Disney, the worldwide entertainment behemoth, is implementing a major change in its corporate strategy by reportedly dismantling its Disney Metaverse division.
Seemingly, this action is part of a larger plan to cut operating expenses by $5.5 billion and reduce staff count by 7,000 employees over a two-month period. According to The Wall Street Journal (WSJ), around 50 members of the division will be left without new contracts.
Disney’s Metaverse division had high hopes
Mike White, the head of Disney’s Metaverse division, established the unit with the goal of exploring innovative ways of storytelling using technology. He was tasked with creating a technological toolkit that Disney’s creative executives could use for their projects. White, who has been with Disney for more than ten years, is not believed to have been affected by the staff cuts.
The division also explored the integration of augmented reality (AR) and other advanced technologies to enrich Disney’s storytelling. An eight-minute augmented reality film 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 to dismantle the Metaverse division may have resulted from several factors. The company consulted with McKinsey & Company to identify cost-cutting opportunities, which could have contributed to the decision to reduce expenses and staff count.
Additionally, unfavourable economic conditions and increased competition in the streaming industry could have played a role. Although former and current Disney CEOs, Bob Chapek and Robert Iger, respectively, once viewed the metaverse as a worthwhile investment opportunity, the changing market conditions may have made it difficult for the company to justify maintaining the division.
It is unclear precisely why Disney made this decision, but the potential benefits of investing in the metaverse were likely weighed against the risks and costs involved.
Not so long ago, Disney responded to the explosive growth of NFTs by partnering with VeVe. The collaboration was intended to offer Disney NFTs on VeVe’s mobile digital collectibles app.
Fallout for the Metaverse
Disney’s decision to halt its Metaverse division could have big consequences for the metaverse’s development 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 metaverse’s development.
The decision to withdraw suggests that the potential rewards may not yet outweigh the risks and costs. Nevertheless, other companies will likely continue to explore the metaverse’s possibilities, and it remains to be seen whether Disney’s decision will have a wider impact on the industry.