Disney has announced that it is laying off about 700 employees at its Interactive video game unit, which is around a quarter of the workforce in the division.
The Disney Interactive unit is responsible for making video games and operates websites. The latest layoffs will also see the company discontinue games such as Sorority Life and Tap Tap Revenge. The move will narrow down the company's focus on mobile and social games.
"We are trying to consolidate things and focus largely on the mobile platform," said the president of Disney Interactive, Jimmy Pitaro, in an interview with Reuters. "The industry is moving very quickly in that direction and we're making that transition."
The company has been trying hard to keep pace with the rapidly shifting consumer preferences and a move towards mobile gaming worldwide. In 2010, Disney acquired mobile game developer Playdom for more than $500 million. However, the acquisition did not bring in significant profits to the company.
The recent layoff should not come as a surprise as the Disney Interactive division has been persistently losing money. In 2013, Disney Interactive lost $87 million and revenues rose 26 percent when compared from 2012. However, in the first fiscal quarter that ended on December 28, 2013, the Interactive division reported $55 million in operating income.
Pitaro said that the company now plans to license most of the games to earn extra revenue. Despite the layoffs, Disney will still continue to develop games and content for its "Infinity" platform, which is a combination of video game and toy line. The company has already sold over 3 million copies of the platform worldwide since its release in August 2013.
Pitaro also added that Disney will continue to make kid-friendly mobile games as well as short videos for YouTube, Disney.com and elsewhere.
The company will also restructure its online strategy and streamline its diverse websites. Disney will close two smaller websites, Spoonful.com and BabyZone.com. It will also revamp Disney.com to use its primary website more as a promotional site for its retail, parks and other businesses.
Disney's share price closed at $83.34 per share on Thursday, March 6.
