Netflix Begins Layoffs as Ad-Supported Tier Nears Introduction

Netflix has entered the layoff period in the company response to dwindling subscriber numbers, paving the way for the introduction of ads to the streaming giant. According to Variety, the company let go of around 300 staffers on Thursday, with the majority of the losses coming from the U.S. across the business.

It is the second round of layoffs at the company after 150 were cut in May on the heels of a sharp drop in value amid subscriber losses. The company set a goal of keeping margins at 20%, with the cuts as part of the strategy. They have also canceled quite a few series in recent weeks, though Variety adds that the streamer is still committed to $17 billion for shows and films in 2022.

"Today we sadly let go of around 300 employees," a spokesperson for Netflix told the outlet. "While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth. We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition."

Netflix's response drops amid a deluge of streaming services on the market, including those owned by content creators like Disney, Paramount, Warner Bros. Discovery and Comcast. Popular shows that were featured heavily on Netflix in the past have now found homes as part of the streaming company that owns their rights initially. Famous examples like The Office and Friends were swiftly ushered from Netflix in recent years, becoming exclusive to Peacock and HBO Max respectively.

There is also the impending addition of ads to Netflix in the near future, coupled with a planned crackdown on password sharing by existing customers. According to the co-CEO, though, the ads won't be added in a way that's intrusive.

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"We've left a big customer segment off the table, which is people who say: 'Hey, Netflix is too expensive for me and I don't mind advertising,'" Netflix CEO Ted Sarandos said Thursday at the Cannes Lions ad festival. "We [are] adding an ad tier; we're not adding ads to Netflix as you know it today. We're adding an ad tier for folks who say, 'Hey, I want a lower price and I'll watch ads.'"

So if you love ads with your mixed bag of content, this tier might be for you. It can't be much different than what we see on Hulu at this point, though Netflix is on thin ice with customers over the smallest infraction so the risk is there.