Disney Says Goodbye to Metaverse: Fires Seven Thousand Employees
Amid budget cuts and resource rationalization, Disney is stepping back from one of the most debated frontiers in technology: the metaverse. According to a Wall Street Journal report, the company has officially disbanded its metaverse development division. The news has sent shockwaves through the entertainment industry and raised questions about Disney's future plans.
The Statement from Bob Iger and the Imminent Cuts
Company CEO Bob Iger announced the news in a letter to employees. The first round of layoffs will take place on March 27, followed by further staff reductions in April and before the summer. Areas affected by the cuts include Disney Entertainment, Disney Parks, Experiences and Products, and Corporate. ESPN appears to be in line for the next cuts, signaling 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 intellectual property library to create interactive stories in advanced technological formats. Despite lofty ideals, the division never achieved the desired traction. Bob Chapek, Iger's predecessor as CEO, once called the Metaverse "the next great frontier," but these expectations remained unfulfilled.
Wrong Investments and Optimistic Omosis
Disney had also invested in Genies, a startup focused on creating virtual reality avatars. 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 were laid off, while Mike White will remain with the company, although his new role has not yet been determined.
The Role of Investors and Economic Pressures
The decision comes amid external pressure. Investors are demanding performance, and to respond, Disney has hired McKinsey & Co. to identify potential cost-cutting areas. In February, the company announced plans to reduce its workforce by 7,000 and implement cost cuts totaling $5.5 billion.
The General Climate in the Media Sector
Disney isn't the only major media company facing challenges. The slow acceptance of the Metaverse has also created problems for other companies like Meta, which has invested billions in the technology but has encountered low demand and user confusion. The entire industry is experiencing a crisis, exacerbated by declining cable TV revenues and declining movie box office.
In conclusion, Disney's departure from the metaverse is a strong sign of a shift in the tide in a rapidly evolving industry. With the metaverse sidelined and thousands of layoffs looming, Disney appears to be realigning itself to meet future challenges. Only time will tell whether this move proves to be a wise decision or a missed opportunity.
