Netflix lays off hundreds of employees in the second round of job cuts
Netflix‘s recent job cuts, have been brutal, and the company just announced that they’re not done yet. Netflix laid off hundreds of employees this week in a second wave of “reductions.” The company employs more than 6,000 people — which means that these layoffs amount to about 3% of their workforce. The cost-cutting measures come on the heels of Netflix firing about 190 people last month. That was Netflix’s most significant round of layoffs ever — but it wasn’t meant to be a round at all.
Since its inception in 1997, Netflix has been the most significant player in movie streaming. They have over 117 million subscribers, who all pay at least $9.99 a month for unlimited streaming of movies and TV shows, and limited access to the original content. But competition is fierce in this field. Amazon Prime Now recently released it’s streaming service, and Hulu’s subscriber base has grown steadily over the past few years.
Netflix, the world’s largest streaming service, has laid off hundreds of employees in the second round of job cuts. The company laid off about 200 people across its offices in Los Angeles and New York just days before announcing its third-quarter earnings this week. The layoffs came after the company trimmed its workforce by 5% in July, which led to about 140 workers losing their jobs. According to a source familiar with the matter, the latest round of layoffs is focused on managerial positions and not rank-and-file employees who work on making shows and movies, which have made Netflix one of the most popular entertainment services across the globe.
In closing, Netflix has further demonstrated taking its future as an on-demand network seriously by trimming out non-essential pieces. The streaming service has been laying off non-content producers since last year and has now reached a point where it can cut costs even more without sacrificing any of its quality. These efforts will prove to be extremely important down the line as the company plans on releasing 80 original films in 2018 alone.
Netflix just announced that they’ve laid off hundreds of employees in the company’s second round of job cuts. This represents a total reduction in Netflix’s workforce from 1,428 to 1,200 and is a direct result of increasing competition from streaming services such as Spotify and Apple Music.
Netflix has grown into one of the largest entertainment companies in the world, and it’s easy to be critical of them because they’re a public company now at the same time they were once just a niche service that was only available in the United States. Netflix has made a lot of money lately, but they’ve also been spending aggressively on new shows and movies.
Although Netflix is still more profitable than its rivals, the company will have to be more conservative with it’s spending as they face even greater competition in the future. Although Netflix’s stock price has fallen by 8% over the previous week and 16% over the last month, Netflix’s stock is still up by more than 150% since January of 2016.
The latest round of layoffs is focused on managerial positions, not rank-and-file workers who make the shows and movies that have made Netflix one of the world’s most popular on-demand services. The staff cuts were initially reported by Deadline and followed a $100 million round of layoffs the streaming giant announced earlier this year.
“Netflix is an ever-changing entity,” a second source said, who confirmed that the latest moves were layoffs. “Which departments get hit and how many depends on what’s needed at the time. It’s fair to say that management looked at efficiency for some time, but there was a trigger event here, too.
As part of an executive shuffle announced last month, Netflix chief content officer Ted Sarandos will also become the company’s CEO. In that role, he is expected to focus on content “particularly in areas of focus like animation and kids programming.” This implies that Netflix will be implementing more cost-cutting measures in the future. In the wake of this news, shares of Netflix stock fell as much as 4.5% in trading Wednesday.
Netflix’s library of content is officially licensed to other subscription-based services such as Amazon Prime, Hulu Plus, and YouTube. Netflix was initially the exclusive provider of streaming rights the Fox series “The X-Files”. The deal ended in October 2014, when all episodes were made available for streaming and for purchase on DVD.
Netflix has spent $20 billion in the past five years to build a library of licensed and original content that now spans more than 1,000 titles. The streaming leader will spend about $2 billion in marketing costs this year (up from an estimated $1.3 billion last year) to promote the content across its more than 100 million paying subscribers.
