Disney, the global entertainment giant, is making a major change in its business strategy by reportedly dismantling its Disney Metaverse division.
Apparently, this move is part of a larger plan to cut operating costs by $5.5 billion and cut the workforce by 7,000 employees over a two-month period. According to The Wall Street Journal (WSJ), approximately 50 members of the division will be without new contracts.
Disney’s Metaverse division had high expectations
Mike White, the head of Disney’s Metaverse Division, founded the unit with the aim of exploring innovative ways of storytelling using technology. He was tasked with creating a technology toolkit for Disney’s creative executives to use on their projects. White, who has been with Disney for more than a decade, is not believed to have been affected by the staff cuts.
The division also explored integrating augmented reality (AR) and other advanced technologies to enrich Disney’s stories. An eight-minute augmented reality movie recently premiered on Disney+ as an early example of this effort. By prioritizing innovation and new storytelling techniques, Disney hoped to stay relevant in the ever-changing media landscape.
Disney’s decision
Disney’s decision to dismantle the Metaverse division could be due to several factors. The company consulted with McKinsey & Company to identify cost-cutting opportunities that could have contributed to the decision to reduce costs and headcount.
In addition, adverse economic conditions and increased competition in the streaming industry may have played a role. While former and current Disney CEOs Bob Chapek and Robert Iger, respectively, once viewed the metaverse as a worthwhile investment opportunity, changing market conditions may have made it difficult for the company to justify keeping the division.
It’s unclear exactly why Disney made this decision, but the potential benefits of investing in the metaverse were likely weighed against the risks and costs involved.
Not too long ago, Disney responded to the explosive growth of NFTs by partnering with VeVe. The partnership was intended to offer Disney NFTs on VeVe’s mobile digital collectibles app.
Fallout for the Metaverse
Disney’s decision to shut down its Metaverse division could have major ramifications for the development of the metaverse as a whole. As a major player in the media and entertainment industry, Disney had the resources and expertise to make a significant contribution to the development of the metaverse.
The decision to withdraw suggests that the potential benefits may not yet outweigh the risks and costs. Nevertheless, other companies will likely continue to explore the possibilities of the metaverse, and it remains to be seen whether Disney’s decision will have a greater impact on the industry.
