Disney loses subscribers on its streaming platform and lays off 7,000 employees

The Disney+ platform lost 2.4 million subscribers in the last three months of 2022 and the entertainment giant announced it would cut 7,000 jobs. It’s the first time since the streaming service launched in late 2019 that Disney+ hasn’t gained millions of new viewers in the past quarter. It now has 161.8 million subscribers worldwide.

In all, according to its quarterly results press release published on Wednesday February 8, the Disney group achieved a turnover of 23.5 billion dollars (21.9 billion euros) from October to December 2022, better than expected by analysts. The entertainment giant mainly reassured the markets with lower than expected operating losses for its streaming platforms (Disney +, ESPN + and Hulu), at $ 1 billion for the period from October to December 2022.

But the group has also announced the upcoming loss of around 7,000 jobs. “Although it is necessary to face the current difficulties, I do not take this decision lightly”, justified Bob Iger during a conference call. According to its 2021 annual report, the group employed 190,000 people worldwide as of October 2 of that year, 80% of them full-time. Its title took off 8% during electronic trading after the closing of the New York Stock Exchange.

Read also: Article reserved for our subscribers The disenchanted kingdom of Disney: governance crisis and calamitous stock market trajectory

The return of Bob Iger

“We believe that the work we are doing to transform our business around creativity, while reducing expenses, will drive sustainable growth and profitability for our streaming businesses”, said Mr. Iger, quoted in the press release. Disney asked him in November 2022 to take over the position of general manager which he had left to Bob Chapek in 2020, after fifteen years in this position, in order to restore momentum to the company.

Champion of the family and polished image of Disney, he has since faced the problems of profitability of the platforms – in particular Disney +, launched with great fanfare before his departure – but also a political showdown in Florida, where is one of the most visited Disney theme parks in the world.

Relations between Florida Governor Ron DeSantis and Disney soured when Bob Chapek spoke out publicly against a law promoted by the governor that bans teaching subjects related to sexual orientation in Florida. ‘primary school.

Read also: Article reserved for our subscribers Former Disney boss Bob Iger signs his big comeback at the helm of the group

New subscription formulas

Streaming platforms experienced blazing growth for years, further amplified by the pandemic, before being overtaken by the economic crisis. “Subscriber growth will not be linear each quarter”had warned in November 2022 Christine McCarthy, chief financial officer of Disney, when the star platform had just gained 12 million subscribers in one quarter.

Netflix, the industry veteran and leader, had a tough first half of 2022, losing nearly 1.2 million subscribers, before bouncing back in the fall and then winter. The platform has more than 230 million paying subscribers but its annual net profit fell 12% to $4.5 billion.

Streaming applications make the same observation as social networks like Snapchat, Facebook or Instagram: gains in users no longer automatically translate into financial gains. Netflix and Disney therefore launched new, cheaper subscriptions in December 2022, with advertising, to attract even more viewers and, above all, to diversify their sources of income.

The Disney+ one costs $7.99 per month, while its ad-free base subscription has dropped to $10.99 in the US. By the end of 2023, the new formula should bring in more than a billion dollars in advertising revenue in the United States, according to figures from Insider Intelligence.

Read also: Article reserved for our subscribers Netflix founder leaves operational management after a very difficult year

The World with AFP

source site-30