Disney begins laying off 7,000 employees, shuts down Metaverse division

Walt Disney Co. has confirmed that it has begun its first round of layoffs this week in an attempt to reduce its costs by billions of dollars.

CEO Bob Iger announced the decision in an email to staff on Monday, stating that the entertainment giant plans to cut 7,000 jobs in three waves: the first this week, the next in April, and a final round by the beginning of summer.

These layoffs are part of Disney's "cost-saving measures" to create a "streamlined approach to our business," according to Iger.

In a conference call last month, company officials explained that these job cuts represent approximately 3 per cent of Disney's global workforce of 220,000, and will save the company roughly $5.5 billion.

Iger also wrote in the email, "In tough moments, we must always do what is required to ensure Disney can continue delivering exceptional entertainment to audiences and guests around the world - now, and long into the future."

Disney has been facing financial challenges in recent years, including significant losses during the early years of the pandemic due to the closure of amusement parks and the halt of in-person productions of movies and TV shows.

However, with the reopening of parks in April 2021, Disney has been able to recoup some of its losses by raising admission prices for the Magic Kingdom, Epcot, and Hollywood studios.

The first round of layoffs have primarily impacted Disney's television production and acquisitions departments, according to the Hollywood Reporter.

Meanwhile, Disney's enormous investment in streaming, including its flagship Disney+ platform, has left the company deep in the red.

Although Disney has amassed 235 million paid subscribers across Disney+, Hulu, and ESPN+, the high cost of producing content has resulted in a $1 billion loss in its direct-to-consumer arm during the first quarter of 2023.

Disney is competing with Apple, Amazon, Comcast, Netflix, Paramount, and other streaming services in an increasingly crowded market.

Iger has stated that the company needs to stop chasing subscribers and spending heavily on marketing to make streaming profitable.

The pending layoffs affect Disney's business across the board, ranging from early career animators and artists to senior executives.

The New York Times reported that Isaac Perlmutter, chairman of Marvel Entertainment, was among those who lost their jobs.

Additionally, 50 employees responsible for expanding Disney into the metaverse will also lose their jobs, according to the Wall Street Journal.

Disney is divided into three business segments: its entertainment division, which includes TV shows and streaming networks; ESPN, which encompasses its sports media operations; and parks, experiences, and products, which includes DisneyWorld, Disney Cruise Line, and merchandise.