Netflix on Thursday laid off 300 employees in the latest round of cuts as the company responds to a revenue slowdown and its first subscriber loss in more than a decade.
The Los Gatos, Calif.-based streaming giant did not say what departments were affected by the cuts. The layoffs, which represent roughly 3% of Netflix’s staff, mostly affected the firm’s US and Canada staff, but also hit teams in Latin America, the Asia Pacific region and the Middle East and Africa. The people shown the door span vice presidents, directors, managers and contributors.
“Today we sadly let go of around 300 employees,” a Netflix spokesman said in a statement. “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. We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition.”
The company in May slashed 150 full-time positions across a variety of units shortly after reporting a loss of 200,000 subscribers in the most recent quarter. In addition, Netflix let go of dozens of contractors, some of whom worked on social media accounts to promote the company’s diverse programming.
The streaming service expects to lose 2 million more sutbscribers this quarter, as Netflix faces a more competitive streaming environment. The rise of Disney+, HBO Max, Paramount+ and other streamers have increased pressure on Netflix to make more hit programming.
Netflix’s stock has fallen 70% so far this year. The shares declined 23 cents, or less than 1%, to $178.66 in midday trading.
The dramatic slowdown comes after Netflix subscriber numbers surged early during the COVID-19 pandemic, when people’s out-of-home entertainment options were limited. Netflix is by far the leader in subscription-based streaming video, with 222 million paying members. The closest competitor is Disney+ at nearly 138 million subscribers.
The layoffs are a result of Netflix trying to preserve its profit margins after leaders misjudged how competition and other factors in the streaming market would affect revenue after the early pandemic surge.
Chief Financial Officer Spence Neumann said in a recent call to discuss that the company hoped to maintain earnings operating margins of 20% during the next two years. Wall Street analysts, who have been focused almost obsessively on subscriber numbers during Netflix’s rise, have begun to turn attention to more traditional metrics such as profitability and revenue as the streaming market matures.
In an memo to staffers Thursday morning, which was obtained by The Times, Netflix co-Chief Executive Reed Hastings, on behalf of himself and fellow co-CEO Ted Sarandos, apologized for not recognizing the company’s revenue problems sooner, which, he said, would have allowed for “a more gradual readjustment for the business.”
According to the email, the layoffs will affect 17 employees in Latin America, 30 in the Asia Pacific region, 53 in Europe, the Middle East and Africa and 216 in the US and Canada. “Each level was impacted even by these changes — roughly 3% of VPs, directors, managers and individual contributors were let go today,” Hasting wrote.
He also said that globally, women remain 51% of Netflix’s workforce, and the people of color continue to comprise 50% of its US and Canada division. The statement comes after the earlier round of cuts, which affected social media accounts dedicated to content featuring the LGBTQ community and people of color, led some observers to question Netflix’s commitment to diversity and inclusion.
Hastings attempted to strike an optimism note in the email, saying that the company plans to expand its employee base by 1,500 workers to 11,500 over the next 18 months, and assuring staffers of “a clear plan to re-accelerate our revenue growth through paid sharing” globally and a lower-priced ad-supported tier in the biggest advertising markets.”
In addition to layoffs, Netflix has promised to improve its business and earn more subscribers by offering a cheaper version with commercials and experimenting with ways to make more money from password sharing.
Despite the job losses, Netflix has said it will continue to spend massive amounts on film and television content, with an expected budget of $17 billion this year. While the company has enjoyed major hits including “Squid Game” and the new season of “Stranger Things,” there’s a growing acknowledgment of a need to focus on bigger and better movies and series.
Matt Brennan contributed to this report.