netflix streaming platform

Video streaming giant Netflix has reportedly cut a total of 450 job positions in the past two months following a disappointing quarterly report that featured a loss of 200,000 paid subscribers.

The first layoff took place in mid-May with the company reportedly letting go of 150 employees. Netflix confirmed to NPR that most of the job positions were based in the United States and that the decision was made primarily based on “business needs”.

Meanwhile, the company issued a statement today informing that they had let go another 300 employees.

“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 (NFLX) and are working hard to support them through this difficult transition”, the report stated.

These layoffs are occurring at a point when many economists are warning that the US economy is bound to enter a recessionary period due to the latest actions taken by the Federal Reserve to contain inflation.

Poor Timing? Not All Employees at Netflix Appear to Agree with Its Content

Netflix has been announcing many changes to its business model including a crackdown on password sharing to further boost its number of paid subscribers while the company is also contemplating the idea of introducing a cheaper subscription package that will incorporate adverts.

However, the timing of the layoffs may raise some eyebrows among advocacy groups as Netflix has been under fire due to its corporate practices concerning the creation of controversial content.

Also Read: Investing in Tech Stocks Explained

In this regard, the company recently added new clauses to its guidelines in which it basically told employees to reconsider if the company is a right fit for them if they do not agree with the content that is being pushed forward.

In an added paragraph to the firm’s cultural guidelines, Netflix stated: “Not everyone will like—or agree with—everything on our service”.

The paragraph continues as follows: “While every title is different, we approach them based on the same set of principles: we support the artistic expression of the creators we choose to work with; we program for a diversity of audiences and tastes; and we let viewers decide what’s appropriate for them, versus having Netflix censor specific artists or voices”.

It is unclear if some of the people that were sacked by the firm on these two separate occasions were explicitly in conflict with the company’s practices.

Both New and Old Users an Unsubscribing from Netflix

A recent survey from data analytics firm Antenna indicated that around 13% of the 3.6 million cancellations that Netflix processed during the first quarter of 2022 came from users who had accounts older than years.

netflix statistics cancellations

This is a particularly worrying development as those users have been for a long time the most faithful to the platform. In addition, the percentage of cancellations from users who have been subscribers from 12 o 24 months rose to 19% as well.

There could be a couple of reasons why Netflix might be experiencing this kind of churn. The first is the cost as Netflix recently hiked its prices by a couple of bucks per month earlier this year.

Even though this might not sound as much to users in the United States, given the large number of video streaming services that are now competing with each other – i.e. Disney+, Prime Video, HBO Max, etc. – people might be prioritizing and staying with the services that they love the most to cut expenditures at a point when fears of an upcoming recession are increasing.

Also Read: Quick Guide to Invest in Metaverse Companies

Meanwhile, content quality has also been cited as one possible reason why Netflix is experiencing negative net paid additions. In this regard, the company has been blamed by professionals within the cinema industry for prioritizing quantity over quality to keep users glued to their screens.

Netflix’s algorithm is designed so titles can be pushed to the most visible areas of the grid so users can constantly find new movies and series to watch. This can backfire, however, if the quality of the content is not good as people can eventually feel exhausted from watching multiple bad films and poorly produced series.

Some of the company’s in-house produced movies have not done well recently as is the case of “Red Notice” a movie that featured top-notch actors like Gal Gadot and The Rock but that received a 36% rating on the popular site Rotten Tomatoes.

However, there have also been some positive releases such as the second season of Bridgerton and new seasons from some beloved series like “Stranger Things”, “Ozark”, and “Better Call Saul”.

The next quarter will possibly paint a better picture of how impactful the latest changes in the US economy have been for Netflix’s business and how its new shows and releases may have managed to reduce cancellations and boost new subscriptions.

Other Related Articles:

eToro CopyTrader™ Tool

Our Rating

eToro
  • Buy Crypto & Copy Trade Professionals
  • Average 30.4% ROI in 2021
  • Average 83.7% ROI in 2020
  • Copy a DeFi or Metaverse Portfolio
eToro
Cryptoassets are a highly volatile unregulated investment product. Your capital is at risk.