Netflix on Tuesday announced it was cutting 150 jobs amid a slowdown in revenue and a decline in subscribers that has shaken the entertainment industry.
The company did not say what departments would be affected by the cuts, though most of the job losses are in the U.S.
“As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company,” a Netflix spokesperson said in a statement. “So sadly, we are letting around 150 employees go today, mostly US-based. These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues. We’re working hard to support them through this very difficult transition”.
The announcement comes after Netflix reported a loss of 200,000 subscribers in the first quarter for the first time in more than a decade. The Los Gatos, Calif.-based streaming service expects to lose 2 million more subscribers this quarter. Following its earnings report, the company’s stock declined 35.1% to $226.19 on April 20, the biggest one day drop since 2004.
Netflix is rethinking its business model that long capitalized on providing a large volume of content that was commercial free for a premium price of $15.49 a month for a standard subscription.
Netflix had been ramping up its staff during the pandemic, as consumers joined the streaming service in droves as they sought to ways to entertain themselves at home. The company employed roughly 11,300 people globally last year, up 31% from 2019. A little less than half of the staff is based in L.A.
Last month, the company laid off people in marketing-related jobs, including contractors who were there for less than a year.
The restructuring marks the end of an era for Netflix that was known for its volume of programs. The company has shifted its business before, from DVD rentals to streaming, and from relying heavily on licensed content to producing its own original programming.
Netflix has recently slowed down their development, according to several people who do business with the streamer.
One partner at an agency who declined to be named attributed the slowdown to risk averse managers at Netflix who are scared of taking big bets following the earnings report.
“Everyone is looking over their shoulder there,” the agency partner said.
Netflix is the dominant streaming subscription service, with 222 million subscribers worldwide. But over the years, the company has faced increased competition with rivals such as Disney+ and HBO Max.
Walt Disney Co. last week said Disney+’s subscriber count increased by 7.9 million to 137.7 million. Subscribers sharing their Netflix passwords with people outside of their households has also hurt Netflix’s bottom line.
The company said last month it would explore adding an lower cost ad-supported streaming option and ways to monetize password sharing.
Netflix is also investing in adding more mobile games that are free for its subscribers. The company has acquired several gaming-related companies including Glendale-based Night School.
So far, other rival streamers such as Disney+ have continued to report subscriber gains.
Fred Seibert, CEO of FredFilms and a former senior executive of MTV and Hanna-Barbera cartoons, said he believes streaming remains a viable business.
“Netflix being this new disrupter that showed up into the media business, they were bound to stumble here and there,” Seibert said. “On the other hand, being the great innovators that they are, I can’t imagine that they’re not going to recover from this.”