Netflix Reportedly Cutting Spending by $300 Million; Becomes Latest Streamer Forced to Pull Back
Netflix Reportedly Cutting Spending by $300 Million; Becomes Latest Streamer Forced to Pull Back
Netflix is in an enviable position in the streaming marketplace. It is the only major subscription video-on-demand service that consistently records a profit, and — according to Nielsen — it is currently the home to seven of the top 10 streaming shows, seven of the top 10 original streaming series, six of the top 10 acquired shows on streaming, and seven of the top 10 movies on a streaming platform. Not bad for a single service.
But even Netflix is not immune to the market forces that are causing other streamers to make drastic content cuts and big licensing deals with other media companies. According to a report from The Wall Street Journal, Netflix is planning to cut around $300 million in spending in 2023. The cuts will come in a variety of segments and could include layoffs, salary cuts, and new approaches to paying for content. It was not clear if any of the $300 million is intended to come from Netflix’s overall content budget, which was expected to be around $17 billion this year.
The Journal reports that Netflix’s decision to delay enacting rules against password sharing is playing a part in the cuts. Netflix originally intended to roll out guidelines preventing account sharing in the United States in the first quarter, but decided to delay that move until the second quarter instead. Netflix executives have said the push-back was intended to help them gather more data about password-sharing, in order to better serve its users.
The financial streamlining at Netflix is reminiscent of what many other streamers are being forced to do. Content spending growth is slowing across the industry, as streamers try to find the easiest path to profitability. But other services have had to make far more drastic moves in order to get to that goal, which Netflix has already achieved.
HBO Max, for example, saw highly publicized content cuts that affected popular titles from “Sesame Street” to “Westworld.” The company also licensed many of the discarded titles to other streamers, and shifted to a strategy of longer theatrical windows for its blockbuster films instead of sending them to streaming as soon as possible.
Disney is also being forced to bite the cost-cutting bullet, and announced this week that it will be removing underperforming titles from its streaming platforms Disney+ and Hulu in the coming months. Disney has also had discussions about licensing content to other companies, as part of an overall program to curb huge streaming losses.
Netflix’s initial cost-cutting moves won’t be as drastic as Disney’s or HBO Max’s, but it’s still noteworthy that a service as beloved as Netflix still has to make such moves. It shows that, though streaming has made great strides in the march to overtake video sources like cable and satellite, streamers are still highly sensitive to market forces, and even the largest streamer in the world isn’t invincible.
Netflix
Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”