Walt Disney Co's (NYSE: DIS) Pixar Animation Studios has started implementing the layoffs reported months ago, releasing approximately 175 staff members, constituting about 14% of its workforce.
These cuts primarily stem from Disney+ reducing its production of direct-to-consumer series. Since his return in November 2022, CEO Bob Iger has advocated for a more disciplined approach to streaming, the Deadline reports.
Despite the challenges, Pixar has struggled to produce a significant hit across all demographics since the onset of COVID-19, with distribution strategies pushing three of its films straight to streaming.
Now, the focus shifts to the upcoming release of "Inside Out 2," directed by Kelsey Mann, during Father's Day weekend from June 14 to 16, which is anticipated to be one of the summer's major box office successes.
Previously, on January 12, an insider at Pixar confirmed to Deadline plans to reduce the workforce as part of Disney's broader strategy to trim content spending.
An initial TechCrunch report suggested cuts could affect up to 20% of staff, but this was later adjusted to a smaller scale with no set timeline or specifics.
The reduction relates to moderation in Pixar's production workflow, which had expanded rapidly under former CEO Bob Chapek.
In May, Disney reported revenue growth of 1% year-on-year to $22.08 billion, marginally missing the analyst consensus estimate of $22.11 billion. Adjusted EPS of $1.21 beat the analyst consensus estimate of $1.09.
Analysts flagged Disney's collection of best-in-class premiere assets. They said Disney's near-term catalysts include updates on the company's strategic priorities and profitability for the DTC segment.
Walt Disney stock gained over 12% in the last 12 months. Investors can gain exposure to the stock via AdvisorShares Gerber Kawasaki ETF (NASDAQ: GK) and Vanguard Communication Services ETF (NYSE: VOX).
Price Action: DIS shares traded higher by 0.07% at $102.97 at the last check on Tuesday.