Disney’s Layoff Bombshell: 7,000 Jobs on the Line.
Walt Disney Co. has eliminated its next-generation storytelling and consumer-experiences unit, the small division that was creating metaverse strategies, as part of a more extensive restructuring that is anticipated to reduce headcount by about 7,000 across the organisation over the next two months.
Disney’s Layoff Bombshell: 7,000 Jobs on the Line.
According to a letter Chief Executive Bob Iger issued to staff members and seen by Reuters, Walt Disney Co. began 7,000 layoffs on Monday to cut expenses and create a more “streamlined” business.
Several significant areas of the business, including Disney Entertainment, Disney Parks, Experiences and Products, and corporate, may be impacted, according to a person familiar with the situation. The round of layoffs this week did not touch ESPN, but it is predicted that it will result in subsequent rounds.
The entertainment sector had undergone a retrenchment since its initial exuberant embrace of video streaming when well-established media businesses lost billions when they founded Netflix Inc. competitors.
They started to cut back on investment after Netflix revealed its first subscriber decline in a decade at the start of 2022, and Wall Street began to prioritise profitability over user growth.
Iger announced that Disney would begin informing the initial set of impacted employees over the course of the following four days. A second, larger round of layoffs is planned for April “with thousands more personnel cutbacks.” The last round would start before the start of the summer, according to the letter.
In an effort to cut $5.5 billion in expenses and turn around its losing streaming division, the Burbank entertainment conglomerate said in February that it would remove 7,000 jobs.
Iger noted that many “contribute a lifelong enthusiasm for Disney” to their work, adding that it was a “painful truth” that many friends and coworkers were departing Disney. Although the firm had kept the specifics of the layoffs under wraps, insiders had predicted they would occur before Disney’s annual shareholder meeting on April 3.
Disney has been experiencing increasing levels of anxiety as speculations about potential budget cuts circulated. According to a Disney executive who talked with Reuters last week, “It’s a dark, black box.”
It was generally predicted that the Disney Media and Entertainment Division would face major budget cuts; nonetheless, this division was ultimately terminated as part of a corporate restructuring. Since the departure of Kareem Daniel in November, not long after Iger took over as the company’s CEO once more, the group has been without a head.
It’s been a long time coming, according to Michael Nathanson, an analyst with SVB MoffettNathanson, who also noted that the business initially started hinting at the need to slash expenditures last fall when Bob Chapek was still Disney’s CEO.
Theme park staff received a memo in February from Josh D’Amaro, chair of Disney Parks, Experiences and Products, alerting them to impending budget cuts for the successful sector.
The cutbacks are not anticipated to have an impact on the guest-facing services at Walt Disney World Resorts in Orlando, Florida, according to representatives of two of the unions that represent cast members there.
Paul Cox, president of the International Association of Theatrical Stage Workers Local 631, said: “When there is a scarcity of workers for front-facing guest roles, I don’t think it’s smart for the Walt Disney Co. to let people go from the departments that generate the most revenue.”
Disney Eliminates the Metaverse Unit Amid Wide-Spread Layoffs
According to people familiar with the situation, Walt Disney Co. has eliminated its next-generation storytelling and consumer-experiences unit, the small division that was creating metaverse strategies, as part of a more extensive restructuring that is anticipated to reduce headcount by about 7,000 across the organisation over the next two months.
The business, which is led by former Disney consumer goods executive Mike White, was entrusted with figuring out how to use Disney’s substantial portfolio of intellectual property to deliver interactive stories in new technological formats.
The people claimed that all 50 members of the squad had lost their employment. Even though it’s unknown what his new position will be, Mr White is still employed by the organisation. No one could be reached to get Mr White’s opinion.
In a statement to staff members published at the time, Bob Chapek, the previous CEO of Disney, stated that the purpose of hiring Mr White was to “create a completely new paradigm for how viewers experience and connect with our tales.”
The metaverse was referred to by Mr Chapek as “the next big storytelling frontier” before Robert Iger took over as CEO in November.
A year after the division was established, Disney’s metaverse approach plans were still nebulous, despite company hints that the new technology would be used in fantasy sports, theme parks, and other consumer experiences.
Last year, Mr White worked on a project to create a membership programme that, in some ways, was similar to Amazon.com Inc.’s Prime programme. This programme would integrate customer data from various Disney platforms, such as the streaming service Disney+, online retail stores, and mobile apps that guests of Disney’s theme parks use to purchase food, merchandise, and other items.
According to others with knowledge of the situation, that endeavour has also been given up. Tuesday morning trading saw a 0.3% decline in Disney shares to $95.34. The stock was up 10% in 2023 as of Monday.
Iger has a positive outlook on the metaverse. He made an investment in Genies Inc. last year and joined the company’s board of directors. Genies Inc. develops software that enables users to design sophisticated online avatars for usage in the metaverse.
Investors are pressuring Disney to eliminate non-essential operations. Several of the company’s senior content executives were upset when McKinsey & Co. consultants were hired last year to help identify cost-cutting potential.
In February, Disney announced that it would eliminate almost 7,000 positions and make savings of $5.5 billion as part of a more extensive strategy to reorganise the company. Many large media firms are under pressure from the economy, fierce streaming competition, and declining earnings from cable TV and the box office.
Tech corporations that have placed bets on innovative entertainment forms are dissatisfied with the metaverse’s slowly increasing appeal. The parent company of Facebook and Instagram, Meta Platforms Inc., has invested billions of dollars in the metaverse, only to discover minimal demand and massive user confusion about how to use the technology.
According to a Meta spokesperson, the company’s efforts in the metaverse were always planned to be a multiyear undertaking. He said it is simple to be pessimistic about the metaverse, but the business still thinks it will shape computers in the future.
Edited by Prakriti Arora