Is Netflix Halting Its Practice of Paying Ultra-High Salaries?

For years, Netflix has stood out for its ultra-high salaries—often paired to high expectations. “We’d be relying on one tremendous person to do the work of many,” is how CEO Reed Hastings once described his compensation philosophy. “But we’d pay them tremendously.” Software engineers and other technologists at the company can earn a healthy multiple of what rivals might pay for their skills and experience.

But is that ultra-high-salary culture coming to an end? A new report in The Information suggests a “new hierarchy” of seniority levels and pay is taking effect, all in an effort to “better control costs.” Once the process is complete, Netflix could have “formal salary bands like those big entertainment companies widely use.” This new pay structure would apply to technologists in addition to employees in other divisions, such as PR.  

Netflix recently announced that a dip in subscriber numbers will translate into overall cost-cutting. Its stock has plunged, with company executives blaming increased competition from rival streamers, password-sharing, and other economic issues for the impact. Plans to spur growth include a lower-priced subscription tier (which could feature ads) and clamping down on people sharing their passwords with friends and family.

Before now, Netflix software engineers who climbed the ranks at the company could earn double of what their equivalents at Apple, Amazon, and Disney pulled down, according to crowdsourced compensation numbers from levels.fyi. According to Glassdoor, which also crowdsources its data, software engineers can make up to $420,000 per year (the base pay average is $173,776 annually). Netflix’s salaries may have also skewed overall compensation numbers in its headquarters city of Los Gatos, CA, which tops Blind’s recent lists of the top-paying cities for software engineersdata scientists, and product designers

Will those numbers change significantly? Even as it cuts back costs, Netflix must still compete with its rivals—and that means hiring technologists with highly specialized skills and the right kind of experience. And that means paying out high compensation.