Disney CEO Bob Chapek expects to “lay off some employees” once the company finishes reviewing its spending, according to a leaked memo published by CNBC. The company will also reportedly freeze most hiring and bring in new employees only for “the most critical, business-driving positions.
If Disney ends up making a round of layoffs, it will be far from the only company pushing streaming services. Netflix has also laid off hundreds of employees this year, while reporting slower subscriber growth, but noted on its last earnings call that its business remains profitable, unlike its premium streaming competitors, including Disney.
Chapek had predicted that the services would be profitable by the end of 2024.
So far, there are no details on how many workers may be affected, as Disney will first form a “cost structure working group” to review its financial situation. However, the prospect of layoffs loomed large after its earnings call Tuesday when CFO Christine McCarthy said Disney “is actively evaluating our cost base at this time and we are looking for meaningful efficiencies.”
Even Mickey Mouse is not immune to economic uncertainty
The company is tightening its belt in other ways, too, as evidenced by Chapek’s memo telling employees to conduct business meetings virtually when they can to reduce travel expenses.
Disney’s streaming services such as Disney Plus, ESPN Plus and Hulu added millions of subscribers last quarter. However, even after raising prices and prompting many to opt for more expensive bundled entertainment services, it is still losing money on its direct-to-consumer business as it spends millions of dollars building content to keep a steady influx of subscribers. Last quarter, the company lost about $1.5 billion on streaming efforts – after all, those flashy sets and costumes don’t come cheap.
Outside of the entertainment industry, the tech world has seen some brutal layoffs. In the last week alone, Meta and Twitter laid off thousands of people, while Amazon instituted a corporate hiring freeze, and in the last few months Snap, Microsoft and several cryptocurrency companies have also initiated layoff plans.
