Disney+ lost 2.4 million subscribers in the last three months of 2022 and the entertainment giant announced it would cut 7,000 jobs.
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It’s the first time since the streaming service launched in late 2019 that Disney+ didn’t add millions of new viewers last quarter.
The platform now has 161.8 million subscribers worldwide.
Overall, the Disney Group achieved sales of $23.5 billion from October to December, better than analysts had expected, according to its quarterly figures released on Wednesday.
The entertainment giant reassured markets primarily with lower-than-expected operating losses for its streaming platforms (Disney+, ESPN+, and Hulu) of $1 billion for the October-December period.
However, the group has also announced that around 7,000 jobs will be cut.
“While addressing the current difficulties is necessary, I do not take this decision lightly,” Bob Iger said during a conference call.
According to its 2021 annual report, as of October 2 this year, the group employed 190,000 people worldwide, 80% of them full-time.
Its stock rose 8% during electronic trading after the New York Stock Exchange closed.
“We believe the work we are doing to transform our business around creativity while reducing costs will drive sustainable growth and profitability for our streaming business,” said Iger.
Disney asked him in November to take over the position of general manager, which he ceded to Bob Chapek in 2020 after fifteen years in the position to reinvigorate the company.
A champion of family and Disney’s polished image, he has since faced the troubles of the platforms’ profitability – notably Disney+, which launched with great fanfare before his departure – but also a political showdown in Florida, where one of the most-watched Disney theme parks in the world.
Relations between Florida Gov. Ron DeSantis and Disney soured after Bob Chapek publicly opposed a governor-sponsored law banning the teaching of sexual orientation-related subjects in Florida schools.
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Streaming platforms enjoyed years of extravagant growth, exacerbated by the pandemic, before being hit by the economic crisis.
“Subscriber growth isn’t going to be linear every quarter,” Disney’s chief financial officer Christine McCarthy warned in November, just as the star platform had just added 12 million subscribers in one quarter.
Netflix, the industry veteran and market leader, had a rough first half of 2022, losing nearly 1.2 million subscribers before bouncing back this fall and winter. The platform has more than 230 million paying subscribers, but its annual net income fell 12% to 4.5 billion.
Streaming applications make the same observation as social networks like Snapchat, Facebook or Instagram: user gains no longer automatically translate into financial gains.
Netflix and Disney therefore launched new, cheaper subscriptions with advertising in December to attract even more viewers and, above all, to diversify their revenue streams.
Disney+ costs $7.99 per month, while the basic ad-free subscription has increased to $10.99 in the US.
By the end of 2023, the new formula is expected to generate more than $1 billion in advertising revenue in the United States, according to Insider Intelligence figures.