Walt Disney Co. is set to remove several programs from its streaming service, Disney+, as part of its strategy to minimize losses and increase profitability. The move comes as Disney aims to reduce spending on content by up to $3 billion and follows a similar approach taken by Warner Bros. Discovery Inc. in streamlining its HBO Max streaming platform.
Program Removal to Reduce Costs
A Bloomberg report quoted insiders familiar with the matter saying that Disney will begin taking down shows from its original slate on Disney+ that have not been renewed for another season. Although these shows have remained on the platform thus far, the company has decided not to extend their contracts.
The decision to remove the programs is driven by the need to avoid incurring additional expenses such as residual fees for participants. The affected shows are expected to be pulled from the service starting next week.
Disney's Financial Strategy
Disney's Chief Financial Officer, Christine McCarthy, recently stated during an earnings call that the company anticipates writing off approximately $1.8 billion of programming in 2023 as it streamlines its content offerings. These charges will predominantly occur in the current quarter.
CEO Bob Iger, who returned to Disney in November, aims to make the streaming service profitable by reducing losses. Following a nearly $1.5 billion loss in its streaming TV business, Iger intends to curate the selection of films and TV shows on Disney+, Hulu, and ESPN+ to control costs.
Impacted Shows and Cost Reduction
Among the shows that will not be renewed this year are Big Shot, a teen basketball series, and The Mysterious Benedict Society, which revolves around orphans on a secret mission. Disney's decision to eliminate these programs is part of a broader effort to reduce expenditures and focus on more curated content. By cutting back on the number of films and TV shows, Disney aims to minimize costs and improve the financial performance of its streaming services.
Profitability Target and Industry Trend
Disney seeks to achieve profitability for Disney+ by the end of its next fiscal year, which concludes in September 2024. This goal aligns with the company's broader strategy of optimizing its streaming platforms to ensure sustainable growth.
The decision to remove shows from Disney+ follows a similar trend in the industry, as Warner Bros. Discovery Inc. has also culled over 90 programs from its HBO Max streaming service since the merger with Discovery. Such moves indicate a shift towards a more streamlined and cost-conscious approach to content offerings.
