With the streaming boom coming to an end and a sizeable quarterly drop in subscriptions, Disney has opted for a sweeping corporate restructuring plan as it looks to preserve cash. This restructuring will be coming at the cost of thousands of employees, according to CEO Bob Iger, in an earnings call. According to Disney, the restructuring will streamline operations and make its business more efficient, as well as reduce costs.
Iger, who resumed the post of CEO after Bob Chapek stepped down from his role last November, said that the mass layoffs were necessary to address the challenges we’re facing today.” The move – which will see 7000 workers at Disney (or 3.6% of the company’s total workforce) being laid off – is part of the company’s effort to achieve $5.5 billion (£4.5 billion) in cost savings. Iger refrained from mentioning which departments will be affected by the fresh round of layoffs.
This development makes the entertainment giant the latest company to join the list of companies laying off employees and follows a month that saw multiple high-profile firms lay off employees by the thousands. Titans such as Alphabet, Microsoft, Meta, Amazon, and Twitter have reduced their workforces via mass layoffs in recent months in response to an economic slowdown and fears of a recession, and Disney is no different. As of October 2, 2021, Disney had around 190,000 employees across the globe, 80% of whom were full-time.
The development is hardly surprising, given that rumors about layoffs started to circulate shortly after Iger returned to Disney as CEO. Iger had originally stepped down from the role in 2023, but after Chapek stepped down owing to a combination of declining earnings, power struggles, and politics, Iger returned to the role. Since then, Disney saw multiple organizational changes, including the establishment of three core divisions – Disney entertainment, ESPN, and Disney Parks experiences and products. Disney’s stock rose slightly at the development to reach $111.78.
“I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide,” Iger said on the earnings call after Disney posted its latest quarterly earnings. The earnings show the first-ever quarterly decline in subscriptions for Disney+ – the company’s streaming service – as the pandemic-induced boost finally came to an end and consumers cut back on spending. The company’s net income fell below analyst estimates to reach $1.28 billion, while the streaming service lost more than $1 billion.
The streaming service added just 200,000 subscribers in the US and Canada to have a total of 46.6 million, while its total subscribers across the globe amounted to 161.8 million Disney+. This represents a decline of 2.4 million subscribers from the previous quarter and the first subscriber loss by Disney+ since 2019. Hulu and ESPN Plus clocked slow growth, with each adding 800,000 and 600,000, respectively, while Disney+ Hotstar subscribers saw a decrease in subscribers. Disney’s direct-to-consumer division, which includes its streaming services, saw a 13% rise in revenue to $5.3 billion, which coincided with an operating loss of around $1.1 billion.
“Our priority is the enduring growth and profitability of our streaming business,” said Iger. “Our current forecasts indicate Disney Plus will hit profitability by the end of fiscal 2024, and achieving that remains our goal.”