A lot has changed at Disney during the two years since returning CEO Bob Iger stepped down—but he reassured staff at the company on Monday that “our Disney world is still spinning.”
Speaking at a town hall event for Disney employees, Iger said the company would shift gears when it came to its streaming business—which includes Disney+, ESPN+, and Hulu—and make profitability the top priority.
“Instead of chasing subscriptions with aggressive marketing and aggressive spending on content, we have to start chasing profitability,” he said, in comments reported by Reuters. “In order to achieve that we have to take a very, very hard look at our cost structure across our businesses.”
Iger’s return to the helm of the entertainment giant, which saw former CEO Bob Chapek ousted, came days after Disney revealed a $1.5 billion loss in its streaming division for its fourth quarter—more than double the loss recorded a year earlier.
On the back of the disappointing fiscal results earlier this month, Chapek announced cost-cutting measures that included plans for job cuts and a hiring freeze.
Asked about the hiring freeze, Iger said it “felt like it was a wise thing to do.”
“At the moment, I don’t have any plans to change it,” he said.
Under Chapek, Disney invested billions into its streaming platforms, drastically increasing spending on original content as part of its growth strategy. That strategy helped the company build up a subscriber base to rival Netflix, but Disney warned when it published its fourth-quarter earnings that streaming growth could soon begin to fade, and streaming losses have been on shareholders’ radar over the past year.
The company will launch a cheaper, ad-supported Disney+ subscription in the U.S. in December in a bid to boost subscriber numbers and revenue through advertising—which it hopes will help put the company’s streaming business on the path to profitability.
Analyst Brendan Brady told the Wall Street Journal on Monday that the “three ways to chase profitability here are to cut costs, raise prices, and add subscribers.”
Earlier this year, former CEO Chapek said that even considering Disney’s plans to hike subscription prices on its flagship streaming platform, Disney+ was “way underpriced.” The service is typically cheaper than what it costs for a subscription at rival platforms like HBO Max and Netflix.
In a nod to the hit Broadway musical Hamilton, Iger told Disney staffers on Monday: “The status quo is gone, a lot has changed, but the sun is still shining and our world, our Disney world, is still spinning”—a paraphrase of lyrics from the song “What’d I Miss?”
Disney shares closed around 3% lower on Monday but edged slightly higher in premarket trade on Tuesday morning. The company’s stock has lost almost 40% of its value since the beginning of the year.
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