Reducing cloud usage at top of the agenda for cost-cutting Netflix

Following two consecutive quarters of subscriber decline, Netflix is looking for ways to cut costs.

According to the Wall Street Journal, the most pressing issue for the company that has laid off more than 400 staff this year is its rapidly rising cloud computing costs. The company has aspirations to reach 500 million global subscribers within the next three years, and the report notes that Netflix is working with Amazon Web Services (AWS) to keep costs associated with cloud from spiralling out of control.

The cost-cutting measures don’t end with cloud computing though, Netflix is looking throughout its organisation for ways to reduce expenditure.

One change being explored is reducing the number of copies of data and content being stored around the world, while Netflix is also said to be reducing the number of software licences it acquires.

The company is also paring back its real-estate, going so far as to close its office in Salt Lake City – an office which largely housed legal and technical support teams – and reduce its office footprint in Los Angeles and Netflix’s native Los Gatos. Employees impacted by these changes have been told to work remotely.

Something which will impact workers globally however is spending on perks. Over the past year, Netflix has set a US$300 per year cap on merchandise that staff can order, when previously they had been able to order a limitless supply of branded mugs, toys and clothing.

Netflix’s operating expenses ballooned to US$23.5 billion in 2021, up 15% year-over-year. With the company evidently entering into a new period of less radical growth, it will have to be more cautious with how it spends money and these measures will help it to become more sustainable in the long-term.