Masterclass is becoming a shell of its former self as subscriptions dropped following spending thousands of dollars on A-list celebrities teaching the courses, including Disney CEO Bob Iger. The company even paid a reported $US100,000 to recreate Iger’s office space with the total cost to hire Iger, build the set, and shoot the course amounting to roughly $US850,000, The Information reported, citing sources familiar with the matter.
Iger joined Masterclass in 2019 to teach “the leadership skills and strategies he used to reimagine one of the world’s most beloved brands,” his Masterclass profile says. “I’ve had some great teachers and have learned many lessons,” Iger told Variety at the time. “With my MasterClass, I want to give back and impart what I’ve learned throughout my career,” he added.
The producers at MasterClass were married to the idea that Iger’s class would be shot where the magic happens: his office. But his actual office was deemed unsuitable for filming logistics, so the how-to streamer reportedly decided to just rebuild the office in a more spacious Disney conference room. According to The Information, the whole thing ended up costing around $US850,000 before Iger’s personal fee was even factored in. Blockbuster films have been shot for less but apparently, MasterClass thought that was a reasonable amount to spend on a talking head interview.
Despite Iger’s willingness to join Masterclass alongside other celebrities including Bill Clinton and Martin Scorsese, the company has entered a downward spiral amid shrinking subscription growth. The classes are now shorter, there are fewer high-profile instructors, and it is now reportedly outsourcing filming and production work, The Information’s sources said. Meanwhile, Masterclass drastically cut its employees throughout multiple rounds of layoffs, decreasing its workforce by more than 50%, dropping to 300 workers from more than 600.
“Like many other companies, over the past 15 months we have had to make difficult decisions related to headcount, and we have also focused on reducing costs and driving efficiencies within our business,” a Masterclass spokesperson told The Information. “Taken together, these actions have made MasterClass stronger—financially and strategically. Costs are down and our teams continue to innovate in content and formats.”
Masterclass rose in popularity during the COVID-19 pandemic, raising a total of $US335 million in funding in 2020 and 2021, but its subscriber growth slowed in early 2022 as fewer people opted to take online courses. The drop in revenue meant Masterclass had to reassess its nonessential spending, cutting the budget by at least half.
The company also announced in May that it would be dropping its subscription price from $US15 per month to just $US10 per month. “By continuing to innovate the approach to our portfolio of content and making the platform more accessible, we’re not only unlocking potential in our members, we’re enabling them to realize it,” Masterclass founder and CEO David Rogier told The Hollywood Reporter at the time.
It also announced comedian Amy Poehler would be leading an improv course scheduled to begin this fall to “help anyone who is looking to be open, curious, and ready for an unprepared life.”
The company further discounted its yearly subscription by 15% earlier this month, bringing the annual price to $US108 for an individual plan. “People are nervous about macroeconomics, and there’s a lot more uncertainty around it,” Rogier told Fast Report in May. “We wanted to meet them where they were, and we wanted to drop our prices. My mission is: I want to make it possible for anyone in the world to learn from the best. And [by doing this] that means more people can.”
But whether more people will want to take advantage of Masterclass’s renewed prices is yet to be seen, even as the company uses shorter videos to try to draw subscribers back in. The shorter classes were intended to provide subscribers with on-the-go content, referred to as GOAT (greatest of all time), in addition to its longer four or five-hour series.
“We wanted to be sure, in addition to our full-length classes, we had things people could watch in short bursts,” Rogier told Fast Company.
However, according to a Parks Associates survey in June, Masterclass’s efforts may be for naught, as reports show that only 47% of households subscribed to OTT (over-the-top) services in the past year. “… Direct subscription has been losing ground to aggregation, and bundling is becoming more important,” Jennifer Kent, VP of research at Parks Associates said in the survey.
Masterclass did not immediately respond to Gizmodo’s request for comment.