In a recent interview with the French newspaper Le Journal du Deimanche, Netflix co-CEO Ted Sarandos argues that a recent slowdown at Netflix is due to multiple factors, including inflationary pressures, supply chain constraints, a drop in smart TV sales and the loss of subscribers when the streamer left Russia.
“Every customer asks themselves the question of the value of a subscription in relation to its cost,” said Sarandos.
Netflix lost 200,000 subscribers in the first quarter of this year, though the Netflix boss wants to put that number into perspective.
“Several content beat audience records, such as the films Don’t Look Up and Red Notice or the phenomenon series Squid Game or the fourth season of Stranger Things, which reached the threshold of 1 billion hours of viewing upon its release,” he said.
To compensate for the drop in subscribers, which now sits at 222 million worldwide per Sarandos, Netflix has laid off roughly 450 employees since May. This signals a cost-reduction plan, and the streamer has adjusted to slower growth relative to its projections. Without limiting spending on content production, Netflix will reach $17.3 billion this year, Sarandos added.
Other strategies for boosting revenue include introducing ads. Sarandos confirmed the global introduction of ads after months of speculation at the Cannes Lions advertising conference in June. He told Le Journal du Deimanche that ads would attract more subscribers, allowing them to watch content at a lower cost.
Additionally, the streamer continues to crackdown on shared passwords and is “testing a new billing system for additional profiles not living under the same roof.” He said about 100 million people use Netflix without paying.