Netflix started the wave of layoffs when it experienced a customer decline in the first half of 2022. While major media companies, including Walt Disney Co. and Warner Bros. Discovery, have announced layoffs and budget cuts in the past 18 months, Netflix has not undergone a significant downsizing despite cutting back on staff and stopping budget growth.
Repercussions of Strikes
Netflix released approximately 130 original programs in 2023, much fewer than the previous year, marking a 16% decline due to two strikes halting production nationwide, as What's On Netflix reported. Over the past decade, Netflix consistently increased its production of new original programs. However, there was a decline in output every quarter of the last year across significant programming categories like movies, TV shows, documentaries, and stand-up specials. During the previous three months of 2023, Netflix had its most minor extensive lineup of new releases in five years. It was reduced by about 25%, with approximately 60 fewer series released in the second half.
The repercussions of the strikes will affect Netflix's release schedule for a few years. While streaming services completed work on numerous shows slated for 2023, they were only beginning production on many titles for release in 2024 and 2025. Several of these programs have experienced delays or cancellations.
This holds for the entire Hollywood industry. The 2024 movie lineup appears sparse because some major titles were delayed to 2025. However, this isn't just a temporary decrease. Netflix intends to produce fewer shows in the future. Film chief Scott Stuber has outlined a strategy to create fewer projects focusing on improving quality. Despite the strike affecting the output of new scripted programs, the service also released occasional new documentaries and stand-up series, mainly unaffected by the labor stoppage.
We've witnessed a similar pattern in comedy. Netflix initially released numerous comedy specials to establish itself as the go-to platform for stand-up. However, it later reduced its production. While it remains the primary backer of stand-up specials, it's not producing as many as in 2017 and 2018.
Rivals are Starting to License Title Again
In the past decade, Netflix rapidly increased its production of original films and TV shows to dominate the market quickly. Starting with a few originals in 2013, it expanded to release dozens and then hundreds, which aims to compensate for the loss of licensed titles from other studios. Netflix is the top TV network globally, and other studios have started licensing titles to the company again.
The company gained over 16 million customers in the first nine months of 2023 and anticipated adding millions more in the last quarter. The rate at which customers cancel the service is significantly lower than its competitors, showing that the reduction in content output hasn't negatively affected Netflix's business.
Netflix continues to produce at such a high volume that it's uncertain if customers even notice when there are fewer shows. Despite this, Netflix still has more scripted programming than any other company. However, the impact is felt by writers and producers in the form of fewer job opportunities. Management can keep spending at the current level, decrease output, and still increase sales, at least for now. Netflix has also seen positive results from its efforts to curb password sharing and launch a more affordable, ad-supported subscription tier.
Rival media companies like Disney, Paramount, Warner Bros. Discovery, and NBCUniversal face declining cable viewership and higher churn in their streaming services. Under pressure from Wall Street, they have cut programming expenses, canceled numerous shows, and turned to Netflix as they seek new revenue sources. Netflix, initially using others' shows to build its audience, is once again leveraging them to entertain viewers.
