It has been a never-ending nightmare for employees in the tech industry, wondering if they will be the next person to lose a job because of the current economic environment. Now, Disney employees are set to experience layoffs as well, joining the list of companies that experienced layoffs this year alone.
Not as Magical for Everyone
As part of the company's efforts to cut costs, they will be laying off 7,000 employees. The returned CEO Bob Iger announced the reduction in an earnings call, saying that it was necessary to "address the challenges we're facing today."
Disney was not safe from the current economic difficulties felt across the country by several tech companies. To make up for it, they plan on reducing costs with a target of saving $5.5 billion across the company, and the layoffs are just a part of achieving that.
It is still unknown which departments will be affected by the workforce reduction, but there have been rumors of it happening since former CEO Bob Chapek stepped down. Since then, the current CEO has made major organizational changes, according to The Verge.
It may also be due to the fact that the significant growth in subscribers for Disney Plus has come down. Still, Iger is determined to put efforts into streaming, as he has established core divisions like Disney Entertainment, ESPN, and Dinset Parls Experiences and Products.
Read Also: Disney Plus Is Welcoming Stan Lee Documentary in 2023, Marvel Says
Slow Down of Subscriber Growth
Disney Plus lost 2.4 million subscribers in the last quarter of 2022, which is the first time for the streaming service, with 200,000 of those subscribers coming from the US and Canada. Fortunately, there are increases in other areas that make up for the loss.
One of Disney's biggest losses is tied to the India-based Disney Plus Hotstar service, which is priced lower than most of Disney's streaming services cost anywhere else. According to CNET, the member base dropped by 3.8 million accounts.
Disney's Hulu subscribers saw an increase to 48 million, and ESPN Plus memberships to 24.9 million, both gaining an increase of 2%. With Disney Plus, its overall subscribers are at a total of 161.8 million by Q4 of 2022, still a bit far from Netflix's 230 million global subscribers.
Despite the drop in subscribers, Disney Plus saw a 13% increase in revenue in its direct-to-consumer division including its streaming services, which amounted to $5.3 billion. Although its operating losses were still at $1.1 billion.
Reports say that the losses were due to the increase in subscription costs for Disney Plus and Hulu, resulting in a $1.5 billion loss last quarter in its streaming business. Iger expressed that Disney's priority is to endure growth and profitability in its streaming business.
He added that the company's forecast sees profitability by the end of its fiscal 2024, which was also mentioned by Disney Chief Financial Officer Christine McCarthy, saying that the launch of the ad tier will provide a meaningful financial impact until later in the fiscal year.
Related: 5 Marvel Titles Streaming on Disney+ in 2023
