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Disney Interactive contracts, lays off 25 percent of workforce

updated 08:23 pm EST, Thu March 6, 2014

Division responsible for $1.3 billion in losses in seven years

As a result of a shift in strategy, Disney's Internet and video game department Disney Interactive is laying off 25 percent of its employees, effective immediately. Around 700 employees are now looking for work, following 2013's consolidation of Disney's mobile and social game development efforts.

Despite success with its Infinity property, over $1.3 billion has been lost in the last seven years by the division. The president of Disney Interactive, James Pitaro, said in an interview that "these are large-scale changes as we focus not just on getting to profitability, but sustained profitability and scalability."

Some of Disney Interactive's smaller efforts will be discontinued, such as BabyZone.com and Spoonful.com. Disney Online will be eschewing display ads in favor of sponsorships and a focus on Disney merchandise.

In Disney's financial conference call last month, Chief Financial Officer James Rasulo called Disney Interactive's results for the rest of 2014 "somewhat lumpy." The division is expected to continue hemorrhaging cash for this quarter, with an expected loss of $54 million.

"We're not exiting any businesses, and we will pursue licensing partnerships in which we retain a lot of creative input," claimed Pitaro. "This is a doubling down on mobile, and an effort to focus much more intently on a core set of priorities."




by MacNN Staff

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