Netflix plans 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 that it delayed its plans to crack down on password sharing in the US and elsewhere from the first quarter of the year until the end of the year. second quarter, meaning revenue from the move is now expected to occur in the second half of the year.
The company earlier this month urged staff to be sensible about their spending, including on hiring, but noted there would be no hiring freezes or additional layoffs.
A Netflix spokesperson declined to comment.
It’s worth noting that while Netflix plans to cut costs by $300 million this year, that number only represents a small fraction of the company’s total costs. For example, Netflix’s operating expenses totaled about $26 billion last year.
The streaming giant is hitting estimates for the first quarter of the year but reported a lighter-than-expected forecast last month. Netflix raised his estimate for the amount of free cash flow it plans to generate by 2023 to at least $3.5 billion, up from $3 billion.
Netflix is exploring new ways to generate revenue. The company launched a 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 warns them to “buy an additional member.” Netflix allows up to two additional members per account for a fee that 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 competes 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 cut a series of jobs last year. In May 2022, the company laid off about 150 employees. A month later, the company laid off another 300 people, representing about 3% of its workforce at the time. Netflix then laid off another 30 employees who were part of its animation department in September.
Netflix’s password-sharing crackdown is expected to take place in the US on or before June 30.