NEW YORK (NYTIMES) - Following Netflix's surprise announcement last month that it lost subscribers for the first time in a decade, the streaming behemoth said on Tuesday (May 17) that it was laying off some 150 people across the company, primarily in the United States, representing 2 per cent of its total workforce.
"As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company," Netflix said in a statement. "These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues."
There are likely to be additional layoffs later this year, according to a source with knowledge of the situation.
In the first quarter earnings call in April, Netflix's chief financial officer Spencer Neumann said that in the next two years the company intended to pull back on some of its spending.
While Netflix will continue to dedicate about US$17 billion (S$23.6 billion) annually to developing new television shows and movies, it will do so with fewer people working behind the scenes.
"We're trying to be smart about it and prudent in terms of pulling back on some of that spend growth to reflect the realities of the revenue growth of the business," Mr Neumann said at the time.
Netflix, long the leader when it came to worldwide subscribers, said last month that it lost around 200,000 subscriptions in the first three months of the year and that it was expecting an additional two million to leave the service during the second quarter.
The news sent shock waves through the entertainment industry, in which many companies have bet their futures on the continued growth of streaming.
In the weeks since the earnings announcement, Netflix announced it would do something its executives once vowed would never happen: allow subscribers the option to pay less for a version of the service that comes with ads. That is likely to happen by the end of the year.
At the same time, the company plans to crack down on password sharing, a practice Netflix believes has cost the company revenue from about 100 million unauthorised users who are watching the service and not paying for it.