Here’s a postscript from our report last week on Disney’s disappointing quarterly earnings. Disney CEO Bob Chapek followed the earnings announcement with a memo that signaled large-scale layoffs ahead at the Mouse House. Larger than expected losses from Disney’s streaming businesses have increased pressure for Disney to buckle down on costs, in what Chapek described as “tough and uncomfortable decisions.” Chapek also announced cutbacks in spending on content for the company’s streaming business, in stark contrast to the strategy that the company has followed for more than two years.
Disney’s new groove is representative of a larger trend impacting all major entertainment companies, as costs are skyrocketing for building out streaming platforms, while consumers are reaching a limit for how much they will spend on subscriptions. The stock price for media giants Warner Bros. Discovery, Paramount, and NBCUniversal have all dropped by at least 35% during 2022, driven by investor concerns over the growth-at-all-costs approach that had been widespread during the pandemic.