As major restructuring continues at the company, Disney still has many unanswered questions ahead.

On Monday morning, an expected announcement came down from Disney corporate offices: its next wave of layoffs is moving forward. This time, 2,500 jobs are expected to be wiped out, bringing the total for 2023 year to 7,000. This follows suit with numerous media companies over the past year going through cost-cutting job eliminations, affecting both the major entertainment businesses, as well as the news and social media realms.

What is immeasurable in all of this is how much of these impacts are industry/economy-related, and how much have been exacerbated by self-inflicted actions. It did not take long in 2022 for Disney to incur blowback for its social activism, particularly in the state of Florida. It was just over a year ago when the company elected to engage Ron DeSantis in the culture wars—and it began to feel the negative effects rather quickly. Public perception of the company fell, and that led to a string of entertainment division failures and a huge drop in its stock price.

These predated the overall industry effects which have been sweeping through the media sector. Layoffs have been experienced in numerous companies over the past six months, from Google and Meta/Facebook, to studios like NBCUniversal and Paramount+. Warners has announced an upcoming layoff, as well. 

Adding to Disney’s woes, though, is that it has seen subscriber flight on its streaming platform, Disney+. In the last quarter, it saw the global numbers drop by 4 million, which only compounds the previous quarter drop of 2.4 million—its first-ever quarter without growth on the streamer. While much of this was due to losing the broadcast rights for professional cricket in India, the number of US subscriptions also fell, by 300,000. This amounts to a streaming loss of -$400 million.

All of this casts into new light what was a hot-button story last week, where Disney announced it was killing plans for a project to build a new campus in the Orlando area. Slated to be a $1.6 billion project with 2,000 jobs created, the announced cancellation had the media excited with talk of political retribution, as it was angled as Disney making a statement against Governor Ron DeSantis.

This turned out to be a fool’s fable, as the company had been hesitant on moving forward with this project already, once Bob Iger took back control of the company. Also, companies are not normally in the business of cutting out profits – potential or otherwise – in order to spite a politician, especially one like DeSantis with a short window of state governance remaining. (For the record, the company has plans in place for further investment in the state in the coming decade.) Then factor in the current constriction efforts the company is making to trim over $5.5 billion in expenses, and a solitary project amounting to about one-quarter of that intended goal easily met the butcher’s blade. 

Even as these layoffs are said to be the last of those planned by the company, it is an unplanned challenge that shows Disney may not be seeing a remedy in the short term. The ongoing writer’s strike in Hollywood shows absolutely no signs of mediation anytime soon, casting a large shadow of a question mark over the entertainment realm. One way you can see the lingering financial challenge is that many of the streaming services are going through a purge and consolidation effort, as well.

Showtime streaming has been merged into the Paramount+ service, and there is talk that Disney will buy out Comcast’s remaining stake in Hulu. (That service had once been a shared venture of the networks, but those have been taken onto respective streamers, and Disney owns two-thirds of it through its ABC ownership and then the buyout of 20th Century Fox.) The talk is Hulu will be merged into Disney+ should that rights buyout take place. But overall, streamers are culling content from their vaults.

Something else that’s happening now on the various platforms is the practice of cutting underplayed titles from the streaming libraries. When once it was thought that even after popularity wanes the content would remain curated, now we are seeing a wave of titles being cut out entirely due to rights, royalties, and/or residuals being a factor. Once thought to be a meager expense for the sake of retaining lush content, one of the sticking points in the WGA negotiations is the royalty payments on streaming services being underreported, leading to less pay.

This is a sure sign of a strike that could stretch out for some time. As the writers demand a larger and longer cut of the proceeds, the studios are bleeding money right now and looking to cut costs. Streamers have become a good source of work for content creators, but they have been a cash strain on companies, and fierce competition has even led to mounting losses for many of those. 

A poor economy and a depressed industry mean the writers are not negotiating from a position of strength.