Disney Interactive, the video game and digital media subsidiary of The Walt Disney Co., will soon layoff "several hundred" of its employees from a total staff of about 3000, according to the Wall Street Journal. The cuts are expected to be announced by Wednesday.
The subsidiary has been underperforming for several years now and has reportedly lost over 200 million a year between 2008 and 2012. In the most recent fiscal year, Disney Interactive posted earnings of 1.1 billion but lost $87 million in overall operating costs, making it the only segment of the Disney conglomerate to lose money. However, last quarter revenue reports show that the subsidiary made a profit, earning $396 million while only spending $16 million in operating costs. This is just the second time in five years that Disney Interactive managed to make a quarterly profit.
The company is clearly trying to turn the corner. Late last year Disney launched the video game, Disney Infinity, which includes plastic toys that can be mounted on an electronic base to change the virtual action -- so far, it's a hit. Despite this, in November, Disney axed the division's co-president John Pleasants leaving Jimmy Pitaro as its sole president. He's now left with the task of restructuring the division.
According to sources the majority of the layoffs will come from Playdom, a division that manages Disney's social media and produces games. Disney bought Playdom in 2010 for $563 million, but has struggled to turn it into a successful game franchise during that time.
The expected layoffs from Playdom come after a slew of other recent layoffs. In January 2013, the company shut down its Austin, Texas based developer Junction Point Studio, laying off about 50 workers. In 2011, Disney got rid of some 200 employees after it shut down Propaganda Games, the studio for the “Tron: Evolution” video game franchise.
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