Entertainment giant Disney has reportedly ditched its Metaverse division as part of a broader restructuring plan that will slash $5.5 billion in operating expenses and lay off 7,000 employees within two months.
The Wall Street Journal (WSJ) reported the news in a March 28 article, citing "people familiar with the matter." All 50 or so members of the Metaverse unit will have no new employment contracts, with the exception of Michael White, who leads the broader consumer products unit, according to the Wall Street Journal. It is understood that the metaverse department was established in February 2022 to create new ways for Disney audiences to participate in its stories.
Disney has also filed a patent for a "virtual world simulator" designed to facilitate headset-free augmented reality (AR) attractions at Disney theme parks on Dec. 28, 2021. The company also considered how to integrate Metaverse technology into sports betting, but the idea never took off.
The decision to cut operating expenses and headcount was made after consulting with McKinsey & Company to identify cost-cutting opportunities, the report said.
Unfavorable economic conditions and growing competition in the streaming industry were the two main factors that led to the decision. Former and current Disney CEOs Bob Chapek and Robert Iger both considered the Metaverse to be a great investment opportunity.
Chapek reportedly described the Metaverse as “the next great storytelling frontier,” while Iger previously served as a director and advisor at Genies, a digital avatar platform that runs on Dapper Labs’ Flow blockchain.
