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Netflix's struggle creates 'fear-based' decision-making

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Netflix’s streaming success has disrupted the traditional film industry and upended more than a century of dominance.

But after one of the most difficult years in Netflix’s history, the company’s leadership style has undergone a dramatic shift. As one former Netflix employee recently pointed out to Insider, management has resorted to cutting costs and laying off staff, making the decision-making process “all reactionary” and “all fear-based.” I’m here.

Netflix’s change began in April, when it saw its first quarterly subscriber decline in over a decade. The stock immediately crashed and has struggled to recover ever since.

Netflix has also had to deal with increasing competition from rival streaming providers like Disney+, Amazon Prime and HBO Max. According to recent data from subscription service research firm Antenna, 23% of new Netflix signups in the US as of the end of April had canceled their subscriptions within a month, compared with other Netflix signups. Significantly higher percentage than streamers.

Netflix shares rose slightly after last month’s better-than-expected earnings, but lost nearly a million subscribers. But the change in management style may continue, and may even have been inevitable as the company has been on the rise over his decade.

“The turning points in Netflix’s business — ad-supported strata, fear-based management, layoffs — are truly a painful downside to growth at the peak of technology trends,” said media analytics firm Disrupty. said Lou Basenees, founder and chief analyst at VTech Research. luck.

Netflix belt tightener

Netflix has been scrambling to increase its earnings since its stock price plummeted. It warns that it will crack down on password sharing, and subscribers will have to pay more if they let someone outside their family use their account. I plan to start.

Since last year, Netflix has promised expansion into video games. In his one year, the streamer has released a slew of new games and acquired multiple video game developers.

At the same time, Netflix has been trying to cut costs, including two smaller job cuts this year. In May he laid off 150 employees and in June another 300.

Netflix didn’t respond immediately luck’Request for comments.

bad luck

This is a stunning turnaround for Netflix, which quickly gained momentum early in the pandemic, after a dramatic uptick. The company added a record 15.8 million new subscribers in 2020. That’s double his annual projection, as widespread stay-at-home orders left many people with little to do but watch TV.

The company’s success in the early days of the pandemic saw a surge in job openings, especially in the areas of content creation and customer service.

But the atmosphere inside the company may not have been so rosy.A former employee told his Insider Rapid growth has stretched many workers, including both lower-level employees and executives.

Netflix has announced that it will continue to expand its streaming library, but spending on new content will plateau at $17 billion annually in 2022 after years of annual increases. The company recently announced that it will focus on what audiences want more, rather than churning out a bunch of shows.

But despite the refocus, some former employees say upper management is more conservative with budgets and takes less risks.

“Don’t try, just do it. They don’t want to hear it,” one former executive told Insider. “It’s no longer fun. It’s really safe to work.”

Sustaining content spending could be key to Netflix staying relevant in an increasingly competitive industry, but Basenese said the company has seen content spending and an increasingly disadvantaged We need to find a balance between the changing market environment.

“Fear promises to rule the day until we see a new equilibrium between low to zero growth in content costs, headcount and subscriber growth,” he said.

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