Disney, the world’s largest entertainment company, has reportedly shut down its metaverse division as part of a broader restructuring plan aimed at cutting operational costs by $5.5 billion and reducing its workforce by 7,000 employees within two months.
On March 28, 2023, the Wall Street Journal reported that the closure means all 50 employees in the division, except for Michael White, will not receive new employment contracts.
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
The report revealed that the decision to cut operating expenses and personnel was taken after consulting with McKinsey & Company to identify ways to save costs. Unfavourable economic conditions and increased competition in the streaming market were listed as the primary factors influencing the decision.
The metaverse division was created in February 2022 to explore new ways for Disney fans to engage with its stories. On February 15, 2022, the company appointed Mike White as Senior Vice President of Next Generation Storytelling and Consumer Experiences to oversee its metaverse strategy. White was formerly a member of the Media and Entertainment Distribution department.
Disney’s past CEO Bob Chapek viewed the Metaverse as a highly promising investment opportunity. Disney had patented a ‘virtual-world simulator’ intended to offer headset-free augmented reality (AR) experiences at its theme parks, with a planned launch date of December 28, 2021. Although there were discussions about integrating metaverse technology into sports betting, the concept was never fully developed.
Some lovers of Disney took to Twitter to applaud the company’s move. While they showed concern for those affected by the job cut, they still believe it was a good move by the organization. Many of these Disney fans believe that the Metaverse is a flip and will only make the company lose billions of money.
Good, because the metaverse is a big flop that makes companies lose millions for something nobody uses. https://t.co/3GztdChKO5
— Thom ✨ (@ThomMcDuck) March 28, 2023
Some also blamed the company’s former CEO, Bob Chapek, for making a bad decision that affected the company and made it lose a lot of money. Another advised the company to reverse every decision made during Chapek’s era.
Kinda figured A LOT of these job cuts were going to be more recently created positions and divisions created under Chapek that were “ill-advised” at best. Sad for everyone who will be affected in the coming weeks, but good riddance to Metaverse crap. https://t.co/Hz1vWa5AmR
— Bri Gallagher- Gremlin suprême de la poubelle 🗑️ (@crazylemur) March 28, 2023
Operation: Reverse Every Single Chapek Era Decision ASAP is in full gear https://t.co/Ayc2mAAh8k
— Shaun Ranks the Mouse (@rankingthemouse) March 28, 2023
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