Netflix plans to cut 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 US and elsewhere from the first quarter of the year. until the second quarter, which means that the income from now is expected to move towards the second half of the year.
The company urged staff earlier this month to be sensible with their spending, including around hiring, but noted there would be no additional hiring freeze or layoffs.
A Netflix spokesperson declined to comment.
It’s worth noting that while Netflix plans to cut costs by $300 million this year, this figure represents a small fraction of the company’s overall expenses. For example, 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 his estimate by 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 campaign against 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 you don’t live with uses your account, Netflix advises them to “buy an additional member.” Netflix allows up to two additional 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 the Netflix Premium plan, almost $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 cut costs, Netflix carried out a series of job cuts last year. In May 2022, the company laid off approximately 150 employees. A month later, the company laid off 300 more people, representing about 3% of its workforce at the time. Netflix then fired another 30 employees in September who were part of its animation department.
The Netflix password sharing crackdown is expected to hit the US on or before June 30.