Disney, the entertainment giant, has reportedly ditched its metaverse division as part of a broader restructuring plan to cut its operating expenses by $5.5 billion and lay off 7,000 staff over two months.
It has been reported that the news was reported by The Wall Street Journal (WSJ) in a March 28 post, citing “people familiar with the matter.“ All of the metaverse division’s 50 or so members will be left without a new employment contract, except for Michael White, who led the broader consumer products unit, the WSJ reported.
However, the metaverse division is understood to have been created in February 2022 to create new ways for Disney audiences to engage with its stories. Disney also patented a “virtual-world simulator,” which aimed to facilitate headset-free augmented reality (AR) attractions at Disney theme parks on Dec. 28, 2021. The firm also once considered how it could integrate metaverse technology into sports betting, but the idea never progressed.
The report said that the decision to cut operating expenses and staff count came following a consultation with McKinsey & Company to find cost-cutting opportunities, according to the report. Unfavorable economic conditions and increased competition in the streaming sector were two main factors that led to the decision. Both Disney’s former and current chief executives, Bob Chapek and Robert Iger, once considered the metaverse to be a very bullish investment opportunity.
Thus, Chapek has reportedly described the metaverse as “the next great storytelling frontier,” while Iger previously worked as a director and adviser in Genies, a digital avatar platform running on Dapper Labs’ Flow blockchain.