Layoffs have become the norm in the tech and entertainment industries, and it looks like a recent drop in Disney Plus subscribers was among the factors that prompted returning CEO Bob Iger to cut 7,000 employees from the books as he looks to restructure Disney for the future.
Overall, Disney is not the only company in the streaming business looking to lay off staff as its two biggest competitors Netflix and HBO Max have also fired personnel in recent months, with the former dismissing up to 2% of its workforce, and HBO doing away with 14%. These developments were discussed by Iger during its first quarterly earnings call in 2023, where he outlined increased revenue towards the end of 2022, thanks to very profitable films like Avatar: the Way of Water and Black Panther: Wakanda Forever.
Over on Disney’s site, the exact numbers show that Disney Plus lost 2.4 million paying customers in the last 3 months of 2022, the first decrease since the service Iger pioneered launched in 2020, under the supervision of his successor, Bob Chapek. Nevertheless, despite this negative, Iger and CFO Christine McCarthy highlighted a minimal loss of subscribers from Disney Plus Premium, the $10.99 ad-free tier that replaced the original product, although they don’t expect commercial revenue from the $7.99 ad-supported bracket to be too significant until the end of this year.
As far as Disney’s workforce goes, the total number of laid-off workers is expected to be 3.2% of the company’s workforce worldwide, though most of these will be in the entertainment divisions, as opposed to the theme park personnel that makes up most of Disney’s global staff. After all, the Parks, Experiences and Products segment grew 21%, proving people are ready to continue spending on tourism, experiences and collectibles.
As part of the restructuring process Iger has envisioned, not only has he made choosing a new CEO to succeed him a priority, Disney’s businesses will now be divided into 3 different branches: Disney Entertainment, which handles all film, TV and streaming for Marvel, Star Wars and Pixar; ESPN, which encompasses ESPN+ streaming; and, lastly, Disney Parks, consisting of all attractions and consumer products. Disney’s stock jumped after hours, but it wasn’t all business as Iger also noted that part of reorganization is about “returning greater authority to our creative leaders and making them accountable for how their content performs financially,” a thought that will especially meaningful to Pixar creatives who have seen their films limited to Disney Plus releases for the last 3 years.
This final part was among the most anticipated changes Bob Iger's return could bring to Disney, however, when the next earnings report drops, the company will also benefit from renewed relationships with the Chinese movie industry, as both Ant-Man and the Wasp: Quantumania and Wakanda Forever were cleared for landing after Avatar 2's premiere.
Source: Disney