Disney Lays Off 7,000 as Streaming Services Tank
Disney is planning to lay off 7,000 workers to cut costs across the company. CEO Bob Iger announced the news in an earnings call on Wednesday, stating that the move is “necessary to address the challenges we’re facing today.”
Like many other companies across the country, Disney’s making the changes as part of its efforts to reduce costs in a “challenging economic environment.”
Iger says he’s “targeting $5.5 billion of cost savings across the company” and that the layoffs will “help achieve this.”
Iger didn’t say which departments the layoffs will affect.
Iger still has his sights set on streaming despite a slowdown in subscriber growth.
Disney Plus added just 200,000 subscribers in the US and Canada for a total of 46.6 million, while its international offering (excluding HotStar) saw the addition of 1.2 million members.
Hulu and ESPN Plus had similarly slow growth, with each adding 800,000 and 600,000, respectively.
It seems streaming services aren’t what Wall Street believed it was going to be.
AMC Entertainment CEO Adam Aron recently praised Disney for scheduling Stephen King’s ‘The Boogeyman’ to be released theatrically on June 2nd, 2023.
The film was originally planned to be released on the streaming service Hulu.
“Theatres beat streamers! We salute producer 21Laps and our friends at Disney for this decision. The Boogeyman, a Stephen King adaption, was made for Hulu. But it tested so well, Disney is releasing it theatrically instead. Thank you Bob Iger, Alan Bergman, Justin, Tony, and Ken,” said Adam Aron on Twitter.
$1.5 Billion in Losses
Disney’s direct-to-consumer division, which includes its streaming services, saw a 13 percent increase in revenue to $5.3 billion.
But it still had an operating loss of around $1.1 billion, which the company attributed to higher costs at Disney Plus and Hulu.
The company’s streaming business lost around $1.5 billion last quarter.
“Our priority is the enduring growth and profitability of our streaming business,” Iger says.
“Our current forecasts indicate Disney Plus will hit profitability by the end of fiscal 2024 and achieving that remains our goal.”
Shares of the company remained unchanged, in fact, The Walt Disney Company (NYSE:DIS) shares rose 0.13% on Wednesday and another 5.42% after hours.
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The Rise of the Movie Theatre Industry is Here
As “Avatar: The Way of Water” gets closer to the $2 billion mark at the worldwide box office, James Cameron says it’s a reminder that moviegoers still value the theatrical experience in an era of streaming dominance.
“I’m thinking of it in the terms of we’re going back to theaters around the world. They’re even going back to theaters in China where they’re having this big COVID surge. We’re saying as a society, ‘We need this! We need to go to theaters.’ Enough with the streaming already! I’m tired of sitting on my ass. Source: Variety.
In recent news, Netflix’s showing of Glass Onion in movie theaters cost the streaming service $200 million for taking it out too early.
In October, AMC announced its first ever Netflix showing in 200 theatres.
Glass Onion: A Knives Out Mystery starring Daniel Craig was released in the U.S. as well as the UK, Ireland, Italy, Germany, and Spain.
The film earned $15 million at the box office but CNBC says the showing could have made $200 million if it had been kept in theatres longer.
Sorry, Charles Gasparino.
“The streaming business, which I believe is the future and has been growing, is not delivering basically the kind of profitability or bottom line results that the linear business delivered for us over a few decades,” Iger said.
In the interim, Disney hopes to cushion that short fall by continuing to rely on traditional forms of distribution, releasing movies on the big screen, where it recently scored blockbuster successes with “Avatar: The Way of Water” and “Black Panther: Wakanda Forever”.
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Companies like Disney are beginning to realize that the theatrical movie experience is needed more than they previously thought. Would you agree?