After Netflix laid off 150 employees and terminated many external contracts in May, another 300 employees are now being laid off in a second wave of layoffs. Employees in the USA are particularly affected. With the layoffs, Netflix aims to reduce costs and align with reduced revenue growth.
Align cost and revenue growth
Netflix has around 11,000 employees worldwide, so the recent layoffs affect almost 3 percent of the workforce. The streaming service has confirmed the terminations to Variety, which previously reported on them. It is not yet known whether there will be further layoffs, but Netflix had already announced that it would lay off employees in several rounds over the course of the year. As Netflix continues to invest heavily in the service, the layoffs are necessary to balance rising costs with slower revenue growth. The margin should be kept at around 20 percent and Netflix plans investments of around 17 billion US dollars for 2022.
First user decline in 10 years
Netflix had to announce a decline in subscribers for the first time in April after ten years of user growth, and the share price immediately fell by around 25 percent because Netflix could not shine with positive prospects either. After a drop of 200,000 subscribers in the first quarter, the company expected another loss of about two million subscribers in the second quarter. Since the beginning of the year, the company's stock has already lost around 70 percent of its value.
Advertising and fee for shared accounts
In order to attract more users and generate more sales, Netflix wants to take stronger action against illegally shared accounts and also introduce an advertising-financed tariff. Both could now be implemented much faster than originally expected. With the start of the fourth season of Stranger Things, Netflix recently set a new viewer record – the brand should also advance the range of games. Netflix is hoping for the same with the sequel to Squid Game, for which a second season has already been announced.