Disney is facing serious problems in 2023. Their streaming, studio, and theme park businesses are all doing poorly, and they’ve had to close many physical stores due to declining sales. Additionally, Disney+ has lost over 10 million subscribers this year, and the company is struggling with mismanagement and high costs, making it less affordable for families. To deal with their debt, they’re cutting costs and jobs, but this strategy may not be sustainable in the long run, as they’re relying on a smaller number of wealthy customers to make up for the loss of middle-class visitors.
The Disney empire seems to be crumbling down amid a worsening management crisis. The entertainment giant just shared some of its third-quarter results, and the latest numbers suggest that the House of Mouse is in deep trouble. Unfortunately, not much is going right for Disney these days. Its three biggest businesses – streaming, studio, and parks – are all underperforming this year, which is causing the company billionaire losses. The simultaneous decline of the three pillars that support the company’s growth is making things extremely difficult in 2023. Previously, if one of these sectors was struggling, executives could rely on the other two to generate cash flow and maintain a stable balance sheet.
But this year, at large, the company has only seen failure. “From our point of view, Disney has problems across just about every one of its businesses,” KeyBanc Capital Markets analyst Brandon Nispel stressed during an interview with MarketWatch.
By now, the conglomerate has left the retail sector almost completely, after slowing sales and foot traffic made it too expensive for Disney to continue operating physical stores. When it announced mass closings several months ago, the news rocked the entire industry, and loyal customers lamented the shutdown of multiple iconic locations.
Meanwhile, its streaming platform Disney+ is facing an ugly downturn this year, losing more than 10 million subscribers since January. In August, Disney+’s subscriber count fell to 146 million subscribers, posting a 7.4% decline compared to the previous quarter – and far worse than Wall Street had predicted. Since 2020, the impact of COVID-19, saturated streaming competition, shifts in consumer preferences, content costs, and geopolitical challenges have all put strain on the media enterprise.
However, industry analysts argue that the worst crisis the company is currently facing is mismanagement. But conditions under Iger’s management aren’t improving as fast as shareholders had hoped. Disney is still scrambling to prop up its box office returns. Disney parks, which account for two-thirds of the company’s revenue are losing popularity due to some extreme price increases. The ballooning costs of tickets, hotel stays, food, drinks, and merchandise have placed a Disney vacation outside the price range of most families in America.
So far, the corporation has canceled some high-profile projects after running up an astronomical amount of debt during the pandemic — $54 billion by the middle of 2020. Now, the company is trying to cut $5.5 billion in costs, a move that already led to 7,000 job cuts.
By pricing out the middle class, the conglomerate is depending upon a smaller number of guests who are willing to pay more for exclusivity. But that alone can not support a multibillion-dollar company over the long term, and it seems that management is forgetting about this or, at least, taking their chances to see how much money they can squeeze from wealthy Americans before the business fatally collapses.
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