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In The Wake of Disney’s Reorganization, The Metaverse Division Might Shut Down

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Walt Disney has axed its next-generation storytelling and consumer experiences unit to streamline its operations. The shutdown is part of a broader restructuring expected to reduce headcount by around 7,000 over the next two months.

Mike White, a former Disney consumer product executive, headed the division and they charged him with fusing Disney’s extensive intellectual property library with new technological formats. The small division’s mission was developing metaverse strategies.

Approximately 50 members of the team have been laid off. Mr.White remains employed by the company, although his new role is unclear, and no comment was available. According to an internal memo sent in February 2022, Walt Disney’s former chief executive, Bob Chapek, hired Mr.White to create “an entirely new paradigm for audience engagement and experience.”

Walt Disney Co. has canceled its metaverse
Walt Disney Co. has canceled its metaverse

Chapek Hailed the Metaverse as “The Next Great Storytelling Frontier”

Although Disney didn’t explicitly explain its plans for the metaverse, Chapek said in a 2021 earnings call that it was creating “unparalleled opportunities” for consumers. “Today’s efforts are merely a prologue to a time when our physical and digital worlds will be further connected, enabling storytelling without boundaries in our own Disney metaverse,” he said.

Chapek had hailed the metaverse as “the next great storytelling frontier” before being succeeded by Iger in November. One year after Disney’s metaverse division was created, its strategy remained unclear even though the company hinted that the new technology might be used in fantasy sports, theme parks, and other areas of consumer interaction.

White also contributed to a membership initiative last year that somehow resembled Inc.’s Prime program. In addition to Disney+, the scheme would integrate data from Disney’s online retail operations and the apps used by visitors to Disney’s theme parks to buy food, merchandise, and more.

Metaverse Popularity Has Grown Slowly, Frustrating Tech Companies

People familiar with the matter report that that effort has also been abandoned. Metaverse popularity has grown slowly, frustrating tech companies that have invested in new entertainment formats. Facebook and Instagram, parent Meta Platforms Inc., has devoted billions of resources to the metaverse, met with low demand and widespread user confusion.

A Meta spokesperson said the company’s metaverse efforts have always been multiyear. The company continues to believe that the metaverse is the future of computing, despite the easy temptation to be cynical.

Disney’s Broader Restructuring Plan Since February

Disney CEO Bob Iger took over Disney’s helm after Chapek left. Chapek abruptly left the company in November following a hectic two-year tenure in which Covid-19 shut down. Florida’s “Don’t Say Gay” bill caused a PR disaster, dramatically weakening streaming demand.

Bob Iger in, Bob Chapek is out
Bob Iger is in, and Bob Chapek is out

Since returning as CEO, Iger has reorganized the company and acknowledged that he is considering selling Hulu. Layoffs are taking place as part of a broader effort to boost free cash flow and reduce corporate spending. As part of its plan to reduce costs, Disney plans to cut $5.5 billion in spending, including $3 billion on content.

As far as the metaverse is concerned, Mr. Iger has been optimistic. As part of his investments, he joined the board of Genies Inc., which sells tools for creating elaborate online avatars for metaverse use.

The company is under pressure from investors to make cuts to non-essential departments. In a move that angered some top content executives last year, the company hired McKinsey & Co. consultants to find cost-cutting opportunities.

During a broader restructuring plan in February, Disney announced it would cut $5.5 billion in cuts and about 7,000 jobs. In recent years, many big media companies have faced economic headwinds, stiff competition in streaming services, and declining revenue from cable TV and movies.

On April 3, Disney will hold its annual shareholder meeting.

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