Disney revamps interactive unit, lays off 700 employees
• Walt Disney Co. overhauled its struggling interactive division in a sweeping reorganization that will reduce the number of video games it develops and alter its advertising strategy to focus more on the mobile market.
As part of the revamp, Disney will lay off 700 employees, roughly one-quarter of the interactive division, according to a person with knowledge of the layoffs. A Disney spokeswoman would not confirm the number.
Disney’s games and online division has for years been a persistent money loser and a small but significant drag on a corporate empire that spans moviemaking and television to cable network ESPN, theme parks and cruise lines.
As with other major game publishing houses, Disney has been trying to keep up with rapidly shifting consumer preferences and an explosion in mobile gaming worldwide. In 2010, it bought mobile game developer Playdom for more than US$500-million, an acquisition that has yet to bear significant fruit.
“We are trying to consolidate things and focus largely on the mobile platform,” the president of Disney Interactive, Jimmy Pitaro, said. “The industry is moving very quickly in that direction and we’re making that transition.”
Last year, Disney Inter- active lost US$87-million as revenues rose 26% from 2012; the division has lost a total in recent years of more than US$1-billion.
In Disney’s fiscal first quarter that ended on Dec. 28, the unit reported US$55-million in operating income.
It will continue to develop games and content for its “Infinity” platform, a combination video game and toy line; it has sold more than 3 million copies of the platform globally since its August release.
That line, which echoes Activision Blizzard Inc’s “Skylanders” product, is viewed as a pivotal element in Disney’s effort to revive the interactive division.
Disney will continue to make kid-friendly mobile games and short videos for YouTube, Disney.com and elsewhere, Mr. Pitaro said.
It will close two smaller sites, Spoonful.com and BabyZone.com, and revamp Disney.com to use its primary website more as a promotional site for its retail, parks and other businesses.