workers in the US after suffering significant subscriber loss.
The decision will affect its office in California, which comprises roughly 2% of the company’s total workforce in North America. Netflix said that the company’s revenue has plummeted, prompting them to cut costs by cutting off jobs.
The company explained that the reason for removal is not based on the staff’s individual performance but due to the drop in revenue they recorded in the past months. Netflix management describes the move as “…especially tough as none of us want to say goodbye to such great colleagues.”
For now, there’s no statement from the company as to what department or parts of the business will see a loss of workers.
Last month, the media giant announced that it had lost over 200,000 subscribers in the first quarter of 2022. Moreover, the company’s analysts project another 2 million subscribers quitting in the following quarter. Following the announcement, many investors withdrew from the company, leading the stocks to plunge 35% in just a day.
Netflix remains an industry leader, with more than 220 million subscribers around the globe, besting other streaming platforms. However, many streaming companies are on the rise, posing challenges to Netflix. On-the-rise streaming platforms include HBO, Amazon’s Prime Video, and Disney Plus, among others.
Recently, Netflix pulled out from Russia, costing them 700,000 subscribers. The company further stated that the ongoing war between Ukraine and Russia contributed to the company’s grave losses in late 2021 and early 2022.
Apart from letting go of workers, the company’s financial hurdle led them to cancel content and delay some series or movies produced by the company. Earlier this month, Netflix announced that it canceled an animated series called “Pearl,” created by Meghan Markle. The move was to cut costs, according to the streaming giant.
According to analysts, while Netflix experienced a heavy surge of subscribers when the pandemic hit, the streaming company ran out ways to “grow the business.”
Netflix says that it will look at possible solutions to increase revenue.
Cracking down on password sharing
When the number of subscribers fell, Netflix management told the media that they could possibly look at cases of password sharing among households.
The management estimates that there are more than 100 million households that benefit from password sharing and access the supposed monthly paid content for free.
“Our relatively high household penetration – when including the number of households sharing accounts – combined with competition, is creating revenue growth headwinds,” the company explained in a statement.
Boss Reed Hastings said that password sharing, while described as “something you have to learn to live with,” detracts customers from other countries from subscribing. Mr. Hastings told investors that they are now “working super hard” to counter the effects of account sharing among US households.
Payment plans are currently underway to curb password sharing in several parts of Latin America.
Netflix made clear that the crackdown on the problem is focused on a “customer-centric” solution instead of an aggressive one.
If the schemes to counter password sharing move too fast and too aggressively, it also risks alienating a potential future audience – many who password-share beyond the household are not actually aware they’re breaking the terms of their subscription,” explained Dominic Sunnebo, analyst at Kantar.
Opinions expressed by CEO Weekly contributors are their own.
