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Can Netflix Drive Down Its Operational Costs with AWS Partnership?


Streaming media giant Netflix is currently in the process of looking for ways to reduce its total expenditures, including measures to control the cost of cloud computing which it plans to do in partnership with Amazon Web Services (AWS.) 

According to those privy to the said plans, the company wants to prevent costs from surging even as it attempts to grow its subscriber base to as big as 500 million users worldwide over the next three years.

The proposed changes include a significant reduction in the number of copies of data and content stored worldwide. In this case, Netflix’s considerable investment into cloud and networking infrastructure is bound to pay off, particularly where the reliability of its service is concerned.

What’s going on?

In the past year, the streaming media firm’s operational expenses were pegged at $23.5 billion, a 15% increase from the amount it spent in 2020. The company spent the bulk of the said amount on programming, salaries, as well as content delivery. 

Indeed, Netflix’s spending concerning the creation of new films and shows, as well as the acquisition of prime material, has steadily inflated its content development budget over the past several years.

Another area where the company seeks to cut costs is the amount its employees spend on various perks offered. Last year, Netflix put limits on the amount of house-branded merchandise that employees could order, including apparel for both adults and children, as well as memorabilia. Following the implementation of rules against unlimited ordering, employees may now order only up to $300 worth of merchandise annually.

Spencer Neumann, Netflix’s chief financial officer, added that the company is also curtailing content- and non-content-specific spending. As he puts it, Netflix is trying to wise up regarding its financial and management issues, making adjustments that will have a positive effect on revenue growth.

Introducing new blood into the organization

Currently, Netflix is on a hiring spree as more junior employees are being hired, from recent interns to fresh graduates right out of college.

This expanded recruitment program emphasizes taking on emerging talent as opposed to the more experienced individuals previously hired, particularly for positions in engineering. Drawing in emergent talents also means that Netflix can offer lower salaries for several roles.

Nevertheless, Netflix also aims to ensure that skilled staff members can focus on increasingly complex tasks as the company continues to grow.

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