In a shock move, Disney has shut down its metaverse division as a part of its massive cost-cutting measures. It is expected that the operational costs would be cut down by approximately $5.5 billion, and the employee force would be reduced by almost 7,000 employees through these measures. Disney previously introduced the metaverse division to establish new ways of engaging a greater audience.
Disney has abandoned a plan to develop its own membership program like Amazon Prime, according to @RWhelanWSJ.
Disney has also eliminated the division that was developing metaverse strategies, according to the report. https://t.co/mSm92XtqE0 pic.twitter.com/e2KqbxAC8i
— Scott Gustin (@ScottGustin) March 28, 2023
Disney started with the development of its metaverse strategy in the mid of 2022 and also announced Polygon as the blockchain of choice. Furthermore, Disney even got a patent for an amusement park in the metaverse, much to the joy of the crypto community. However, the joy did not last long.
A Hit to the Metaverse Community
The decision of shutting down the metaverse by Disney was made in light of unfavorable economic conditions and increased competition within the market. Disney’s metaverse was increasingly considered to be a perfect investment opportunity. At the same time, it was also defined as a frontier of the next generation of storytelling.
However, the scrapping of the project is a setback for the thriving industry. As per details, the 50 members of the Metaverse Division in Disney are now unemployed except Michael White. Such a move by a renowned company will set the wrong tone for the Metaverse departments in the sector. Based on the current scenario, these metaverse departments are at the top of the hitlist for firms that are working on cost reduction.
Economic Pressure Disrupts Disney!
As per Disney’s Chief Executive, Bob Iger, the firm would begin the termination of its 7,000 employees this week, and it would consist of a total of three rounds. In the first round, leaders would communicate the news to the first group of impacted employees in four days.
The second round would consist of termination notifications in April, leading to greater staff reductions. The final round would be initiated prior to the start of summer until the mark of 7,000 layoffs is reached.
“We have made the difficult decision to reduce our overall workforce by approximately 7,000 jobs as part of a strategic realignment of the company, including important cost-saving measures necessary for creating a more effective, coordinated, and streamlined approach to our business. For our employees who aren’t impacted, I want to acknowledge that there will be challenges ahead as we continue building the structures and functions that will enable us to be successful moving forward.”
These layoffs were announced earlier in February. The reduction in employee force would also target the media and distribution of Disney, parks, resorts, etc. As a result, Disney believes that its streaming business would stop losing money by 2024.