Disney is pressing pause on its metaverse ambitions as the media company reportedly lays off its next generation storytelling and consumer experiences division aka its metaverse team, according to The Wall Street Journal.
The journal reported that the team has around 50 employees, and according to a memo sent out by CEO Bob Iger, there are reports of three rounds of layoffs at Disney. A total of 7,000 employees are expected to be made redundant across the company, helping it cut around $5.5 billion in costs. This is approximately 3% of its total staff count. Iger also said in the memo that a second, larger round of notifications will happen in April with several thousand more staff reductions.
Disney first shared its metaverse ambitions to its employees last year, and Mike White was named as the next generation storytelling unit lead. White has been with the company for over 10 years and was named the lead under the rule of former CEO Bob Chapek, who has since departed the company. His role is a newly-created one, the company had then said. It is unclear if White’s role will be impacted.
However since the return of current CEO Bob Iger, several reorganisations have been underway and talks even emerged of Disney selling Hulu. In February this year, Iger confirmed the news of layoffs across its global offices. According to Reuters, Iger told analysts that this reorganisation will result in a more cost-effective and coordinated approach to its operations. “We are committed to running efficiently, especially in a challenging environment,” he added. Adding to that, Iger reinforced that streaming will remain Disney’s main priority. He said the company would place more focus on its core brands and franchises.
“We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders," he said. This will be Disney’s fifth restructuring in the past five years. This time round, the restructuring can be attributed to the “lower results at Disney+” due to “higher programming and production, marketing and technology costs” as well as increased competition for streaming viewers.
Disney isn’t the only company to move away from the metaverse amidst tough economic conditions. In February, Microsoft laid of around 100 employees from its metaverse industries core team just months after it was formed, said Fortune. In Asia, Tencent also reportedly broke apart its extended reality unit and Snapchat disbanded its Web3 team at the end of 2022.
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