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Disney to cut 200 jobs because of lower DVD sales

08 June 2011 09:30 (UTC +04:00)

Baku - APA-Economics. Walt Disney is cutting about 200 jobs from its film studio in response to the worldwide slowing of DVD sales, in a move that is likely to be followed by other studios across Hollywood.

The company declined to comment but people familiar with the situation said the job cuts were in response to wider structural changes that have wreaked havoc on entertainment industry business models. The majority of the cuts will come in home entertainment, according to a person familiar with the situation. Paramount, which this week releases JJ Abramsâ€™ Super 8, is also examining the cost structure of its home entertainment division. Philippe Dauman, chief executive of Viacom, which owns Paramount, said last week that the home entertainment revenue stream was â€œchallengedâ€.

â€œFewer DVDs are being sold, so you have to review your home entertainment overhead,â€ he told the Nomura Securities US media conference. â€œWeâ€™re very focused on that.â€

At Disney, Bob Iger, chief executive, has spoken of â€œsecularâ€ change in the film industry, with upheaval the result of waning consumer interest in DVD and growth in new platforms, such as digital distribution. DVDs were once Hollywoodâ€™s biggest revenue driver and for a decade provided a steady stream of cash, ensuring that even box-office failures were able to turn a profit. But sales have tumbled and studios have cut the number of films they release.

Total US sales of â€œpackaged mediaâ€, which includes DVDs and Blu-ray discs, fell about 20 per cent in 2010, according to Digital Entertainment Group, which represents studios and consumer electronics groups. Packaged media sales fell from $2.6bn to $2.1bn in the first quarter of 2011, DEG said. Consumer interest in digital alternatives has grown sharply but has not risen enough to offset the decline. Several companies â€“ led by Apple and Netflix â€“ distribute films to consumers digitally.

Apple is in discussions with Hollywood studios about a cloud-based film service, while Netflix and Hulu, an online video service owned by News Corp, Disney and NBC Universal are also buying film rights. Hulu struck its biggest deal to date last week when it agreed a distribution deal with Miramax, the company behind hits such as Pulp Fiction. Walmart, which owns the Vudu streaming service, and Amazon are also in the market for content, as are Sony and Microsoft for their consoles.