Top streaming platform, Netflix is making plans to reduce its expenditure by $300 million this year. According to reports by The Wall Street Journal, Netflix plans to cut down on spending due to the delay in its plans to crack down on password sharing in the U.S and in other places from the first quarter of the year to the second quarter.
Hence, Netflix’s revenue would not be coming until the second half of the year.
Netflix had urged its staff to be careful with their spending, especially in hiring processes, however, Netflix would not stop hiring and laying off staff.
Although this move by the streaming giant to cut costs by $300 million this year is a good move, which represents a small fraction of the company’s overall expenses, for example, Netflix spent $26 billion on operating expenses last year.
Netflix did not hit the estimates for its expenses for the first quarter but disclosed a slightly lower forecast for last month. Netflix, however, increased its estimate for income generation in 2023 to $3.5 billion from $3 billion.
Although, Netflix has explored new ways for revenue generation, one of which is its recent crackdown on password sharing policy for users in Canada, New Zealand, Portugal and Spain, which it started earlier this year. Netflix requested its paying users to set a primary location for their account and if someone, who doesn’t live with them uses their account, Netflix alerts them to “buy an extra member.” Netflix however allows up to two extra members per account but at a fee, which varies from country to country.
The company also launched a new ad-supported plan called “Basic with Ads” in November 2022. This plan costs $6.99 per month, and is $13 less than Netflix’s Premium plan, and also $9 less than the Standard plan, and $3 less than the Basic plan. It hopes to compete with other major streaming services like Disney+, Hulu, HBO Max, Paramount+ and Peacock with the ad-supported plan.
In order to cut costs, Netflix also laid off at least 150 staff in May 2022 and cut another 300 jobs in April, which represents 3% of its workforce at that time. It also cut off another 30 jobs in September, from the animation department.