7,000 employees are 3.2% of the company’s total workforce, which as of October 2022 numbered 220,000 people.
The layoffs at Disney are part of CEO Bob Iger’s sweeping cost-cutting efforts. He says he is “targeting $5.5 billion in cost savings across the company” and that the layoffs “will help achieve that.”
$2.5 billion of this sum are non-content costs: about 50% are marketing costs; 30% – Labor costs; and 20% – spending on technologies, purchases, etc.
Disney expects those savings to be “fully realized” by the end of fiscal 2024. It was not announced which departments will be affected by the cuts.
Rumors of layoffs at the company began shortly after Iger returned as CEO, replacing Bob Chapek last November. The new CEO also announced the creation of three major divisions of the company: Disney Entertainment, ESPN and Disney Parks.
Of course, the layoffs are also due to the current economic situation in the world (previous reductions took place at Meta, Amazon, Microsoft), as well as the end of the so-called “streaming boom”. 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) gained 1.2 million users. Hulu and ESPN Plus saw similarly slow growth, each adding 800,000 (up 48 million) and 600,000 (up 24.9 million) subscribers, respectively.
Disney’s streaming unit grew revenue 13% to $5.3 billion; but had an operating loss of about $1.1 billion, which the company attributed to higher costs for Disney Plus and Hulu. The company’s streaming business lost about $1.5 billion in revenue last quarter.
“Our priority is the continuous growth and profitability of the streaming business. Current forecasts indicate that Disney Plus will reach profitability by the end of fiscal year 2024,” says Iger.
The financial report covers the last three months of 2022, so it’s too early to say how much the cheaper subscription with ads ($7.99 per month) has affected the number of Disney Plus subscribers.
It’s also possible that more people are ditching the service now that the three-year bundle that the company released with the launch of Disney Plus is expiring. While Disney also offers a bundled plan with Disney Plus, Hulu, and ESPN Plus, it’s significantly more expensive than the first offering.
Source: The Verge, Variety
