Recall that two months ago, video streaming giant Netflix sacked 150 members of its staff. Recently, the company has sacked another 300 staff members, which represents 3% of its workforce.
The company disclosed that this move was necessary so that they can adjust costs as the company continues to record slower revenue growth. Netflix revealed that about 216 affected staff members were in the United States, 30 employees were from the Asia-Pacific countries, 53 in Europe, the Middle East, and Africa, and 17 in Latin America.
Following the new round of layoffs, the management had to issue a statement. In their words, “Today we sadly let go of around 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”
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Netflix has joined the list of companies that have laid off staff members this period over a decrease in revenue growth. Other companies are Tesla, Compass, Stitch Fix, and Coinbase. Netflix laying off staff members is no doubt business-driven and not based on individual performance.
In the first quarter of the year, the company was hit with a drastic decrease in revenue, when it lost 200,000 subscribers and is expected to lose an additional 2 million subscribers in the 2nd quarter.
Part of what led to a major loss of subscribers for Netflix was a hike in their subscription price. The company has also attributed password sharing to the decrease in its revenue as it is making efforts to crack down on password sharing, noting that over 100 million households are sharing the same password.
Password sharing has impacted the earnings of the streaming platform which has translated into a loss of opportunity for subscription sales. Netflix initially allowed password sharing to attract subscribers in its early days.
However, subscribers started to use the platform beyond just immediate family, sharing it as a group subscription plan with friends and acquaintances. While the concept had a promising start to attract subscribers, it currently seems to have outlived its purpose.
Recall when Netflix was founded in 1997, the company swiftly developed a reputation for revolutionizing the movie rental market, which saw them dominate the market, enjoying minimal direct competition.
The company then discovered a way to maintain its market by positioning itself where it entered the movie market in its infancy. The streaming company continued to enjoy that domination until other streaming companies began to surface.
Currently, the company is faced with heightened stiff competition from other streaming companies like Hulu, Walt Disney, Amazon Prime Video, HBO max, and Discovery +.
Looking at the strong competition Netflix is facing from other streaming companies, it shows that one thing is certain in business, which is that no matter how long a business or brand have been dominating the market, they will eventually begin to face stiff competition from competitors, which is why a business or company must not rest on its laurels, rather they should keep improving and evolving.
One thing Netflix must do to regain its spot as the number one streaming giant is to identify a strong competitive advantage and offer services that are lacking in other streaming services. Also, their subscription fee should be in sync with other streaming companies, because naturally, humans will love to go for subscriptions with a lesser price.