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Disney layoffs: $200 million loss, Disney Interactive Playdom layoffs expected

Disney layoffs: $200 million loss, Disney Interactive Playdom layoffs expected
Disney layoffs: $200 million loss, Disney Interactive Playdom layoffs expected

Disney layoffs are expected to come as soon as this week. The layoffs of several hundred people at Disney come after Disney Interactive has lost hundreds of millions of dollars in the past four years, especially with its Playdom. “Disney Interactive, which lost more than $200 million a year between 2008 and 2012, is in a period of transition,” reported the Los Angeles Times on Feb.3, 2014.

The news of the layoffs at Disney Interactive was first reported by the Wall Street Journal on Monday. Disney Interactive is the video game and digital media subsidiary of the Walt Disney Co., and its financial struggle and loss of hundreds of millions of dollars is resulting in the latest round of cost-cutting measures at the subsidiary.

In January of 2011, Disney Interactive Studios, which made video games, laid off about 300 people and the company shut down Propaganda Games, the development studio responsible for the "Tron: Evolution" video game.

In 2012, Disney Interactive laid off 50 people, primarily from among those who worked on the many websites Disney operates.

In January of 2013, Disney Interactive cut 50 jobs and closed the Austin, Texas-based Junction Point Studios, the developer responsible for the "Epic Mickey" titles.

Among Disney’s five subsidiaries (media networks, parks and resorts, studio entertainment, consumer products and interactive) only Disney Interactive posted an operating loss for the 2013 fiscal year. Disney Interactive has a staff of about 3,000 employees.

In February of 2013, Robert A. Iger, chairman and chief executive of Disney, said that "profitability at Disney Interactive has been a goal of ours in 2013." But despite the success of “Disney Infinity,” the division was not able to recover fast enough from its struggle and lost $87 million for its fiscal 2013, which ended Sept. 28.

“Disney Infinity” was released in August after a years-long development process that cost Disney about $100 million. “Disney Infinity,” which is available on multiple platforms including PlayStation 3 and Xbox 360, is a video game that includes plastic toys that can be used on an electronic base to change the virtual action. More than three million copies of the action-adventure game have been sold. The game’s popular characters include Disney film characters like Buzz Lightyear and Woody from Pixar's "Toy Story" franchise and Capt. Jack Sparrow and Barbossa from the "Pirates of the Caribbean" movie series.

The Disney layoffs in 2014 have been expected since Jimmy Pitaro took over as sole president of Disney Interactive. Just three months after the successful launch of its "Disney Infinity" video game, co-president John Pleasants was ousted in November, and the games and media groups were merged. The Disney Interactive layoffs are expected to come from Playdom, which Disney acquired in 2010 for $563 million, and turned out to be a money loser.

Disney Corp. has remained silent in regard to the Disney layoffs. However, during an earnings call on Feb. 5, 2014, Disney CEO Bob Iger said that new versions of “Disney Infinity” are in development and included characters and game environments from both Marvel and Star Wars universes. Players of “Marvel: Avengers Alliance” are wondering whether this means the end of the game. As the Los Angeles Times had reported, Disney Interactive is in a period of transition – and transitions can take years.

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