Disney CEO Bob Chapek is predicting “some staff reductions” once the company reviews its spending, according to a leaked memo published by CNBC. The company will also reportedly freeze most hiring, only bringing on new employees for “the most critical, business-driving positions.”
If Disney does end up carrying out a round of layoffs, it’ll be far from the only one among the companies pushing streaming services. Dozens of workers have lost their jobs at Warner Bros. Television and HBO Max this year. Netflix has also laid off hundreds of employees this year while reporting slower subscriber growth but noted during the last earnings call that its business remains profitable, unlike its premium streaming competitors, which include Disney.
Chapek has predicted that the services will become profitable by the end of 2024.
So far, there aren’t any details about how many workers may be affected, as Disney will start by forming a “cost structure taskforce” to go through its finances. However, the prospect of layoffs loomed after its earnings call on Tuesday when CFO Christine McCarthy said Disney was “actively evaluating our cost base currently, and we’re looking for meaningful efficiencies.”
The company is tightening its belt in other ways, too, with Chapek’s memo telling employees to conduct business meetings virtually when they can to cut down on travel expenses.
Disney added millions of subscribers to its streaming services like Disney Plus, ESPN Plus, and Hulu last quarter. However, even after raising prices and prompting many people to choose a pricier bundle of entertainment services, it’s still losing money on its direct-to-consumer business as it spends millions to create content that will keep the subscribers coming in. Last quarter, it lost around $1.5 billion on its streaming efforts — those slick Andor sets and costumes don’t come cheap.
Outside of entertainment, the tech world has seen some brutal cuts: Meta and Twitter have laid off thousands in the last week alone, while Amazon instituted a corporate hiring freeze, Over the last few months, Snap, Microsoft, and several crypto firms have also reduced their ranks.