Netflix’s downturn has employees questioning its culture

At Netflix, it’s long been known that “adequate performance gets a generous severance package.”

The Los Gatos, Calif., company treats its roughly 11,300 employees as members of a professional sports team, where every player must be a star performer or he’s gone, reflecting what the company calls a “test of guardian”. “We’re a team, not a family,” Netflix says of its culture.

But what happens when the performance of the whole team is called into question?

Last week, Netflix said it had lost subscribers for the first time in more than a decade, losing 200,000 subscribers in the first quarter, and expected to lose 2 million more this quarter. The disclosure puzzled investors, who wondered if the streaming giant had lost its golden touch. Shares fell 35% on April 20, their biggest one-day drop since 2004.

In response to its dramatic slowdown, Netflix said it would test ways to encourage people to pay to share passwords; release better shows, movies and games; and explore a lower-cost, ad-supported version of Netflix — an option the company had long resisted.

But the low number of subscribers and the company’s response sparked a mixture of angst and uncertainty among many rank-and-file workers. Some fear the streaming juggernaut hired too quickly and became complacent as subscriber growth soared at the start of the pandemic.

Others are skeptical of strategic changes and fear that Netflix’s distinct culture will fundamentally change, according to former employees who spoke with The Times and comments posted on a private Netflix group on Blind, an anonymous forum for people with company-verified email addresses.

“Now we find ourselves in a company that looks more and more like every other big tech company,” a Netflix employee wrote on Blind, citing changes to compensation policies that would favor hiring less engineers. experienced at a lower salary. “Would they still do it if they had hired a little more slowly in recent years? I don’t think so, so where is the responsibility of the leaders who made the wrong decision to overhire? »

A primary concern for many is job security, which was amplified on Thursday when Netflix cut an undisclosed number of marketing-related positions, including from Tudum, a publication dedicated to promoting Netflix content. The pop culture site had been touted by former chief marketing officer Bozoma Saint John, who quit in March. The company said Tudum remained “an important priority”.

After Netflix released its earnings data, some of the workers laid off this week said they had been assured by managers that their jobs were secure.

“We were basically told, ‘Don’t worry about it,'” said a former entrepreneur who declined to be named because he had signed a nondisclosure agreement.

Instead, they were told that Thursday was their last day and that they would receive two weeks’ severance pay.

“They leave a lot of people in an extremely bad position who came here to invest in a project they sold to us,” the entrepreneur said.

The effect of the stock’s sharp decline – Netflix shares have fallen 70% this year – on staff compensation is further fueling anxiety. Employees can choose the portion of their salary tied to stock options.

Amid the uproar, the rivals received a surge in job applications from Netflix employees, said people familiar with the matter who were not authorized to comment publicly.

“Do you recommend putting work aside for a bit and starting interviews? joked an employee on Blind.

Netflix declined to comment for this article.

The company has long touted its culture of “radical transparency,” in which people have the freedom to make big spending decisions and place big bets. Employees who fail to meet Netflix’s high standards learn from their mistakes or are asked to leave.

“Getting cut from our team is very disappointing, but there’s no shame,” according to Netflix’s corporate culture website. “Being part of a dream team can be the thrill of a professional life.”

Despite the tough environment, Netflix has earned a reputation for generous compensation and a willingness to outspend its rivals. Its staff has grown aggressively during the pandemic, increasing by 20% in 2021.

Additionally, the streamer has spent heavily on content, funded filmmakers, and maintained a steady stream of deals through talent agencies, making it the toast of an industry that’s always on the lookout for buyers. deep pockets. At the same time, the company’s bluster caused consternation among more traditional studio executives, whose parent companies were under pressure to try to beat Netflix at its own game.

But recent struggles have been an ego check on the company and its employees. Now that Netflix is ​​under the microscope of Wall Street, the era of freewheeling spending is coming to an end. Even perks like company store loot are under scrutiny, insiders said.

In a presentation last week, CFO Spencer Neumann said Netflix would be “cautious in terms of reducing some of that expense growth to reflect the realities of growing revenue for the business. … In During this period of slower revenue growth, we will protect our operating margins.

Even before Tudum’s layoffs, several managers left the company in recent months, including animation director Phil Rynda.

The newfound frugality could reverberate in Hollywood. With so much money poured into the space, other gamers who have spent the last four years trying to top Netflix might be rethinking their own priorities.

Some current and former employees say the worries are overblown. The streaming giant has already overcome challenges, including switching from DVD rentals to streaming, when Netflix was still primarily a disc-by-mail service. It continued to grow as rival studios, including Disney, pulled their content from Netflix and put it on their own streaming services.

Netflix co-founder and co-CEO Reed Hastings expressed confidence that the company will weather this difficult time and pointed out that Netflix still dominates streaming with 222 million subscribers worldwide. Its nearest competitor, Disney+, has 130 million.

“Internally, we’re really prepared, and it’s like our moment to shine,” Hastings said during an earnings presentation last week. “That’s when it all counts, and we’re very focused on achieving those goals and getting back into the good graces of our investors.”

But some current and former employees are skeptical of the strategy, especially the dramatic pivot to the possibility of an ad-supported subscription option.

“It looks like a huge curve,” said a former employee.

In 2019, when entertainment executives speculated at Cannes Lions that Netflix would consider adding advertising to its streaming service, Netflix told CNBC that it was “wishful thinking out of ‘a conference on advertising’.

Hastings admitted during last week’s earnings presentation that he objected to the ad, saying it hindered the user experience. But he said he’s had the idea since. “I’m a bigger fan of consumer choice,” Hastings said.

A producer who worked with Netflix and asked not to be identified said, “It felt like a panic.”

Netflix is ​​a frequent Emmy and Oscar player and has produced critically acclaimed and award-winning programs such as “The Crown” and “The Queen’s Gambit.” Nonetheless, a lingering criticism of Netflix is ​​that its TV-style programming and movies often have fleeting relevance and little lasting cultural impact.

There is growing recognition within Netflix that the company needs to produce better content as rivals such as Disney and HBO Max make major strides in streaming, people familiar with the company said. Because the company releases full seasons of its shows at once and makes it easy for subscribers to cancel, Netflix must release a new hit every month to stay competitive and continue to grow, executives said.

Staff members have also criticized that its content and leadership do not fully reflect and include the transgender community – concerns that were raised after transphobic language was included in a Dave Chappelle l ‘last year. At the time, some employees staged a walkout and protest. Co-CEO Ted Sarandos later told Variety that he “messed up that internal communication,” but the company kept the special on its streaming service.

“Everything that was said was about the fact that there are millions of people who don’t watch Netflix, who don’t pay for Netflix, because there isn’t enough content on the platform that they are interested in. “said the Netflix alum. program manager B. Pagels-Minor, who helped lead the protest and was fired after being accused of leaking internal data. Pagels-Minor denied the claim.

Leave a Reply

Your email address will not be published.