Disney’s video game and Internet division has been struggling for a while now. Company announced massive layoffs in which around 700 people lost their job.
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Layoffs were expected at Disney’s video game and Internet division, though no one thought it will be on such large scale. The layoffs are part of company’s decision to restructure the business and combine mobile games with social games. Disney will also rely much more on outside licensing and cut back in-house game development to the minimum.
"These are large-scale changes as we focus not just on getting to profitability but sustained profitability and scalability," Disney Interactive president James A. Pitaro said. According to Mr. Pitaro, Disney would cut annual game output up to 50 percent, luckily Disney Infinity will not be affected by all these changes. The company will continue to grow Disney Infinity which sold more than 3 million Starter Packs.
Disney Interactive will also close some of smaller web businesses such as Spoonful.com and BabyZone.com. Disney Online, company’s collection of websites anchored by Disney.com, plans to abandon display advertising and replace it with advertising sponsorship, along with focusing on promotion of Disney-branded merchandise.
All the changes and restructuring are a solution to money loss which gaming and web division made since 2008. It is only logical to reorganize business in order to bring in higher profit. For Disney, right changes could be crucial as video games should bring significant growth in future. Focusing on mobile and social games seems to be the way every company eventually goes for. It is an easy way to reach out to new users. However, it is obvious that social gaming didn’t really work for Disney, suggesting that company’s acquisition of Playdom, in 2010, was not such a good move.
It was a glorious year for social gaming and then everyone started using mobile devices. Although, social games still get enough players and with a right concept, new games could bring back the old glory of Facebook gaming. Disney Infinity remains as the only profitable title by Disney Interactive. Will these moves save Disney?
Thanks to Pauline for keeping an eye on the news.
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