This week, two distinct news stories collided to paint a picture of where Netflix’s head is at as it continues its belt-tightening phase and potential freefall: On the one hand, co-CEO Ted Sarandos‘ confirmation that the business will soon launch its long-rumored ad-supported subscription tier is encouraging.
On the other hand, there was a notice stating that 300 more employees had just been let go by the company.
Just a few weeks prior, 150 employees were let go in a round of layoffs, many of whom worked in the company’s marketing or social media departments.
This number also excludes the dozens of independent contractors and freelancers who lost their jobs, including those in the company’s contentious original animation division.
According to Variety, today’s layoffs affect several company divisions, mostly in the United States; Netflix employs about 11,000 people worldwide.
New changes coming into the platform
The streamer will soon launch a subscription tier for the market of users who, in the words of Sarandos, are “People who say: Hey, Netflix is too expensive for me and I don’t mind advertising.” Sarandos was on hand to confirm this at the Cannes Lions advertising festival in the meantime.
Since the company obviously has no relationships with advertisers right now, the streamer’s participation in Cannes Lions makes sense.
Although Netflix has been steadily raising the prices on those for a few years now, Sarandos did promise that ads won’t be interfering with the current paid subscription tiers.
Naturally, both developments lead to the same conclusion: That terrible earnings call from earlier this year, when information about Netflix’s subscriber rates declining for the first time in years sent investors scrambling.
Both the layoffs and the ad-tier appear to be based on the same premise: that Netflix has essentially cornered the market of consumers who would pay for its services under its current business model, particularly in the United States and Canada.
Therefore, they must either significantly reduce their operating budget or expand their reach into the cheap seats and earn some advertising revenue in the process.