Disney cuts metaverse division and is set to lay off 7,000 employees

Walt Disney Co. is eliminating its metaverse division as part of a plan to reduce its workforce by 7,000 over the next two months to cut operating costs. Disney’s CEO, Bob Igler, announced on Monday that the layoffs would commence this week, and the next-generation storytelling and consumer services unit, responsible for developing the company’s metaverse strategies, will be among the first to take the hit.

Mike White, the head of Disney’s metaverse section, was promoted in February 2022, having previously served as SVP of consumer experiences and platforms at Disney. The unit sought to explore more interactive stories in immersive forms, leveraging the company’s rich intellectual property library. However, according to the Wall Street Journal, all members of the metaverse unit have now lost their jobs due to Disney’s decision to cut the division. Meanwhile, White is still a part of the organization, although his new role is now unclear.

Former CEO Bob Chapnek elevated White into the metaverse unit last year to change the narrative of immersive experiences in the industry. Chapnek was a huge fan of the metaverse, describing it as “the next great storytelling frontier.” He lauded the metaverse as the perfect platform for Disney to explore its “strategic pillars” of innovation, storytelling excellence, and audience focus.

“The metaverse is an entirely new paradigm for how audiences experience and engage with our stories and a perfect place to pursue our strategic pillars of storytelling excellence, innovation and audience focus.”

Former CEO of Metaverse, Bob Chapnek in 2022

Is metaverse wave burning out?

Disney hired White and created its new metaverse unit only a few months after Meta popularly rebranded from Facebook. Indeed, Disney was one of the many big names that looked in the metaverse direction after Meta invested billions of dollars. American media executive Robert Chapnek took over from White in November, and he also appeared to be bullish on the metaverse as he joined the board of Genies Inc. in 2022.

However, several big tech companies are reconsidering their posture towards the metaverse due to underwhelming returns from products and services. Meta‘s Oculus headsets, for instance, have struggled due to low user demand despite heavy investments in the product. Many users are not convinced of the use of the product outside gaming.

Disney announced in February 2023 that it would reduce operating costs by $5.5 billion and lay off 7,000 workers as part of a broader restructuring. Like several other global corporations, the company has to eliminate expensive projects that are not bringing any revenue in the short term.

It is still unclear whether Disney will keep tabs on the metaverse through other teams, as it is a long-term project. Time will tell how it all pans out.

Photo credit: Tyler Nix(Unsplash)