Disney-owned animation giant Pixar is gearing up for significant layoffs this year, as confirmed by the company. While initial reports suggested that the layoffs could affect as many as 20% of Pixar’s 1,300-strong workforce, the studio has refuted these numbers, indicating that the exact figure is still being determined based on various factors such as production schedules and staffing needs for upcoming projects.
The planned layoffs are not imminent and are expected to take place later in the year as Pixar shifts its focus to producing fewer contents.
Insiders reveal that the layoffs will include staff who were hired to work on projects for Disney’s streaming platform, Disney+. The company has been under pressure to deliver content for Disney+ as it strives to turn its streaming division profitable.
Disney+, which is home to popular titles from Pixar, Disney, and Marvel, has continued to grow its subscriber base. In the fourth quarter, it added 7 million new subscribers, bringing its total to 150.2 million, surpassing analysts’ expectations. Additionally, the platform’s ad-supported customer base has also experienced growth, reaching 5.2 million.
Pixar, renowned for its blockbuster films like “Finding Nemo,” “Monsters, Inc.,” “WALL-E,” and the “Toy Story” franchise, is the latest casualty of Disney’s cost-cutting efforts. Disney aims to further reduce costs by an additional $2 billion, reaching a target of $7.5 billion, following a decline in ad revenue from its TV stations and ongoing losses in its streaming division.
Disney anticipates that its streaming service will become profitable by the fourth quarter of 2024 as a result of the company’s restructuring initiatives that have created significant efficiencies, as per CEO Bob Iger’s remarks to investors. The streaming division has recorded narrowing losses, with Disney+ reporting a loss of “just” $387 million in Q4 2023, down from nearly $1.5 billion in Q4 2022.
Pixar’s film “Elemental” was one of the popular titles released on Disney+ in the last quarter, alongside other Disney and Marvel releases. Although it initially struggled at the box office, the film eventually made up for its poor performance over time. This follows a string of underperforming titles like “Lightyear” and “Onward,” prompting Disney to reconsider its release strategy.
Pixar’s upcoming releases include a sequel to “Inside Out” and a new film, “Elio,” set for 2025, which is part of the studio’s efforts to manage its budget, typically around $200 million per film. Comparatively, other animation studios, such as Illumination and DreamWorks, operate with smaller budgets.
A previous round of layoffs at Pixar in 2023 saw the departure of 75 employees, including key executives. These layoffs were part of Disney’s broader plan to reduce headcount by 7,000 jobs and cut costs by $5.5 billion.
In pursuit of transforming its streaming business into a profitable growth venture, Disney is also set to incorporate Hulu content into Disney+ in the US. Additionally, the Disney execs have been showcasing the company’s ad tech at the Consumer Electronics Show in Las Vegas, following the launch of ad-supported streaming on Disney+ in 2023.
