Disney Interactive expected to layoff hundreds after Disney Infinity's Success

[Rumors Rocks]

Disney's Interactive-Media Unit to Lay Off Several Hundred People http://online.wsj.com/news/articles/SB10001424052702304851104579361180742804184

Layoffs Expected to Begin After Quarterly Results Released Wednesday

Fans play Disney's 'Infinity' videogame at a convention in August, when the game first went on sale. Ben Fritz/The Wall Street Journal

Walt Disney Co. DIS's interactive-media unit is preparing to lay off several hundred people despite a strong launch for its videogame "Infinity," according to people close to the company.

The cuts at Disney Interactive, which has undergone multiple rounds of layoffs in recent years as it struggled to reach profitability, are expected to begin after the media giant releases its quarterly financial results Wednesday, these people said. Disney Interactive has about 3,000 employees.

The planned layoffs follow a recent internal announcement by Disney Interactive President Jimmy Pitaro that he would reorganize the group and shuffle several members of his senior executive team.

Mr. Pitaro took sole control of Disney Interactive in November after his former co-president, John Pleasants, was pushed out.

Among the operations expected to be hit by the layoffs is the struggling Playdom social-gaming business, which Mr. Pleasants led before Disney acquired the company in 2010 for $563 million.

In an interview as he was exiting, Mr. Pleasants said Playdom was "still challenged" and that he "could have been maybe a little more aggressive" in streamlining its operations.

Disney is expected to continue investing in "Infinity," a combination videogame and toy line that launched in August and has sold more than three million copies world-wide. Disney spent more than $100 million developing and launching "Infinity," which was considered critical for its continuing videogame efforts after a number of failures.

New versions of "Infinity" featuring characters from Disney's Marvel superhero unit and the Star Wars universe it acquired along with Lucasfilm in 2012 are being developed, one of these people said.

During the quarter ended Sept. 28, the launch of "Infinity" helped Disney Interactive to generate $16 million operating income on $396 million of revenue, only the second profitable quarter in its five-year history.

However, the unit still seeks its first profitable fiscal year. Disney Chairman and Chief Executive Robert Iger had set that as a goal for the fiscal year ended Sept. 28. But the company pushed back the target date when the release of "Infinity" was delayed to August from June.

Disney Interactive also operates websites including Disney.com and produces mobile games and content.

 

[ArthurKing1220]

The article doesn't seem to specify who, exactly, they're laying off (i.e., what sort of personnel) but if it is people associated with the actual production and coding for these games, this is not surprising. It's extremely common, even for big, AAA games, to see developers doing big rounds of layoffs after the title comes out. There's a lot of churn in the game design and development world, at least among the rank-and-file artists and coders. This doesn't mean: 1) that the people laid off did a bad job (necessarily), 2) that the company doing the layoffs is in trouble (necessarily). Rather, it's the product of the economic model that these studios operate under, which is to go from periods of feast to famine depending on where they are in the course of game development. Although I'm sympathetic to the people who lose their jobs in this regard, in a way, it makes sense -- unless you're a studio the size of EA, it doesn't really make sense to have a continuous cadre of hundreds of coders and artists and other asset people in between game projects. Most of the time these people end up landing on their feet and getting other jobs because their credentials are strong and everyone in the industry understands how it works.

Again, just my $.02 and just speculating. Maybe the layoffs involved hundreds of marketing people in which case nothing I said above applies. But if they're letting go of game-related personnel, there's a method to that madness.