Earlier today Roku announced plans to cut 10% of its staff over the next few months. Roku will also as part of this cost-cutting effort remove content from The Roku Channel according to a report from The Verge.
In the filling today Roku said it planned to reduce its expenses by “consolidating its office space utilization, performing a strategic review of its content portfolio, reducing outside services expenses, and slowing its year-over-year headcount expense growth rate through a workforce reduction and limiting new hires, among other measures.”
With this move, Roku will follow Paramoun+ and Disney+ in removing content to cut costs. This will help Roku cut down on what it has to pay companies for the content on The Roku Channel.
In the filing, Roku said:
In light of Roku, Inc.’s (the “Company”) continuing evaluation of its operations, on September 5, 2023, the Company determined to implement additional measures to continue to bring down its year-over-year operating expense growth rate by consolidating its office space utilization, performing a strategic review of its content portfolio, reducing outside services expenses, and slowing its year-over-year headcount expense growth rate through a workforce reduction and limiting new hires, among other measures. The workforce reduction is expected to impact approximately 10% of the Company’s employees. The Company expects to record a restructuring charge related to the workforce reduction, primarily consisting of severance and benefits costs, in a preliminary estimated range of $45 million to $65 million. This range excludes charges related to the potential impairment of office facilities and content, which are described in Item 2.06 below. The Company expects that the majority of the restructuring charge will be incurred in the third quarter of fiscal 2023. The Company further anticipates that the implementation of the workforce reduction, including cash payments, will be substantially complete by the end of the fourth quarter of fiscal 2023.
These cuts are expected to happen in the 3rd quarter of 2023, but Roku warns it could be extended into the 4th quarter of 2023. Roku like many companies who rely on ad sales have been hit hard by a soft ad market in 2023. In July, Roku released its 2nd quarter 2023 earnings and announced that it had added 1.9 million new active accounts. Now Roku has over 73.5 million active accounts using Roku Players and Roku TVs.
Plex has also recently announced layoffs as it tries to make its free ad-supported streaming services profitable as a growing number of streaming services struggle to become profitable.