Disney boss Bob Iger has vowed to cut costs across the billion-dollar company, starting with its movie and TV budget and potentially extending to its Hulu streaming service, and even superheroes aren’t around. except.
The changes are part of the company’s plans to navigate the new media environment and the decline of linear television, a movie business with an uncertain future and a continually growing broadcast business.
Iger said the company would look specifically at how much spending goes toward certain content, including fewer Marvel sequels, and make a judgment after the review, according to hollywood reporter.
The announcement comes after Disney last month announced plans to lay off 7,000 employees in a “significant transformation” to cut costs by eliminating some of the efforts of Iger’s predecessor.
Disney boss Bob Iger has vowed to cut costs at the billion-dollar company by spending less on making new movies and TV shows as Hulu’s fate remains unclear.
The changes are part of the company’s plans to navigate the new media environment and the decline of linear television, a motion picture business with an uncertain future and a growing broadcast business.
“I’m very pleased that the support I’m getting from the company’s content creators is meaningful and real, and it comes in the form of reducing spending for content, whether it’s a TV series or a movie, where costs are they’ve shot up in a huge way and not in a bearable way in my opinion. Everyone’s okay with that,” Iger said.
He added that it was also about “understanding how much volume we need, reducing how much we produce.” So it’s how much we spend on what we do and how much we earn.’
However, the potential to sell content elsewhere remained on the table.
“And as we look to reduce the content that we’re creating for our own platforms, there are probably opportunities to license it to third parties,” Iger said.
“For a while, that was either prohibited or something we couldn’t do because we were favoring our own streaming platforms.
“But if we get to a point where we need less content for those platforms and we still have the ability to produce that content, why not use it to grow revenue? And that’s what we would probably do.
Marvel, Star Wars, Frozen and others would remain exclusive to Disney-owned platforms, and Iger claimed the company has the “most powerful brand” in family entertainment.
But the aftermath is expected, to the relief of some, to fade into the background.
“What we have to look at (with) Marvel is not necessarily the volume of Marvel storytelling, but how many times we go back to the well on certain characters,” Iger said.
“Sequels usually work well for us, but do you need a third or a fourth, for example? Or is it time to turn to other characters? There’s nothing inherently out of place in terms of the Marvel brand. I think we just have to see what characters and stories we’re drawing from.
“If you look at Marvel’s trajectory over the next five years, you’ll see a lot of firsts. Now, let’s go back to the Avengers franchise, but with a whole set of different Avengers as an example.
Iger also added that one goal would be to focus on high-quality programming, highlighting not only major franchises, but also FX, whom he praised as a content producer and as a brand.
“You know, there’s so much choice for the consumer right now, and it’s all about what’s different,” Iger said.
Disney’s $27.5 billion streaming service Hulu is under the microscope as bosses weigh taking over full ownership
Marvel, Star Wars, Frozen, and others would remain exclusive to Disney-owned platforms. Iger claims that the company has the “most powerful brand” in family entertainment.
“Obviously, that’s something we’ve talked about about those brands: Star Wars, Marvel, Disney and Pixar, for example. But quality is also a differentiator.
“I think HBO showed that well, you know, in their halcyon days when high-quality programming made a big difference, not volume.
“Because streaming platforms require so much volume, one has to wonder if that’s the right direction to go, or if it can be more curated (I used the word judicious a few times), but I guess more picky about what you’re manufacturing. , and focus on quality and not volume.’
the fate of hulu was left up in the air as Iger said they were ‘looking’ at the business carefully.
“What we’re doing right now, because we own two-thirds of Hulu and we have a deal with Comcast that may result in us owning 100 percent of it, is we’re really looking at the business very, very carefully, all of those competitive dynamics with the understanding that we have a good platform on Hulu,’ Iger said.
Comcast CEO Brian Roberts also said he had an interest in outright ownership of Hulu, but many saw the comments as raising the price of Hulu.
Disney is the majority owner of Hulu, with a two-thirds stake, while Comcast owns a third.
Beginning in January 2024, Comcast can use a put option to require Disney to take over its stake, while Disney can tell Comcast to sell its stake to it.
Under an agreement between the two companies, Hulu would obtain a fair market value assessment from independent experts.
However, Hulu’s minimum guaranteed valuation of $27.5 billion means that Disney would have to shell out at least around $9 billion, if it transfers.
Based on Hulu’s quarterly revenue from 2019 to 2022, the streaming platform brought in a whopping $10.7 billion by 2022, $6.3 billion of which came from streaming.
Its live television revenue was $4.4 billion, while it saw a subscriber peak in 2022 at 45 million.
Hulu’s users compared to competitors are still lower than fan favorites YouTube and TikTok and still lower than Disney+, Prime Video and streaming veteran Netflix.
Hulu’s net worth is $16 billion as of early 2023 and the company has an 11 percent market share in streaming services.
Approximately two-thirds of customers remain with Hulu after six months, and more than 60 percent of Hulu users watch ad-supported content.
Last month, Disney employees rejected a mandate that required them to return to the office four days a week.
More than 2,300 workers have signed a petition asking Iger to reconsider the order cutting his remote work days first implemented during the pandemic.
The mandate, employees claim, will lead to “forced resignations among some of our hardest-to-replace talent and vulnerable communities” and will also “drastically reduce productivity, production and efficiency.”
The petition comes just weeks after Disney announced 7,000 layoffs to cut costs at its entertainment and ESPN divisions.
Iger announced the layoffs as part of a “significant transformation” to cut costs.
The CEO took over from Bob Chapek in November and plans to restructure the company into three divisions: Disney Entertainment, ESPN and Experiences and Products.
The restructuring and layoffs will predominantly eliminate those in the entertainment and ESPN divisions, as the cuts will affect roughly 3.5 percent of the company’s workforce. Frontline employees at the parks are reportedly not in danger.
However, the company has faced a major backlash after it announced it earned $1.28 billion in the three months ending December 31.
After Disney aired an ad during the Super Bowl celebrating its 100-year anniversary, the company received criticism from the public.
“Something about that celebratory Disney ad bothers me… maybe it’s the recent announcement that they’re laying off 7,000 employees and spending at least $7 million on the ad,” said Kristina Monllos, the magazine’s senior marketing editor. Digiday online shopping.
Commercials during the Super Bowl can cost upwards of $7 million for just a 30-second slot.