Disney-owned Pixar would lay off workers this year, Eltrys and the business revealed. Pixar claims the layoffs are too excessive, even though sources suggest they may reach 20%, reducing the company’s 1,300-person workforce to 1,000. The number of affected personnel is still being calculated owing to production scheduling and staffing for future greenlit projects, the studio stated.
Pixar said the layoffs would happen later this year as it produces less content.
Insiders say Pixar laid off personnel Disney+ recruited to develop for its streaming segment, which hasn’t made a profit.
Disney+ attracted 7 million members in Q4, raising its total to 150.2 million, including Hotstar, exceeding analysts’ projections of 148.15 million. More than 50% of new U.S. subscribers picked Disney+’s ad-supported subscription, which rose by 2 million to 5.2 million.
Disney subsidiary Pixar is well known for “Finding Nemo,” “Monsters, Inc.” “WALL-E,” and “Toy Story” films. It is the most recent to suffer from Disney’s cost-cutting measures, which the company said would increase by $2 billion to reach $7.5 billion in Q4 earnings after ABC and other TV stations cut ad revenue and Disney+ continued to lose money.
The “restructuring” of Disney, which “enabled tremendous efficiencies,” CEO Bob Iger told investors during results, could pull its streaming service out of the red by Q4 2024. It has also reduced streaming losses. Disney+ lost over $1.5 billion in Q4 2022 and $387 million in Q4 2023.
The quarter’s top streaming titles included Disney and Marvel movies like “The Little Mermaid” and “Guardians of the Galaxy Vol. 3.” Pixar’s “Elemental” was also popular. Disney claimed “Elemental” grossed half a billion globally and was the most-viewed picture on Disney+ in the quarter, although it was originally a box office failure and one of Pixar’s worst launches in 28 years. It overcame its bad debut, but it followed other underperforming films like “Lightyear” and “Onward,” forcing Disney to rethink its releasing strategy.
The COVID-19 epidemic hampered Pixar’s March 2020 release “Onward,” but Disney+ released “Soul,” “Luca,” and “Turning Red” immediately.
“Disney had more or less trained audiences to expect big, hot Pixar content at home,” said Parrot Analytics entertainment analyst Brandon Katz. It takes time to retrain audiences to favor the theatrical experience.
Katz also emphasized that Pixar has faced significant audience behavior and choice shifts outside streaming. In the 2010s, audiences favored pre-established IP, which needed less marketing and customer buy-in. Sequels and franchises are tiring for viewers.
“That pendulum swing has been hard for all studios, Pixar included, to keep up with,” Katz said. According to their box office history, ‘Coco’ was their final megabucks original, earning $500 million or more globally.
The animation company will create an “Inside Out” sequel this year and “Elio,” a boy’s cosmic journey, in 2025. Katz said that this speed may help Pixar stay within its $200 million budget for each picture. Illumination and DreamWorks have $75-100 million and $70-145 million budgets, respectively.
“Every film at $200 million plus will require significant box office returns to break even and turn a profit,” he added.
Reuters claimed that Pixar fired off 75 staff in 2023, including two executives behind “Lightyear,” including veteran animators Angus MacLane (“Toy Story 4,” “Coco”) and Galyn Susman, who had worked at Pixar since the original “Toy Story.” The article said that Iger’s proposal to remove 7,000 workers and $5.5 billion in expenditures included such layoffs.
“Turning streaming into a profitable growth business” was Iger’s top 2024 opportunity, he told investors in Q4.
Disney+ will add U.S. Hulu content this year to enhance its streaming business, after the Warner Bros. and Discovery combination and a reported Paramount merger.
This week at the Consumer Electronics Show in Las Vegas, Disney executives have been exhibiting their cross-platform ad innovation since Disney+ launched ad-supported streaming in 2023.
