Netflix announced about 1,000 employee layoffs this week, or about six percent of its 16,000-person staff. Previously, Netflix’s largest layoff was half that — 450 job cuts in 2022.
In a company-wide memo, co-CEOs Ted Sarandos and Greg Peters wrote in part, “We wanted to share that we are making a number of organizational changes and, as a result, we’ll be letting go of roughly 6% of our colleagues, with the greatest impact to our product, tech, legal, and HR teams.”
“Our mission — to entertain the world — is ambitious, and delivering on it requires us to be disciplined about where we prioritize our people and resources.”
So what’s going on…?
A few things…
Netflix’s stock price is waaaaay down over last year. As of this moment, it is down 42 percent — trading at $70.30 compared to $121.00.
This is mostly due to the widespread belief that streaming has hit a ceiling when it comes to signing up new subscribers, and unlike other entertainment multinationals that enjoy alternative income streams (theme parks, merchandising, home video, cable TV, broadcast TV), all Netflix has is subscriber income and whatever revenue comes from its advertising tier.
Netflix is still insanely profitable. Nevertheless, it is no longer seen as what it once was — a growing phenomenon.
After all, there are only so many people in the world, and only so many of those people are interested in Netflix.
Faced with that reality, how do you boost your stock price?
Well, if you can’t boost your customer base, you boost your profits another way — by cutting costs. And this, my friends, is where AI comes in…
Hollywood can pay all the lip service it wants raging against AI, but AI is going to save Hollywood, and not just in eliminating those insanely high costs involved with CGI. You can already subscribe to AI bots that act as full-blown employees who not only handle paperwork, create reports, do your purchasing, create your payroll and employee schedules; AI can send and respond to emails, do inventory, monitor security cameras, write computer programs, replace legal and PR teams with its research and reporting capabilities…
AI works 24/7.
AI doesn’t unionize.
AI doesn’t require health insurance or a parking space.
AI doesn’t take a newspaper into the bathroom.
No payroll or Social Security taxes are associated with AI.
Every single day, AI shows up on time and does its job without complaints or personality conflicts.
For better or worse, this is the future…
Grocery store chain Kroger said it will lay off 3,000 corporate employees over the next three years as it ramps up its use of artificial intelligence to streamline operations.
“Technology is reshaping what’s possible,” CEO Greg Foran wrote in a memo to employees on Monday. “The way work gets done is changing across every industry; we must adapt and take advantage of technology. We need to adopt capabilities, reduce duplicative work and look closely at where work is best fit to be done.”
Crybabies are gunna crybaby, but change hits every generation, and you can either adapt or you can die.
Something else I expect Netflix to do is to eventually offer free access to its older catalogue titles via a free streaming service like a Pluto, Tubi, or Roku Channel. Right now, Netflix has a buttload of TV shows and movies subscribers no longer watch, so it only makes sense to dump that dead weight into a streaming service that will bring in advertising revenue.