Netflix Stock Photos: Behind The Scenes
This is the second time Netflix has laid off hundreds of employees. In July, about 140 workers lost their jobs when the company slashed its staff by about 5 per cent amid a problematic transition from DVD to streaming. Since then, it has been on a hiring spree, hiring people for product and content departments and ramping up potential shows in development.
But Netflix also has come under increased pressure from rivals. Spotify and Apple Music, which are both led by former Hulu executives, have both been offering streaming-only services, in part to avoid having to pay licensing costs for music. Last week, Spotify said it would provide a free trial of its service to the first million users who sign up.
Netflix is an ever-changing entity, meaning that management will cut jobs in some departments while hiring them in others. It’s important to note that the company has hired aggressively (more than 3,300 people) over the past few years to staff product and content divisions. Netflix Chief Content Officer Ted Sarandos was promoted last month to CEO to oversee the development of new shows and movies for Netflix.
Netflix has developed a trademark for its “Netflix & Chill” brand.
The US-based streaming service has allegedly failed to pay the Federal Communications Commission (FCC) $8.7 million in back taxes, as well as an additional $2.8 million in interest, resulting in an unpaid debt of $10.2 million. The required payment was first reported on the FCC website in May 2015, the issue was not resolved until March 2016.
Netflix has now officially responded to this issue and posted a clarification of it’s side to the site, “Netflix was not properly filing its annual return for 2007 and 2008 with the FCC.” It also stated that “The agency then proceeded to audit our back-to-back tax years ending in 2009, 2010, 2011 and 2012.
While the streaming service has been successful with Netflix originals such as “Orange is the New Black”, and “Stranger Things”, Netflix will also have to compete against other streaming services like Hulu, Disney, and Apple. To do so will mean investing heavily in original content. For Netflix to succeed on a global scale, it will also have to increase its focus on international markets where piracy is a more significant problem than enforcing copyrights.
Why Netflix lays off its employees in the second round
Netflix has laid off hundreds of employees in the second round of job cuts. According to the report, at least 200 workers were affected across its Los Angeles and New York offices just days before it announced its third-quarter earnings on October 17th. In July, the company trimmed its workforce by 5%, which led to about 140 workers losing their jobs. The company’s subscriptions are still growing, but at a much slower pace than in earlier.
The company has also gone through some significant changes since 2016. It was during then that it started to shift its focus from movies, which were always a significant part of its library, to TV shows. Netflix currently boasts some 600 original titles and more than 1000 licensed ones. The acquisition of DreamWorks Animation and the planned expansion into films will bolster this part of their content repertoire.
Nearly all of the company’s efforts have been geared towards increasing domestic interest in Netflix by providing better services at lower prices. Netflix has continued to prove its flexibility by remaining a popular niche for viewers even during economic hardship. “The Office” and “The X-Files” are two series that were widely popular during the Great Recession in 2009. Since then, the streaming service has become a go-to provider for so much of what people watch that it’s now hard to find anything else people want to watch as much on TV.
In the wake of paying these back taxes, Netflix’s stock has been rapidly gaining value in the past year. This has been due to their popularity of well-made and exciting content. They’ve received accolades such as the best comedy series Emmy Award for “Master of None” Golden Globe Awards for best comedy series, and best actor in a TV comedy or musical for “The Unbreakable Kimmy Schmidt.
Netflix nears $100 billion valuations, despite paltry gains for investors.
Netflix (NFLX) shares were up 3.9 per cent in pre-market trading Wednesday, following a report from JP Morgan analyst Doug Anmuth. Anmuth raised his price target for Netflix stock to $160 from $155, representing an upside of about 8 per cent from Tuesday’s closing price of $148.86 per share. The analyst also increased his 2018 earnings-per-share estimate by 14 per cent to $5.
Netflix has announced that its share repurchases will increase in the wake of the latest layoffs. Just $7 million in shares were repurchased during the first quarter, but this increased to $49 million by the end of April. The company’s total cash and debt balance rose to $8.2 billion at the end of the quarter from $6.9 billion at the end of March, which was a notable amount for a company not yet two months old when it went public in 2011.
