Animation studio owned by Disney Pixar is poised to undergo layoffs this year, TechCrunch has learned and the company has confirmed. While company sources said the layoffs would be significant and amount to 20 percent — or reductions that would see Pixar’s 1,300-person team down to less than 1,000 in the coming months — Pixar says those numbers are too high. Instead, the studio said the number of affected workers is still being determined due to factors such as production schedules and staffing for future greenlit films.
The studio emphasized that the layoffs are not imminent, but will take place later this year as Pixar focuses on creating less content.
According to insiders, Pixar’s layoffs include the number of employees hired for Disney+ — hires Disney pushed Pixar to produce for its streaming division, which has yet to turn a profit.
In the fourth quarter, Disney+ added 7 million new subscribers, bringing its total to 150.2 million, including Hotstar, beating analysts’ expectations of 148.15 million subscribers. Disney+ ad-supported customers also grew by 2 million to 5.2 million, as more than 50% of new customers in the US chose an ad-supported product.
A subsidiary of Disney, Pixar is best known for films such as “Finding Nemo,” “Monsters, Inc.” “WALL-E,” the “Toy Story” franchise and more. It is now the latest to be affected by Disney’s cost-cutting measures, which the company said will cause fourth-quarter earnings to rise by an additional $2 billion to meet a target $7.5 billion, after declining ad revenue from ABC and other broadcasters and continued (albeit narrowing) losses within its Disney+ streaming division.
Disney said it expects to bring the streaming service out of the red by the fourth quarter of 2024 as a result of the company’s “restructuring” that has “brought in tremendous efficiencies,” CEO Bob Iger told investors during earnings. In addition, it has reduced flow losses. As of Q4 2022, Disney+ lost nearly $1.5 billion. in Q4 2023, it lost “just” $387 million.
Pixar’s “Elemental” was cited as one of the popular titles released on the streaming platform in the quarter along with other Disney and Marvel releases such as “The Little Mermaid” and “Guardians of the Galaxy Vol. 3.” “Elemental” had grossed half a billion worldwide, Disney said, and was the most-watched movie on Disney+ in the quarter, but initially it was considered a box office bomb and one of the worst debuts in Pixar’s 28-year history. The movie he made up for his poor opening over timebut he had followed other underperforming securities such as “Lightyear” and “Onward,” which forced Disney to rethink its release strategy.
Pixar’s “Onward,” which was released in March 2020, had problems due to the onset of the COVID pandemic, but “Soul,” “Luca” and “Turning Red” went live on Disney+.
“Disney has more or less trained audiences to expect big, hot Pixar content at home,” he explained Brandon Katzan entertainment industry strategist at Parrot Analytics. “Re-educating audiences to re-embrace the theater experience and prioritize it … takes time.”
Katz also noted that Pixar had to deal with other changes in audience behavior and preferences beyond the shift to streaming. For example, audiences in the 2010s preferred pre-established IP, which required less marketing and less buy-in from consumers. Now, audiences are facing sequel and franchise fatigue.
“This pendulum swing has been difficult for all studios to keep up with, including Pixar,” Katz added. “If you look at their box office history, [2017’s] ‘Coco’ was their last genuine box office megabucks – that is, it has now crossed $500 million worldwide.”
This year, the animation studio is set to launch a sequel to “Inside Out”. and, in 2025, “Helio”, a new film about a boy who goes on an intergalactic adventure. That pace could help maintain Pixar’s budget, which tends to hover around $200 million per film, Katz noted. Other animation houses have smaller budgets, such as $75-100 million at Illumination and $70-145 million at DreamWorks.
“Any film when it’s at 200 million plus, it’s going to require significant grosses to break even and turn a profit,” he said.
Earlier in 2023, Pixar cut 75 jobs, including two executives behind “Lightyear.” Reuters reported, including longtime animators Angus MacLane (“Toy Story 4,” “Coco”) and Galyn Susman, who has been with Pixar since the original “Toy Story.” Those cuts were part of Iger’s plan to cut the workforce by 7,000 jobs and $5.5 billion in costs, the report said.
“Turning streaming into a profitable growth business” was a top opportunity Iger cited for 2024, he told investors in the fourth quarter.
Also this year, Disney+ will acquire Hulu content in the US, in another effort to bolster its streaming business, mirroring other consolidations among its peers, including the merger of Warner Bros. and Discovery and it is rumored Sovereign merge.
Disney executives at Consumer Electronics Show this week in Las Vegas they have featuring Disney’s ad technology running across all linear and streaming platforms, following the 2023 launch of ad-supported streaming on Disney+.
