Streaming media company Netflix has revealed plans to slash spending by $300 million this year, as part of a cost-cutting measure.
Reports reveal that the streaming giant is looking to cut costs, as it plans to crack down on password sharing broadly in the U.S. The company has further urged its workforce to be cautious with spending, including in relation to hiring, while noting that there would not be a hiring freeze or additional layoffs.
In the company’s First Quarter Q1 report for 2023, Netflix beat estimates but reported a lighter-than-expected forecast last month. The company brought in $8.16 billion revenue during Q1 2023, while Wall Street expected a slightly higher figure of $8.18 billion. However, the firm reported higher-than-expected earnings of $2.88 per share in Q1, while analysts anticipated $2.85 per share.
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Netflix also started the year by adding 1.75 million subscribers, bringing up the total number of global subscribers to 232.5 million. The subscriber growth represented a 4.9 percent year-over-year increase compared to the disastrous first quarter of 2022,
The company saw modest growth in the U.S./Canada region, adding 100,000 subscribers during the quarter, while the Latin America region underperformed for Netflix as it lost 450,000 subscribers during the first quarter.
As Netflix turns its focus to revenue numbers for its quarterly earnings, the company is forging ahead with its account-sharing crackdown, which rolled out in markets like Canada, New Zealand, Portugal, and Spain earlier this year. The company will also crackdown on passwords in the U.S., beginning in the second quarter, Netflix said in its letter to shareholders.
With its recent tests and pilot programs, Netflix has revealed how it will crack down on password sharers–namely, a combination of asking users to verify their accounts plus options for account holders to pay extra to share their accounts with others outside the household.
Netflix says it will use a combination of IP addresses, device IDs, and account activity from devices signed into the Netflix account to determine if an account is being used in the primary account holder’s household.
Analysts disclose that Netflix may see a $3 billion increase in revenue after the Password Sharing Crackdown. For the past year, Netflix has been adamant about cracking down on password sharing, and over the last few months, it is becoming more and more of a reality.
The company is also continuing to focus on its advertising business and will host its first Upfronts presentation on May 17 at the Paris Theater in New York. The video streaming industry is turning to advertising as inflation and consumer fatigue compound the headwinds facing subscription-based models.