Software developer Plex issued pink slips to more than three dozen workers late last month, impacting around 20 percent of its overall workforce.
In a note, executives affirmed the layoffs would impact “every department” at the company, which is based in the San Francisco Bay Area.
Plex got its start more than a decade ago when its development team forked the free XBMC (now Kodi) media player, bundling it into an easy-to-use software application that allowed entertainment buffs to stream home movies and downloaded videos across multiple devices.
Four years ago, Plex launched a free, ad-supported streaming television service that is accessible within its app. While the client-server media player is still developed, supported and sold, the company has concentrated much of its efforts on acquiring content and signing on new channels for the free streaming service, which has grown considerably over the last year.
The development of the streaming service comes at a time when the global advertising market is experiencing a slowdown — and while connected TV dollars are increasingly flowing toward free, ad-supported services, Plex doesn’t seem to be getting its share of the pie.
In a note circulated among employees, Plex CEO Keith Valory wrote that the sluggish ad market has “significantly impacted” its business, and that “we cannot know how long ad markets and pricing will continue to be depressed and volatile.”
“The only way to reach profitability under these constraints is to significantly reduce our personnel expenses,” Valory affirmed.
The admission was surprising, given Plex issued a press release earlier this year that claimed its advertising business had “nearly tripled” its revenue during 2022. The company is privately-owned and doesn’t report financial earnings; analysts estimate Plex earns somewhere between $15 million and $40 million in annual revenue.
The press release was apparently timed with an initial round of layoffs that saw several people exit the company in January, according to one executive. The pink slips that went out in June were part of a second round of cuts that are meant to reduce expenses and improve cash flow.