According to a document seen on Friday, Walt Disney is preparing to halt hiring and eliminate some positions as it works to bring the Disney+ streaming service to profitability amid a backdrop of economic uncertainty. In a memo to Disney executives, Chief Executive Bob Chapek stated that the business is enacting a targeted hiring restriction and anticipates “some small personnel layoffs” as it works to control costs.
Chapek stated in the message that, “While some macroeconomic elements are beyond our control, achieving these goals needs everyone of us to continue doing our part to manage the areas we can control, most notably, our expenses.”The action followed Disney’s quarterly earnings report on Tuesday, which fell short of expectations as the entertainment giant continued to lose money from its foray into streaming video, or “direct-to-consumer” (DTC) business. Following the release of the findings on Wednesday, firm shares dropped more than 13%.
According to Disney, the quickly expanding service attracted 12 million subscribers in the fourth quarter of its fiscal year while reporting an operational loss of about $1.5 billion. Disney+ would turn a profit, according to the corporation, after losses peaked in the quarter, in the 2024 fiscal year.The streaming service is well-known for its original shows, which include “Star Wars” entries “The Mandalorian,” “Andor,” and “Obi-Wan Kenobi,” as well as “Marvel,” “WandaVision,” “Hawkeye,” and “She-Hulk: Attorney at Law” and “Star Wars” blockbusters.
Disney’s rising streaming costs raised concerns from analysts. The company must demonstrate that its move to DTC will be worth the investment price that is now being paid, Moffett Nathanson analyst Michael Nathanson wrote in a note this week.
In order to prepare for a downturn in the economy, corporate America is drastically cutting back on its workforce. This week, Meta Platforms said that it would reduce costs by 13% by eliminating more than 11,000 jobs.