Disney follows Hollywood consolidation trend as ‘woke’ era ends in job losses

Disney announced layoffs of 1,000 employees Tuesday as another group of studio executives wrested back control of entertainment from Hollywood creatives.

Marvel Studios took the deepest cuts, losing most of its visual development staff, who will be replaced by outside contractors hired project by project.

Reporter Nellie Andreeva at Deadline said sources told her 8% of Marvel staff will be affected.

This follows a previous round of Marvel layoffs in 2024.

New Disney CEO Josh D’Amaro, who replaced Bob Iger in February, ordered cuts across film, television, ESPN and corporate operations, telling staff in a memo the company needed a leaner, more agile organization, according to The Wrap.

The company’s chief marketing and brand officer, as well as the entire home entertainment team, executive director of global publicity and marketing communications, the senior vice president of global digital marketing and the director of digital marketing, along with large numbers of public relations staff, were laid off.

It signals that the streaming boom that has been feeding Hollywood since at least the COVID-19 pandemic has run its course.

Streaming was supposed to be Hollywood’s answer to declining movie attendance. Instead, it became a resource sink.

Disney+ needed content volume to sign up subscribers, and Marvel obliged by flooding the pipeline with material.

The strategy produced a large volume of content and a decline in audience loyalty and profits.

As recently as last month, a cast member of Marvel’s “Daredevil: Born Again” urged viewers in the press to use the show as a “wake-up call” to “fight oppression,” referencing Immigration and Customs Enforcement as a villain, Outkick reported.

“Daredevil: Born Again” underperformed.

Outkick contrasted the performance with the success of the movie “Project Hail Mary,” which it described as family-friendly.

Hollywood is shrinking

The Disney layoffs mirror other job losses across the industry.

Paramount Skydance has eliminated roughly 2,000 positions since David Ellison took over.

Sony Pictures announced additional cuts last week, the Associated Press reported.

A pending merger between Paramount and Warner Bros. Discovery, if approved, could trigger another round of layoffs, industry sources said.

Paramount’s Ellison said producing strong content would reduce the need for layoffs. 

“We have all the economic incentives to make sure that we grow this business and are going to invest in content to basically achieve those goals,” he said in March, the Los Angeles Times reported.

Some analysts say consolidation reflects broader industry challenges.

The entertainment industry has faced declining revenues and shifting consumer habits in recent years.

Auto worker unions in the 1970s were often criticized for being disconnected from consumer demand, providing an opening for foreign competitors.

Today, studios face pressure as content struggles to match evolving digital distribution and audience expectations.

Even the Writers Guild of America has adjusted its approach.

The union reached a four-year deal with studios earlier this month without a strike authorization vote.

It is a reversal for an organization that, along with the actors union, staged a 148-day walkout in 2023 that contributed to industry disruption.

Writer and actor employment remains down roughly a quarter from pre-strike levels, the New York Times reported.

The Writers Guild agreed to the deal as the industry contracts, and a strike “would only exacerbate the global contraction in the industry,” Variety reported.

Wall Street’s response to the Disney job cuts was immediate.

Disney stock rose on the news.

Raymond James upgraded Disney stock to “outperform” from “market perform” on April 1, setting a $115 price target and calling the shares historically cheap after a 13% year-to-date decline, Yahoo Finance reported. 

The firm cited expectations of increased streaming revenue and improved margins.

It is likely those expectations reflect efforts by Disney executives to streamline operations and improve financial performance.