Disney Shuts Down Metaverse Unit in Latest Restructuring Plan

Disney Shuts Down Metaverse Unit in Latest Restructuring Plan

Entertainment giant Disney has announced the shutting down of the Metaverse unit as part of its restructuring plan. The Wall Street Journal reports citing people "familiar with the situation that the entire next-generation storytelling and consumer-experience unit, comprising 50 people, has been laid off as part of the cost-cutting measure undertaken by the company.

The Wall Street Journal Reports Closure of the Metaverse Unit

Disney has lost interest in the metaverse and has decided to shut down the unit. According to reports from the Wall Street Journal (WSJ), the metaverse unit of the company has reportedly been closed in the latest round of layoffs announced on March 27 by CEO Bob Iger.

The restructuring move is likely to be completed in three phases and involves the reduction of 7,000 employees on the company payroll. It is estimated that the plan would reduce costs by USD 5.5 billion. In a memo sent to the employees, Iger justified the move by stating that it was "part of a strategic realignment of the company, including important cost-saving measures necessary for creating a more effective, coordinated, and streamlined approach to our business."

Former Disney CEO Bob Chapek had picked Mike White to lead the now-defunct metaverse unit back in 2022. White has evaded the axe, while all 50 employees of the metaverse unit have been laid off. However, the future of White in the company remains uncertain at the moment.

Metaverse Optimism is Fading

Disney stepped into the metaverse in 2022, seeking new markets to introduce its intellectual properties. Chapek had profiled the metaverse as a pillar in establishing various initiatives, including the implementation of digital experiences. In a memo issued on February 2022, Chapek declared:

"Teams across the company are exploring this new canvas, and I have been blown away by what I’ve seen. Today, we have an opportunity to connect those universes and create an entirely new paradigm for how audiences experience and engage with our stories."

But the fortunes and excitement around the metaverse industry have been fading in 2023. Axios indicates that companies involved in the metaverse's development seem to be facing funding problems. Citing that about USD 2 billion was raised through March 2022 as compared to USD 500 million this year.

Meta was one of the first major companies to pivot into the metaverse and announce layoffs affecting over 11,000 employees, suggesting the pursuit of other priorities. Meta CEO Mark Zuckerberg stated on March 16 that while the metaverse remained a key part of the business, the single largest investment was focused on advancing AI and building it into each one of Meta’s products.

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