In the current global economic climate, many companies, including Disney, are resorting to mass layoffs as a cost-saving measure. In a recent earnings call, CEO Bob Iger announced the company’s plan to lay off 7,000 employees to achieve cost savings of $5.5 billion.
CEO Iger stated that this move aims to address the challenges they are facing in this current economic environment and will result in a more cost-effective, coordinated approach to operations. However, he did not specify which Disney departments will these layoffs affect.
Despite the recent slowdown in subscriber growth for Disney’s direct-to-consumer division, which includes its popular streaming services like Disney Plus, Hulu, and ESPN Plus, the company’s revenue still increased by 13% to $5.3 billion. However, the division still incurred a loss of approximately $1.1 billion due to the higher operating costs for Disney Plus and Hulu.
Possible reasons behind the decline in numbers
The major factor contributing to the subscriber decline was largely due to a dip in the number of Disney+ Hotstar subscribers. The international streaming platform, which operates mainly in India and parts of Southeast Asian countries, witnessed a decline of 3.8 million subscribers from the previous quarter’s 61.3 million.
Another factor contributing to the decline in numbers could be the expiration of the three-year bundle deal offered with the launch of Disney+ and the recent increase in the subscription price of Disney+’s ad-free plan to $11 per month. However, Disney has started rolling out the $7.99 ad-supported tier, but Disney CFO Christine McCarthy acknowledged that the impact of the new ad-supported tier of Disney Plus may not be significant until later this fiscal year.
This raises some concerns about Disney’s goal of reaching 215 million to 245 million subscribers by 2024. However, speaking of growth, CEO Iger said, “Our priority is the enduring growth and profitability of our streaming business. Our current forecasts indicate Disney Plus will hit profitability by the end of fiscal 2024, and achieving that remains our goal.”