Netflix reportedly plans to cut spending by $300 million this year
Netflix is planning to cut its spending by $300 million this year, according to a new report from The Wall Street Journal. The report indicates that part of the reason the streaming giant is looking to cut costs is because it delayed its plans to crack down on password sharing in the U.S. and elsewhere from the first quarter of the year to the second quarter, which means that revenue from the move is now expected to come in toward the second half of the year.
The company urged staff earlier this month to be sensible with their spending, including in relation to hiring, but noted that there would not be a hiring freeze or additional layoffs.
A Netflix spokesperson declined to comment.
It's worth noting that although Netflix plans to cut costs by $300 million this year, this number represents a small fraction of the company's overall expenses. For instance, Netflix's operating expenses last year were about $26 billion.
The streaming giant beat estimates for the first quarter of the year but reported a lighter-than-expected forecast last month. Netflix raised its estimate for the amount of free cash flow it aims to generate in 2023 to at least $3.5 billion, up from $3 billion.
Netflix has been exploring new ways to generate revenue. The company launched its crackdown on password sharing in Canada, New Zealand, Portugal and Spain earlier this year. In these countries, Netflix requires paying users to set a primary location for their account. If someone they don’t live with uses their account, Netflix alerts them to “buy an extra member.” Netflix allows up to two extra members per account for a fee, which varies from country to country.
In addition, the company launched a new ad-supported plan called “Basic with Ads" last November. The tier costs $6.99 per month, which is $13 less than Netflix’s Premium plan, nearly $9 less than the Standard plan and $3 less than the Basic plan. With this plan, Netflix is competing with other major streaming services that offer ad-supported options, including Disney+, Hulu, HBO Max, Paramount+ and Peacock.
In an effort to lower costs, Netflix conducted a series of job cuts last year. In May 2022, the company laid off approximately 150 staffers. A month after that, the company laid off 300 more people, which represented about 3% of its workforce at the time. Netflix then laid off another 30 employees in September who were part of its animation department.
Netflix's password sharing crackdown is expected to hit the U.S. on or before June 30.