Disney Says Goodbye to Metaverse: Fires Seven Thousand Employees
In a time of budget cuts and resource rationalization, Disney is taking a step back from one of technology's most hotly debated frontiers: the metaverse. According to a report from the Wall Street Journal, the company has officially disbanded the division dedicated to the development of the metaverse. The news has sent shockwaves through the entertainment industry and raises questions about Disney's future plans.
The Statement from Bob Iger and the Imminent Cuts
Bob Iger, the company's CEO, announced the news through a letter to employees. The first round of layoffs will take place on March 27, followed by further staff reductions in April and into the summer. Areas that will experience cuts include Disney Entertainment, Disney Parks, Experiences and Products, and Corporate. ESPN appears to be in line for the next cuts, marking Disney's clear intent to streamline its organizational structure.
The Metaverse Division: Ambitions and Failures
Led by Mike White, a former Disney Consumer Products executive, the Metaverse division was born with the goal of using Disney's rich library of intellectual property to create interactive stories in advanced technological formats. Despite high ideals, the division never achieved the desired traction. Bob Chapek, Iger's predecessor as CEO, had once characterized the metaverse as "the next great frontier," but those expectations went unfulfilled.
Wrong Investments and Optimistic Omosis
Disney had also invested in Genies, a startup focused on creating avatars for virtual reality. Despite this and other attempts to gain traction in the metaverse, the project never took off as hoped. All 50 members of the Metaverse team have been fired, while Mike White will remain at the company, although his new role has not yet been finalized.
The Role of Investors and Economic Pressures
The decision comes against a backdrop of external pressure. Investors are demanding performance, and to respond, Disney has hired McKinsey & Co to identify areas of possible cost reduction. In February, the company already announced plans to reduce its staff by 7,000 and make cuts totaling $5.5 billion.
The General Climate in the Media Sector
Disney isn't the only major media company facing difficulties. The slow acceptance of the metaverse has also created problems for other companies like Meta, which has invested billions in the technology but has seen low demand and confusion among users. The entire industry is going through a crisis, exacerbated by declining cable TV revenues and declining movie box office.
In conclusion, Disney's farewell to the metaverse is a strong signal of the changing winds in a rapidly evolving industry. With the metaverse sidelined and thousands of layoffs on the way, Disney appears to be realigning itself to meet the challenges ahead. Only time will tell whether this move will prove to be a wise decision or a missed opportunity.
