Pixar, a renowned animation studio under Disney's ownership, has officially acknowledged plans for a round of layoffs.
LOS ANGELES, CALIFORNIA - JUNE 08: Characters are seen during the World Premiere of Disney and Pixar's feature film "Elemental" at Academy Museum of Motion Pictures in Los Angeles, California on June 08, 2023.
Reducing Workforce at Pixar
The initial estimations hinted at a substantial reduction, potentially reaching 20% of Pixar's workforce. TechCrunch reported that this will decrease the current team of 1,300 employees to less than 1,000.
However, Pixar clarified that the precise number of affected individuals is still under evaluation, taking into account factors such as production schedules and staffing needs for upcoming approved films.
Contrary to immediate concerns, the layoffs are not imminent, and Pixar anticipates implementing them later in the year. This strategic move aligns with Pixar's decision to streamline its operations, emphasizing a more focused approach with fewer content projects in the pipeline.
The restructuring efforts also involve personnel originally hired for Disney+, a directive from Disney that Pixar insiders link to the streaming service's ongoing financial challenges.
During the fourth quarter, Disney+ saw a surge in new subscribers, with an addition of 7 million, reaching a total of 150.2 million, inclusive of Hotstar. This surpassed analysts' predictions of 148.15 million subscribers.
The ad-supported segment of Disney+ also experienced growth, attracting an additional 2 million customers, reaching a total of 5.2 million. Notably, more than 50% of new U.S. customers opted for the ad-supported product.
Disney's Cost-Cutting Initiatives
Renowned for iconic films such as "Finding Nemo," "Monsters, Inc.," "WALL-E," and the "Toy Story" franchise, Reuters reported that Pixar is the latest entity within Disney to be affected by the company's cost-cutting initiatives.
In response to a decline in ad revenue from ABC and other TV stations and ongoing losses in the Disney+ streaming division, Disney has escalated its cost-cutting efforts by an additional $2 billion, aiming for a total target of $7.5 billion.
During Disney's Q4 earnings report, CEO Bob Iger outlined the company's anticipation to bring Disney+ into profitability by Q4 2024 through a comprehensive company "restructuring" that has yielded substantial efficiencies.
This restructuring initiative, aimed at optimizing operations, is part of Disney's broader strategy to mitigate losses in its streaming services. In Q4 2022, Disney+ incurred losses nearing $1.5 billion, whereas in Q4 2023, the losses reduced to approximately $387 million.
Early Signs
Pixar's film "Elemental" emerged as one of the standout titles on the streaming platform during the quarter, sharing the spotlight with Disney and Marvel releases such as "The Little Mermaid" and "Guardians of the Galaxy Vol. 3."
Despite initially being labeled a box office disappointment and one of Pixar's weakest debuts in its 28-year history, "Elemental" eventually rebounded, grossing half a billion worldwide and becoming the most-watched film on Disney+ in the quarter.
Pixar faced challenges with previous releases like "Lightyear" and "Onward," prompting Disney to reassess its release strategy. The latter, "Onward," encountered pandemic-related issues upon its March 2020 release, while subsequent films like "Soul," "Luca," and "Turning Red" opted for direct Disney+ releases.
In 2023, Pixar underwent workforce reductions, eliminating 75 positions, including key figures associated with "Lightyear," such as veteran animators Angus MacLane and Galyn Susman, who had been integral to Pixar since the inception of "Toy Story."
These cuts were part of a broader initiative led by CEO Bob Iger, aiming to trim 7,000 jobs and cut costs by $5.5 billion. Iger emphasized the pivotal objective of transforming streaming into a profitable growth sector as a key opportunity for 2024.
