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(Kitco News) – The metaverse continues to claim corporate victims as Disney has become the latest globally recognized brand to shutter its metaverse division as it works to cut costs amid difficult economic times.
The Wall Street Journal was the first to report on the development, citing “people familiar with the matter,” indicating that Disney has eliminated its next-generation storytelling and consumer-experiences unit, a 50-member team that was developing the company’s metaverse strategy.
This move comes as the mass media and entertainment conglomerate is looking to cut operating expenses by $5.5 billion and lay off 7,000 staff over the next two months.
Michael White, a former Disney consumer-products executive, was in charge of the division and was tasked with finding ways to tell interactive stories in new technological formats using Disney’s extensive library of intellectual property, sources said. While White will remain at Disney in an unspecified role, the other members of the metaverse unit have lost their jobs.
The metaverse unit was originally created in February 2022, when White was hired by Disney’s former chief executive Bob Chapek, who distributed an internal memo saying that the goal was to “create an entirely new paradigm for how audiences experience and engage with our stories.” Chapek referred to the metaverse as “the next great storytelling frontier.”
But the struggles of the crypto industry over the remainder of 2022 left those plans in flux and after more than a year where little developments happened, Disney has opted to shutter the unit.
There is a strong likelihood that the entertainment giant will eventually circle back to the metaverse as the company has patented a “virtual-world simulator,” which aimed to facilitate headset-free augmented reality (AR) attractions at Disney theme parks, back in December of 2021.
Disney’s current CEO, Robert Iger, has also shown that he is bullish about the metaverse by investing in and joining the board of Genies Inc., a technology startup that sells tools allowing users to create elaborate online avatars for use in the metaverse.
The move to shutter the metaverse unit at this time has been influenced by the economic struggles affecting businesses across all sectors. Last year, Disney hired consultants from McKinsey & Co. to help find cost-cutting opportunities, which led to the February announcement that it planned to make $5.5 billion in cuts and cut about 7,000 jobs as part of a broader restructuring plan.
Disney is not alone in nixing its metaverse team as Meta Platforms Inc., the parent of Facebook and Instagram, also shuttered its metaverse unit as part of its efforts to reduce its headcount by 11,000 employees as a cost-cutting measure. All sectors of the company will be affected by the layoffs, including Reality Labs, the unit responsible for developing augmented reality (AR), virtual reality (VR), and prototypes in emerging technologies such as mixed reality and brain-computer interfaces.
In February, Microsoft announced that it was dissolving its Industrial Metaverse Core team, a unit of 100 employees that was formed in October and was designed to help customers use the metaverse in an industrial setting.
Tencent, the tech firm behind the WeChat social media platform and China’s largest company by market cap, also revealed in February that it was reevaluating its approach to the metaverse and scrapped its plans to launch virtual reality hardware after forming its “extended reality” XR unit last June.
Layoffs have also become a common occurrence outside of the realm of crypto and the metaverse as e-retail giant Amazon has begun the process of reducing its headcount by 18,000, while Google’s parent company Alphabet recently laid off 12,000 workers, equivalent to 12% of its workforce.
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