Netflix axes 300 staff in second round of job cuts

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Netflix has reportedly laid off 300 employees in its second round of job cuts, multiple media reports including The Wall Street Journal, The Guardian and CNBC said, as it grapples with its first subscriber loss in over a decade. During the first round in May this year, Netflix reportedly laid off 150 staff. Similar to the first round, most of the employees impacted are US-based, media reports said, and those impacted represent approximately 3% of the total workforce. MARKETING-INTERACTIVE has reached out to Netflix for comment.

In April, Netflix also cut staff from its in-house editorial content arm, Tudum, five months after launching it last December. Bloomberg previously said that the layoffs are a broader restructuring of Netflix's marketing department. On the other hand, TechCrunch said that Netflix will not be shutting down Tudum despite the changes and a spokesperson said the website "remains an important priority for the company".

The streaming giant reported a loss of 200,000 subscribers in April this year, resulting in a 25% dip in shares in extended hours after the earnings report. Netflix previously lost subscribers in October 2011, CNBC reported previously. Netflix explained in a previous letter to shareholders that its revenue growth "has slowed considerably". It cited reasons including high household penetration, when including the large number of households sharing accounts combined with competition, as one of the headwinds of revenue growth.

Alongside the reported subscriber loss, Netflix's co-CEO Reed Hastings also said during the earnings call that the company is open to offering lower-priced ad-supported plans after years of pushing back on ads on its platform. He said then that allowing consumers who would like to have a lower price and are ad tolerant get what they want makes a lot of sense. The ad-supported plans are expected to roll out in the next year or two.

Netflix's strategy of offering ad-supported plans is making progress so far as co-CEO Ted Sarandos said recently in Cannes that Netflix is in discussions with multiple potential partners to help it break into the ad business, WSJ said.

Quoting Sarandos, WSJ reported that Netflix wants "a pretty easy entry into the market" and that what Netflix initially launches "will not be representative" of what the product will ultimately be. In fact, Sarandos said he wants Netflix's product "to be better than TV". At the same time, Netflix might also eventually launch its own ad offering and build up the business internally, WSJ said. According to him, Netflix wants the ad experience to be "more integrated and less interruptive" than traditional TV advertising.

Photo courtesy: 123RF

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