Editor’s note: This article was first published in June 2011. This is a news piece, and Disney’s 200 job cuts, Paramount’s cost review that week, the forecast of further layoffs in 2012 and the fall in sales of more than 20% describe the situation at that time.
The film industry is already being hit by the crisis, piracy and competition. Walt Disney has announced it will cut 200 jobs in order to reduce costs and stay profitable, as its business model has declined considerably over the last three years.
Disney said it has seen a sharp slowdown in DVD sales because of digital distribution and piracy.
This week Paramount Pictures will look at ways to cut costs and, like Disney, is focusing on reducing staff. Both companies predict that every film studio and production company will take similar measures, because the business is losing profitability at a breakneck pace. There is talk of sales falling by more than 20%.
They say that with Apple and Netflix coming in as digital content distributors, along with Sony, Amazon and the new partnership between Google and Microsoft on their consoles, the business will soon get worse, so further layoffs in 2012 can’t be ruled out.
This raises a question that has come up several times before: how to find a business model that encourages internet users to pay for a product (films, in this case). We have praised companies like Google, Apple and Microsoft for coming up with a business model that works for both the company and the user, but if the film industry keeps losing money, who will make the films that these three giants go on to sell?
Further reading
Featured image: Carol M. Highsmith, Public domain, via Wikimedia Commons.
