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Tuesday, June 28, 2022

Netflix lays off 300 more employees, confirms ad-supported tier is coming

Netflix co-CEO Ted Sarandos

Netflix co-CEO Ted Sarandos
Photo: Kevin Winter (Getty Images)

The belt-tightening phase/potential freefall of Netflix continues apace this week, as two separate news updates collide to sketch out where the streaming service’s head is at these days: On the one hand, confirmation from co-CEO Ted Sarandos that the company’s long-rumored ad-supported subscription tier is finally coming…and on the other, an announcement that the company has just laid off 300 more members of its staff.

That latter news comes just a few weeks after an earlier round of layoffs that saw 150 people lose their jobs, many of them in its social media or marketing departments. (That number also doesn’t include dozens of freelancers and contractors who had their employment ended, including within the company’s embattled original animation department.) Variety reports that todays layoffs come from across multiple divisions of the company, mostly centered in the U.S.; Netflix employs some 11,000 people across the planet.

Meanwhile, at the Cannes Lions advertising festival, Sarandos was on hand to confirm what the streamer has been hinting at for ages now: It’ll soon be launching a subscription tier for the market of users who, in Sarandos’ words, are “People who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising.’” Hence the streamer’s presence at Cannes Lions itself, since the company obviously currently has no relationships with advertisers. (Sarandos did promise that ads won’t be intruding into the current paid subscription tiers—although Netflix has been steadily jacking the prices up on those for a few years now.)

Both developments, of course, come back to the same place: That disastrous earnings call from earlier this year, when Netflix sent investors scurrying with reports that its subscriber rates had dropped for the first time in years. Both the layoffs, and the ad-tier, seem to operate from the same working theory: That Netflix has acquired pretty much the entirety of the market of people (especially in the U.S. and Canada) who would pay for its services under its current operating model. And so they’ve got to both extend their range out into the cheap seats (and pick up some ad revenue in the process) or cut back their operating budget significantly. (But rest assured: Sarandos also confirmed that he remains committed to keeping Netflix your number one stop for older comedians making shitty Transphobia 101 jokes; the business market may be ever-shifting, but some things will never change.)

[via THR]

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