Disney Interactive laid off roughly 700 people Thursday, about 26 percent of its global workforce, as it moves to bring itself to profitability. While the Walt Disney unit showed revenue of $403 million and operating income of $55 million in the most recent quarter, it’s lost more than $1.3 billion since 2008. The New York Times says the restructuring is “a humbling acknowledgment that, despite the company’s repeated pronouncements that long-term profitability was on the horizon, the unit remains challenged.”
As part of the restructuring, the company will close offices in Chicago, New Jersey, Colorado, South Korea and India, according to the Los Angeles Times.
Though the layoffs come as no surprise, they weren’t expected to be this large, the New York Times points out. Disney is combining its successful mobile games business and its less-than-stellar social games operation. It will also cut its in-house game development efforts, putting more emphasis on outside licensing. “We’re not exiting any businesses, and we will pursue licensing partnerships in which we retain a lot of creative input,” James A Pitaro, Disney Interactive’s president, told the newspaper.
Last year the unit published about 24 games, but now will cut its output by around half.
Some of Disney Interactive’s smaller Web businesses will be closed, including expectant-parent website BabyZone.com and the family site Spoonful.com. Disney Online will “largely abandon” its typical display advertising model in favor of sponsorships and more promotion of Disney-branded products.
“This is a doubling down on mobile and an effort to focus much more intently on a core set of priorities,” Pitaro said.