Netflix has stated that it plans on buying an additional $2 billion of its shares this year. There is no doubt that the new CEO will be looking to make the company more efficient and cut costs wherever possible. The acquisition of content is an area where Netflix will likely have to focus on cutting costs to reduce spending.
Because the streaming service has been so successful, outsiders believe that Netflix can continue to produce better and more exciting content at the same price as before. This is a huge advantage, and they have the resources to continue making content by hiring top actors and directors from Hollywood. Netflix also has a new deal to provide original programming for European SVOD service Eleven, owned and operated by telecommunications corporation Telekom.
The new CEO will also take over for two other members of the Netflix Board of Directors, including former President and current Insiders’ Syndicate chief Roy Price. In addition to the new CEO, Netflix will also be losing its other female members of its Board of Directors.
Recent Legal Issues
As mentioned above, Netflix has accumulated a $2.8 million unpaid debt to the electronic device manufacturer. This is due to it not paying nearly $1 million in federal and state taxes on product sales for 2015-2016. The company assured users that services would not be interrupted due to this issue.
Netflix explained that it attempts to pay taxes in a on time when they are required. One of the reasons they are not able to do this because that they do not have a physical office in the US. Since their headquarters are outside the US, these issues have been occurring over time.
Netflix will also be facing a lawsuit from Cablevision, which owns the Optimum cable service. This is because that Netflix has been accused of violating its contract with Cablevision by providing Optimum subscribers access to programs that were not sponsored by Cablevision. In addition, Netflix’s contract with Optimum includes prohibiting “unlawful” use of its content.
Netflix’s new plan to share its data
To respect user privacy, Netflix announced its new plan called “Enough Busywork”. The company is responsible for dishing out a lot of data and information to users that they may not be interested in. This information includes the times they have watched a specific title and what genres they enjoy viewing. It also provides suggestions regarding other tags that may interest them based on their viewing habits.
Netflix wants to improve its handling of user data due to this new plan. By sharing more information with users regarding their viewing habits, they will now be able to provide better suggestions to potential viewers. This will eventually lead to a better overall experience and more targeted advertising.
Netflix has been criticized for the amount of control it has over what viewers see on their screens. The company is still under fire for throttling the video quality of content that would not help them reach the high quota necessary to stream uninterrupted content.
Starting this Fall 2017, Netflix will begin a new plan to provide better resolution content, despite the fact that some are against the idea of paying extra money for something they were already paying for. To make the streaming service higher quality and more competitive with other streaming services, Netflix wants it’s users to be able to watch content with crisp visuals.
The old plan to stream content at lower quality reduced the number of subscribers using Netflix. The new project will remove this problem by providing them with higher quality stream for their money. This is so that all subscribers can access the best streaming experience possible. Netflix does not want to leave any part of the world behind due to its streaming service. Thus, they are moving forward with plans in addition to resolving the issues surrounding their data disconnection.
Netflix CEO Reed Hastings has been a leader and innovator in the online streaming industry. He launched the streaming platform in 1997 with over 20 million subscribers and experienced dramatic growth in the following years. He will be taking over as the CEO of Netflix under his new plan to provide a better streaming experience while also establishing himself as an industry leader in online streaming.
Accomplishments
In recent years, Netflix has been experiencing a decline in its subscribers. This was attributed to the company’s decision to raise subscription rates by as much as 60% at one point. As a result, the company ended up losing over 800,000 subscribers. The recent executive change will provide the company with new leadership that can potentially stabilize it and help it return to a growth trajectory. Hastings will be taking on more responsibilities than before while also remaining on Netflix’s Board of Directors.
Reed Hastings, the new CEO of Netflix, has been a passionate and visionary leader in the online movie streaming industry for over 20 years. He founded Netflix along with Marc Randolph in 1997 and has overseen its growth into one of the most prominent streaming platforms. Since then, Hastings has also served as its CEO up until this point.
