Netflix Inc said it laid off 300 employees, or about 4% of its workforce, in the second round of job cuts aimed at lowering costs after the streaming giant lost subscribers for the first time in more than a decade. The move mostly affected its U.S. workforce and came after the company cut 150 jobs last month.
“While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth,” Netflix said in a statement on Thursday. The world’s dominant streaming service has come under pressure in recent months as inflation, the war in Ukraine and fierce competition weigh on subscriber growth. After the subscriber drop in the first quarter, Netflix has forecast even deeper losses for the current period.
To arrest that downtrend, the company plans to introduce a cheaper, ad-supported subscription tier for which it is in talks with several companies. “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth,” a Netflix spokesperson said in an email. “We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition.”
Netflix is retooling its operations after the departure of 200,000 subscribers during the first quarter of 2022 upended the company’s subscription-based revenue model. The difficulties have bludgeoned the company’s stock price and hurt worker morale. In addition to the layoffs in May, Netflix also let go some contract workers and editorial staff from its Tudum site in April — part of a scaling back of its marketing budget.
Netflix’s subscriber woes were in part due to a price hike in January. Further, it’s facing heightened competition with streaming content from Amazon.com Inc., Walt Disney Co., and Hulu, all of which have posted subscription growth recently. Netflix Inc is in talks with several companies for advertising partnerships, co-CEO Ted Sarandos said on Thursday, as the streaming titan looks to plug slowing subscriber growth by rolling out a cheaper plan with ads.
Media reports from earlier this week said it was in discussions with Alphabet Inc’s Google and Comcast Corp’s NBCUniversal for potential marketing tie-ups. “We’re talking to all of them right now,” Sarandos said at the Cannes Lions conference when asked which company Netflix was looking to partner with.