Roughly 200 positions are expected to be eliminated by the Walt Disney Co., most to be absorbed by the company’s Burbank headquarters, in a round of layoffs next week, according to a company source.
Some of the positions to be eliminated currently are vacant, the source added.
The layoffs come as the industry weathers a transformation, with ticket sales at theaters flat, home video sales undercut by the recession, Internet streaming outlets such as Netflix sapping home video sales, and as studios offer video-on-demand in an effort to tap the growing digital distribution market.
“The changes in home video have been dramatic,” Larry Gerbrandt, an industry analyst who runs Media Valuation Partners, said. “What is happening to the movie industry is a little like what happened to the music industry when iTunes was introduced.”
Brad Brown, a publicist for films and television, said the industry trend of making fewer films — but focusing on high-profile, big budget “tent-pole” movies with potential for a large international audience — also is changing marketing and distribution operations at the studios.
“All the major studios announced some time ago making fewer films, but bigger films,” Brown said. “They don’t have a need on an ongoing basis for all the people in distribution.”
The layoffs are not the first for Disney this year. In May, the Disney Interactive Media Group eliminated 103 positions in North Hollywood, according to the California Employment Development Department. In March, Disney Interactive Studios in Glendale eliminated 54 jobs.
Disney reported profits of $942 million on revenues of $9.1 billion for the first quarter of 2011, with both figures lower than the same period in 2010. Studio revenues declined 13% to $1.3 billion, and the company’s gaming operation continued to operate in the red.
Chief Executive Robert Iger said he expected the gaming part of the company to begin generating a profit in 2013.
Gerbrandt said studios are struggling to regain command of the home video market. Studios benefit when consumers rent their films via Netflix, he said, “But the high-margin sector of home video was the sale of DVDs. The question for the studios is, ‘How do we continue selling a movie to a consumer?”