Disney scraps metaverse unit in cost-cutting move as wider layoffs loom

Disney scrapped its fledgling metaverse unit as part of the company’s layoff plan, resulting in the unit’s entire staff — roughly 50 employees — losing their jobs. 

The shutdown is reportedly a preamble to the Mouse House’s $5.5 billion in cuts and a larger round of workforce reduction that could impact approximately 7,000 employees, sources said. The restructuring is slated to be completed during the next two months, the Wall Street Journal reported. 

Led by Mike White, a former Disney consumer products executive, the division was responsible for exploring innovative ways to present interactive stories using Disney’s vast library of intellectual property, sources said. White has been retained at the company, but his new role remains unclear. 

White and the company did not immediately respond to The Post’s request for comment. 

Disney’s stock price dropped 2.44% over the past five days, hitting $95.27. 

The company’s former chief executive, Bob Chapek, hired White in February 2022, telling employees in an internal memo at the time that the goal was to “create an entirely new paradigm for how audiences experience and engage with our stories.”

Chapek, who stepped down when Bob Iger took over in November, had referred to the metaverse as “the next great storytelling frontier.”

Following Facebook’s name change to Meta and its ambitious plans to establish a new virtual world, Disney, like many other companies, jumped on the metaverse bandwagon in 2021, CNBC reported. 

“Suffice it to say our efforts to date are merely a prologue to a time when we’ll be able to connect the physical and digital worlds even more closely, allowing for storytelling without boundaries in our own Disney metaverse,” Chapek said in a 2021 earnings call.

However, plans for Disney’s metaverse strategy remained sketchy a year after the division was created, although the company had suggested that the technology could be utilized in areas such as fantasy sports, theme park attractions, and other consumer experiences. 

Similarly, Iger last year invested in and joined the board of Genies, a technology startup that sells tools allowing users to create elaborate online avatars for use in the metaverse.

With pressure from investors to cut off nonessential businesses, Disney hired consultants from McKinsey last year to help find cost-saving opportunities, a move slammed by some top content executives.

Economic headwinds, stiff competition in streaming and dwindling revenues from cable TV and the cinematic box office have pressured many big media companies.

Facebook parent company Meta’s metaverse plans were also halted after the firm lost $13.7 billion in 2022 amid the slow growth in the popularity of the metaverse.  

A Meta spokesman has said the company’s metaverse efforts were always intended to be a multiyear project.

With Post wires