These job cuts are very similar to the moves by US tech giants which had occurred due to the pandemic. Bob Iger replaced Bob Chapek in the year 2020 because Chapek was not able to rein in costs. He also centralized power to a group of executives who made decisions on contents.
Iger said “I do not make this decision lightly” and “We are going to take a really hard look at the costs for everything that we make, both across television and film.” He took this decision after the annual report 2021 about its quarterly earnings was posted. The report said that the company had employed 1,90,000 people all over the world and 80% of these employees were working full-time. Iger also mentioned that now they are going to have a proper check on the content it makes and also the pricing of its streaming services.
In the Era of OTT platforms, Disney Plus is one of the biggest OTT platforms, which can also be considered as the archrival of Netflix and Amazon Prime Video. Disney Plus lost its 161.8 million customers on 31st December only in the span of three months. The company had its first fall in subscribers as people stopped their subscriptions.
Netflix has also been through a rough patch and made its way out by announcing a boost in new subscribers in December 2022. In order to rein back costs Netflix started a campaign in which it wants users to stop sharing their passwords among its hundreds of millions of global subscribers.
Disney has a franchisee of many blockbuster movies such as the Marvel series and also many animation hits and sequels. Disney is not only an entertainment empire, it has theme parks, film studios, and cruise ships, the revenue for three months were $23.5 billion.
The reason for this can be the increased price by five percent in post-session trading and Disney analysts were somewhere expecting this decline due to this change. Also, analyst Paul Verna said “There are still big challenges ahead for Disney” to the investors. The challenges are the declining business of Traditional TV, no profits in OTT streaming, and one of the activist investors is pressurizing them to rein the costs.
Disney is having a spat with Florida governor Ron DeSantis. He wants to take back control of the area around Walt Disney World which was controlled by the entertainment giant. He is very angry at Disney for criticizing a state law that says that lessons on sexual orientation in schools are banned. This is also one of the main reasons for the decline in Disney’s subscribers. Disney needs new strategies, plans, and proper campaigns for overcoming this situation.
