Walt Disney Co. long-troubled interactive unit is laying off 700 workers, or about one-quarter of its staff, as it continues to consolidate its online and videogame businesses.
The cuts have been in the works since last month, as reported earlier by The Wall Street Journal, although the number of layoffs is on the high end of expectations. Along with eliminating jobs, Disney will produce fewer games for such social networks as Facebook and less online content for families and mothers. The media giant had already pulled back from most of its production of games for consoles like the Xbox and PlayStation.
The sole exception is “Infinity,” its successful videogame franchise launched in August that brings together many of the company’s characters and has sold more than 3 million units. Disney Interactive President Jimmy Pitaro said “Infinity” is one of a few areas in which his division plans to accelerate its investment.
New versions of “Infinity” are in the works, Mr. Pitaro said. People close to the company have said Disney is working on updates featuring characters from its Marvel and Star Wars properties.
After spending $563 million to acquire social videogame maker Playdom Inc. in 2010, Disney has struggled in the business and cut back significantly. Mr. Pitaro said that Playdom will continue, but it is shutting down several games and future work will focus more on mobile devices.
In addition, several Disney-owned family websites, such as Babyzone.com, are being folded into its main Disney.com portal.
Disney Interactive is coming off two consecutive profitable quarters for the first time since its inception in 2008, although Walt Disney Co. Chief Financial Officer Jay Rasulo recently told Wall Street analysts it would slip back to a loss during the current quarter.
Mr. Pitaro wouldn’t make any specific predictions about future profitability.
“These are large changes,” he said. “We are focused not just on getting to profitability, but building a business with sustained profitability and scalability.”