With Disney+ having a significant drop in subscribers since the start of 2023, one can only wonder why? Disney+ has been a platform that saw a rise in viewers because of the range of content it offered. It was a big step for the streaming service because of the various collaborations it had. However, this abundance in content faded rather quickly.
Even though the platform holds all the projects made by Disney, Marvel Studios, Lucasfilm, and other partner studios, that was pretty much it. In other countries, this range was still somewhat bigger. This will be taking a big hit as viewership and the number of subscribers has already declined greatly.
Disney+’s Cost-Cutting Initiatives
Bob Iger claimed that one of the main goals was to change the focus of the company to growing revenue by cost-cutting and looking for content that helps in growing subscribers. He stated that under the previous model, they were not distributing enough funds to marketing when the service was launched.
“When you make a lot of content, everything needs to be marketed. You’re spending a lot of money on marketing that are not going to have an impact on the bottom line except negatively due to the marketing costs. We believe we actually have an opportunity to lean into those more, put the right marketing dollars against it, allocate more, or basically away from, programming that was not driving any subs at all.
This is part of the maturation process as we grow into a business that we had never been in. We’re learning a lot more about it, specifically, we’re learning a lot more about how our content behaves on the service and what it is consumers want.”
CEO Bob Iger stated during May 2023 earnings call that they were making a lot of content that was not necessarily helping the sub-growth. He realized that they were getting more surgical about what they made and were straying away from their goals. Christine McCarthy, CFO of Disney, cited Iger’s, stating that these “cost-cutting initiatives” include removing content from Disney+ as the platform will be adding Hulu as a part of a “one-app experience.”
What Type of content will Disney+ be Removing?
McCarthy made it known on this call that Disney is actively reviewing the content of their DTC services to make sure that they align with their strategies and will result in the removal of certain content from the service. Disney anticipates a write-down of Q3 of $1.5-$1.8 billion from this. She also stated that moving forward, they intend to create a lower volume of content in alignment with their strategies.
These spending cuts will be implemented predominantly in 2024 with regard to the already big amount of changes that are being made this year itself.