Disney layoffs will eliminate nearly 26 percent of the company’s Interactive unit. The unit includes video game and internet division employees. The massive layoffs were rumored for months. However, the affected employees received notice on Thursday.
The division will close numerous offices worldwide, including locations in Chicago, Colorado, New Jersey, Hyderabad, India, and South Korea.
Although a large portion of Interactive’s global staff was cut, the layoffs will not impact Disney Infinity or Avalanche Software employees. A representative said the company will continue to invest and build those specific divisions.
The cuts are part of a company-wide reorganization effort. In an official statement, a Disney representative explains that the company has “consolidated several lines of business as part of an effort to focus… on a streamlined suite of high quality digital products.”
The representative acknowledges the Disney layoffs were a difficult decision. However, the cuts were necessary to remain competitive and focus on “sustainable profitability and innovation.”
As reported by Los Angeles Times, Disney Interactive lost nearly $800 million between 2008 and 2012. Although increased revenue was reported in the first quarter of 2014, the division is still “in a period of transition.
The division’s increased revenue was boosted by sales of Disney Infinity, which debuted in August 2013. Although the popular video game contributed to $403 million in revenue, company officials proceeded with the layoffs.
The Disney Interactive layoffs are the third round of job cuts and closures since 2011. In January 2011, the company closed their Propaganda Games division, which resulted in the loss of 200 jobs. In January 2013, the company closed Junction Point Studios, eliminating 50 positions.
The New York Times reports that the latest round of cuts were sparked by consolidation of Disney’s mobile and social gaming divisions. As mobile games have gained popularity, and social games have fallen out of favor, the company will scale back on game development in general.
In 2013, Disney Interactive released around 24 games, including Disney Infinity. However, they are planning to cut their game output by 50 percent per year. Disney Interactive President James A. Pitaro said the division plans to “pursue licensing partnerships,” which will replace a portion of their in-house development.
Although several divisions have experienced a loss in revenue, the company as a whole continues to thrive. In the most recent quarter, Disney reported “$1.84 billion in profit and $12.31 billion in revenue.” Pitaro expects the new focus on mobile gaming and “a core set of priorities” will guarantee the company’s continued success.
The Disney layoffs were officially announced and employees were notified on Thursday.
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