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Approximately 150 Netflix employees were laid off on Tuesday, largely in the United States, about a month after the streaming giant disclosed its first drop in member numbers in ten years.
Netflix said in a statement to Forbes that the layoffs were due to weak revenue growth and business demands, not individual performance.
“None of us want to say goodbye to such fantastic colleagues,” the representative said, adding that the business aims to “help them through this extremely tough change.”
Netflix lost 200,000 users in the first quarter, a sharp contrast to projections of 2.7 million new subscribers. This quarter, the company expects to lose another 2 million members, according to the corporation. Netflix’s shares plunged 35% to around $220 when the news surfaced, and was trading at around $189 Tuesday afternoon. Password sharing was blamed for some of the losses; Netflix estimates that 100 million homes across the world share passwords, with 30 million in the United States and Canada. Netflix co-CEO Reed Hastings said the streaming service will look into launching a lower-cost, ad-supported tier as well as a program that would let users to pay for additional profiles they may share, similar to a pilot program that was launched earlier this year in Chile, Costa Rica, and Peru.
According to a message sent to staff last week and cited by the New York Times, the ad-supported tier could start in the fourth quarter of this year. According to Variety, Netflix let off 25 people from its marketing division shortly after the news of the layoffs leaked, including writers for the company’s fan website Tudum.
While Netflix continues to be the obvious market leader with 220 million users worldwide, it has experienced severe competition in recent years with the introduction of alternative services such as Disney Plus, HBO, and Amazon’s Prime Video.
Last month, the corporation reported that the situation in Ukraine and its decision to raise pricing in the United States had cost it customers.
It was claimed that leaving the Russian market had cost the firm 700,000 users.
In addition to employee cuts, the corporation is reducing content and limiting its own creations. In an effort to save money, it terminated the creation of Pearl, an animated series produced by Meghan Markle.
According to some analysts, Netflix has ran out of straightforward methods to build the business after a boom in sign-ups during the pandemic.
The company claims it is considering a more cost-effective ad-based approach, as well as tightening down on password sharing, which it claims has cost it 100 million homes.