Disney plans to remove “certain content” from its streaming platforms as a cost-cutting effort, the company announced during its earnings report for second fiscal quarter of 2023. Not only that, but the entertainment giant revealed it would be producing “lower volumes of content” to align with the company’s recent strategic shift.
Disney Chief Financial Officer Christine McCarthy broke the news on Wednesday’s earnings call. During the second quarter, the company took a restructuring charge of approximately $150 million primarily related to severance. Bob Iger’s return has led to mass layoffs as Disney continues to refine its strategy. Additionally, the company is expected to record separate charges of approximately $180 million, the bulk of which is expected in the third quarter.
“We are in the process of reviewing the content on our DTC services to align with the strategic changes in our approach to content curation,” McCarty said on Wednesday.
As Disney removes content from its streaming platforms, it expects to take an impairment charge ranging from $1.5 billion to $1.8 billion. That charge is also expected to appear in the company’s third quarter. “Going forward we intend to produce lower volumes of content in alignment with this strategic shift,” McCarthy said.
Iger revealed that when Disney+ launched three and a half years ago the goal was to flood “the so-called digital shelves” with as much content as possible to encourage subscriber growth. Now as the service has grown, “we realized that we made a lot of content that is not necessarily driving sub growth,” Iger said.
According to the Disney head, the company is now focused on being more “surgical” in the content it makes instead of “spending a lot of money marketing things that are not going to have an impact on the bottom line.” Disney’s tentpole movies remain “great” subscription drivers. But marketing spends “are spread so thin” on other projects, the company has not been able to allocate enough money to market when these big tentpoles land on its streaming services. Iger listed the new “Avatar,” “The Little Mermaid,” “Guardians of the Galaxy Vol. 3,” “Indiana Jones” and “Elemental” as examples of the types of big projects he was talking about.
“We actually believe we have an opportunity to lean into those more, put the right marketing dollars against it, allocate more away from programming that was not was not driving any stops at all,” Iger said. “This is part of the maturation process… we’re learning a lot more about how our content behaves on service.”
McCarthy added that, moving forward, Disney was looking at a more “curated approach to our general entertainment.”
Disney is one of the biggest players in the world of streaming. Not only is the corporation responsible for Disney+, but it also has ESPN+, the Latin American-focused Star+, the Indian subscription Disney+ Hotstar and, of course, Hulu, which is majority owned by the company.
It’s also not the only giant streaming player that’s toyed with the idea of removing its own original content. Last fall, Warner Bros. Discovery faced a great deal of criticism when it was revealed the company had removed several originals — including children’s shows that could only be found on HBO Max — from its streaming platforms. Disney announcing that it will be taking a similar step is another alarming move for consumers as streaming continues to drastically change the TV and film industries.