Netflix has laid off 300 employees, or about 3% of its workforce, due to slowing growth and the economic slowdown. It's the company's second layoff spree in two months after it laid off 150 employees last May.
Reports indicate that as early as April, the company has started retrenching many of its staffers, including some from their editorial arm Tudum which was just recently launched in December last year.
Netflix Says Slower Revenue Growth is a Factor For The Layoffs
According to Netflix, they will continue to make investments in businesses. However, the adjustments they recently made were so that their operational expenses could still keep themselves in line with their "slower revenue growth."
"We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition," Netflix said in a statement.
Most of the recent layoffs were done with employees in their U.S. office. But there were also reports of retrenchment episodes in the Middle East and Africa, Asia Pacific, Europe, and Latin America.
This move follows a wave of layoffs happening within most tech giants in the market in recent weeks, such as MasterClass, Coinbase, and many others. Most reports point to the rising inflation rates, global market instability, and slumping market growth, as the primary reasons for these company decisions.
Retrenchments Not Unexpected, Netflix Struggles To Address Revenue Problems
Netflix cutting costs and firing employees are not unexpected consequences of the current extreme market conditions, unfortunately. Just within the first quarter of the year, Netflix already saw a departure of its 200,000 subscribers. This incident also meant that, according to the company, they would likely lose 2 million global paid subscribers in the second quarter of the year.
Some other reasons Netflix cited were the Russia-Ukraine conflict, uncontrolled spread of COVID-19, and password sharing. The market was not benevolent towards Netflix, despite such conditions. Right now, Netflix trades around $178.93, which is a far cry from its $512 a piece valuation a year ago. This reflects a plunge of more than half of its market value from 2021, market rally.
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The company has made numerous attempts in the past to recover viewership and attain more subscribers to fill its revenue gap. For example, they began live streaming comedy shows on the platform and launched their own titles to attract different consumer personas.
In other countries, like Costa Rica, Peru, and Chile, have also begun revising payment structures already. If another user of the account comes from a different household, they are charged more. However, it has not helped much around their objective of creating more revenue.
Reports also say that Netflix is planning on launching an ad-backed tier for their subscribers this year. However, we have yet to see how this will pan out for the viewers who pay for a Netflix subscription to avoid streaming sites flooded with many commercials within the platform.
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