Disney cuts 7,000 jobs to achieve cost savings after Disney+ takes hit

Disney+ faced a drop in revenue and subscriber growth in the past quarter, leading to restructuring process and 7,000 job cuts. This is part of the company’s efforts to achieve USD$5.5 billion in cost savings. The layoffs come in conjunction with multiple other tech companies’, such as Amazon and META, making major cuts.

Following the cuts, the company will restructure into three segments, namely an entertainment unit that encompasses film, television and streaming, a sports-focused ESPN unit and finally experiences and products. The restructuring aims to return power to creative executives. According to Reuters, Iger told analysts that this reorganisation will result in a more cost-effective and coordinated approach to its operations. “We are committed to running efficiently, especially in a challenging environment,” he added.

Adding to that, Iger reinforced that streaming will remain Disney’s main priority. He said the company would place more focus on its core brands and franchises.

Iger also said that the company is embarking on "significant transformation", one that will maximise the potential of Disney's world-class creative teams and "unparalleled brands and franchises”.

“We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders," he said.

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This will be Disney’s fifth restructuring in the past five years. This time round, the restructuring can be attributed to the “lower results at Disney+” due to “higher programming and production, marketing and technology costs” as well as increased competition for streaming viewers.

Disney announced its first quarter 2023 earnings today, reporting a total of 161.8 million Disney+ global subscribers, a decrease of 2.4 million subs from 164.2 million in the previous quarter. This is the first time that the streaming service noted a drop in subscribers since its launch in 2019. According to CNN, the job cuts were part of the company’s cost-cutting where Iger said the company was aiming for US$5.5 billion of cost savings across the company.

Iger stepped down as CEO in 2020 but returned to the role in November 2022. Earlier this week, Bloomberg reported his plans to explore more licensing of its films and television series to rival media outlets as pressure grows to curb the losses in its streaming TV business.

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