Netflix trying to manage its cloud computing cost with AWS

By Nilanjan Dey

Netflix hopes to reach 500 million users worldwide within the next three years. It lost 970,000 customers between April and June, and its current-quarter projection fell short of Wall Street’s expectations.

As part of its efforts to reduce total costs, Netflix Inc. is reportedly collaborating with longtime cloud partner Amazon Web Services to better manage rising cloud computing costs, according to sources cited in the Wall Street Journal.

The company is reducing its real estate footprint, reducing the number of copies of data and content stored globally, and hiring more junior employees.

According to the report, the streaming company is hiring more junior employees, such as interns and recent graduates, as part of its “emerging talent” recruitment strategy.

The WSJ report also said that the company usually used to hire experienced personnel, especially for engineering posts. According to people familiar with the company, this adjustment allows the corporation to spend less on compensation for some roles while ensuring that competent employees can concentrate on challenging duties as the business expands.

Netflix hopes to reach 500 million users worldwide within the next three years. It lost 970,000 customers between April and June, and its current-quarter projection fell short of Wall Street’s expectations.

To cut costs, Netflix had to lay off 300 employees in the second round of layoffs, accounting for 4% of its workforce.

Another cost-cutting measure implemented by Netflix is the restriction of perks spending. The company has limited the amount of Netflix-branded merchandise that employees can order in the last year, including coffee mugs, sweatshirts, and baby onesies. After years of limitless orders, employees are now only allowed to place orders for $300 in goods per year.

It is also reducing software and technical costs, such as reducing investment in original software used in the creation of original content. Because software licenses can cost thousands of dollars, the company has given its employees guidance on how to obtain them.

The corporation spends a lot of money on making movies and television shows, and its content budget has been steadily increasing for years. Its operating costs rose 15% year on year to $23.5 billion in 2021, as it increased spending on programming, salaries, and content delivery.