As part of the revamp, Disney will lay off 700 employees, roughly
one-quarter of the interactive division, according to a person with
knowledge of the layoffs. A Disney spokeswoman would not confirm the
Disney's games and online division has for years been a persistent
money loser and a small but significant drag on a corporate empire
that spans movie-making and television to cable network ESPN, theme
parks and cruise lines.
As with other major game publishing houses, Disney has been trying
to keep up with rapidly shifting consumer preferences and an
explosion in mobile gaming worldwide. In 2010, it bought mobile game
developer Playdom for over $500 million, an acquisition that has yet
to bear significant fruit.
"We are trying to consolidate things and focus largely on the mobile
platform," the president of Disney Interactive, Jimmy Pitaro, said
in an interview with Reuters. "The industry is moving very quickly
in that direction and we're making that transition."
Last year, Disney Interactive lost $87 million as revenues rose 26
percent from 2012; the division has lost a total in recent years of
more than $1 billion.
In Disney's fiscal first quarter that ended on December 28, the unit
reported $55 million in operating income.
Disney now plans to license most of its games to earn additional
revenue, Pitaro said.
It will continue to develop games and content for its "Infinity"
platform, a combination video game and toy line; it has sold more
than 3 million copies of the platform globally since its August
That line, which echoes Activision Blizzard Inc's "Skylanders"
product, is viewed as a pivotal element in Disney's effort to revive
the interactive division.
[to top of second column]
TWEAKS UPON TWEAKS
Disney will continue to make kid-friendly mobile games and short
videos for YouTube, Disney.com and elsewhere, Pitaro said.
The company also intends to adjust its online strategy and
streamline its diverse websites.
It will close two smaller sites, Spoonful.com and BabyZone.com, and
revamp Disney.com to use its primary website more as a promotional
site for its retail, parks and other businesses.
Disney will continue to generate advertising revenues from
Disney.com and will increase the amount of content it produces in
conjunction with sponsors, Pitaro said.
For instance, Disney produced a 38-minute video with Google called
"Blank: A Vinylmation Love Story." In December, it announced it
would make a series of animated shorts with Rosetta Stone that
Pitaro said would be the model for future joint efforts.
(Editing by Edwin Chan and Leslie Adler)
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