Disney’s struggling video game and Internet division has laid off 700 employees (26 per cent of its staff) in a major retrenchment that includes a shift in advertising strategy at Disney.com.
Lay-offs came as a result of Disney’s decision to combine two businesses: booming mobile games (those played on iPads and smartphones) and sagging social games (those played on websites like Facebook). Disney also decided to sharply scale back in-house development of games of all types. It will now rely much more on outside licensing.
“These are large-scale changes as we focus not just on getting to profitability but sustained profitability and scalability,” James A. Pitaro, the president of the unit, Disney Interactive, said in an interview.
Pitaro said that Disney Interactive, which published about two dozen games last year, would cut annual game output by as much as 50 per cent. “We’re not exiting any businesses, and we will pursue licensing partnerships in which we retain a lot of creative input,” he said.
But the gaming and web division has been loss maker dropping more than $1.3 billion since 2008.