Disney has shut down its metaverse unit, tasked with developing strategies to tell interactive stories using the company’s intellectual property. The small division was part of the company’s next-generation storytelling and consumer-experiences unit, eliminated as part of a broader restructuring that will reduce the company’s headcount by about 7,000 over the next two months. All 50 members have lost their jobs, including Mike White, the former Disney consumer products executive who headed the unit.
The unit’s closure means that Disney’s plans for its metaverse strategy remain unclear more than a year after the division was created. The company had hinted that the technology might have applications in fantasy sports, theme-park attractions, and other consumer experiences. However, the plans for the membership initiative that White was designing, which was intended to integrate customer data across multiple Disney platforms, including streaming service Disney+ and online retail operations, have also been abandoned.
The former Disney CEO, Bob Chapek, who hired White in February 2022, had described the metaverse as “the next great storytelling frontier.” Mr. Chapek’s successor, Robert Iger, has been bullish about the metaverse and invested in and joined the board of Genies Inc. This technology startup sells tools allowing users to create elaborate online avatars for use in the metaverse. However, Disney is under pressure from investors to make cuts to nonessential businesses, and last year, the company hired consultants from McKinsey & Co. to help find cost-cutting opportunities.
Slow growth popularity of the Metaverse
The closure of Disney’s metaverse unit comes amid slow growth in the popularity of the metaverse, which has frustrated tech companies that have bet on new entertainment formats. Meta Platforms Inc., the parent of Facebook and Instagram, has shifted billions in resources to the metaverse, only to find low demand and widespread confusion among users about how to use the technology.
Economic headwinds, stiff competition in streaming, and dwindling revenues from cable TV and the cinematic box office have pressured many big media companies. The closure of Disney’s metaverse unit is part of the company’s broader restructuring plan, which was announced in February and will see the company make $5.5 billion in cuts and cut about 7,000 jobs. However, Disney’s stock has been up 10% in 2023, despite falling 0.3% to $95.34 in Tuesday morning trading.