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Streaming Giant Netflix Lays Off Hundreds of Employees

Industry: Media
Current: Other Industry Indicators

Netflix laid off 300 employees in the second round of layoffs, which constitutes 4% of its workforce
Previously, the company laid off 150 employees in May 2022
Netflix cut jobs as the streaming giant grapples with slow growth in revenue, loss of subscribers, and other macroeconomic factors

The popular video streaming company Netflix laid off 300 employees in the second round of layoffs. The company effected layoffs across many business functions, with most jobs cut in the US. Earlier, the company made an initial round of reduction in May 2022, where it laid off 150 employees, and dozens of contractors and part-time workers. The job cuts at Netflix come amid slow growth in revenue, loss of subscribers, and other macroeconomic factors.

Loss of Subscribers

In the first quarter of 2022, the company reported the first loss of 200,000 subscribers in more than a decade. Prior to its recent loss, Netflix consistently grew its subscriber base. The platform’s easy-to-use interface, investment in original content, and data-driven suggestions enhanced its popularity. The COVID-19 pandemic accelerated its adoption widely and cemented its leading position.

Slow Growth in Revenue

The revenue growth of Netflix slowed down significantly due to a large number of users sharing accounts, combined with stiff competition from Amazon, Walt Disney Co, and Hulu. In Q4 2021, the revenue of the company increased 3% over that in the previous quarter, whereas operating expenses increased roughly 24% during the same quarter. According to the company, the adjustment in the workforce is intended to align its costs with a slower rate of revenue growth.

Macroeconomic Factors

Households are forced to tighten their budgets owing to the rapid increase in the cost of living. With inflation soaring globally, household budgets are increasingly under pressure from the increasing prices of energy, fuel, and food. As this crisis worsens, consumers will increasingly forgo luxuries such as Netflix. On top of the cost of living crisis, Netflix’s withdrawal from Russia owing to the Ukraine conflict hastened the loss of subscribers.

Way Forward

Netflix intends to launch a less expensive, ad-supported membership in order to reverse the downtrend. Besides, investing in original content will continue to be critical to Netflix’s recovery. The markets for streaming services in Western Europe and North America are getting congested by the day. Hence, the untapped potential in Asia, Latin America, the Middle East, and Africa presents a huge opportunity for the company.

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