Disney Laying Off 700 Workers from Interactive Unit

[crazy4wdw]

From the Associated Press:

Disney Laying Off 700 Workers from Interactive Unit

LOS ANGELES -- Disney is laying off 700 people from the interactive unit that makes video games and operates websites, about a quarter of the workforce in the division.

A Walt Disney (DIS) spokesman confirmed the layoffs Thursday.

The move narrows the company's focus on mobile and social games that use key Disney characters. Some games that Disney acquired when it bought social game maker Playdom in 2010 for $563 million, such as Sorority Life, will be discontinued.

It is also discontinuing one-time hits, such as music play-along game, Tap Tap Revenge.

Disney Interactive had long been a money-losing unit and last month posted only its third profitable quarter since results began being broken out in 2008, thanks in part to its Disney Infinity console game, which Disney will keep supporting.

The company shuffled the executive ranks at Disney Interactive in November. Co-president John Pleasants stepped down, leaving co-president Jimmy Pitaro with responsibility for the division.

In a statement Thursday, Disney said the restructuring was "difficult but necessary given our long-term strategy focused on sustainable profitability and innovation."

Shares of the Burbank, Calif., company added 37 cents to $83.05 in afternoon trading. Earlier in trading shares touched $83.42, an all-time high.

 

[OKW Lover]

Is this recent? I thought I heard a similar story a few weeks ago.

 

[crazy4wdw]

Is this recent? I thought I heard a similar story a few weeks ago.

The article is dated today (3/6/14) and indicates that Disney made the announcement today.

http://variety.com/2014/digital/news/disney-interactive-lays-off-700-employees-1201126908/

 

[OKW Lover]

OK, that's interesting. I know I recall something similar in a less recent announcement. Perhaps they are just pulling out entirely and leaving this sector to third parties that will license Disney's intellectual property.

 

[frank430316]

Disney announced in Feb., that they were considering laying off over two hundred from Disney Interactive. Today they announced that the actual number is over 700 with the majority coming from the Playdom group (Marvel Alliance, Disney City Girl). This is going to make it very difficult for Disney to hire game developers in the future.

 

[Reddog1134]

Is this recent? I thought I heard a similar story a few weeks ago.

Maybe you're thinking of when they shut down Lucasarts?

 

[frank430316]

Here's the news release:

http://www.nytimes.com/2014/03/07/business/media/disneys-game-and-internet-division-cuts-one-quarter-of-its-workforce.html?_r=0

 

[OKW Lover]

Maybe you're thinking of when they shut down Lucasarts?

That might be it

Sent from my iPhone using DISBoards

 

[Disco]

I can't believe they shuttered Lucas which has made some of the best and most imaginative games to date. Disney has been mired in an industry that it should be excelling in and they don't have the brains to use LA for all its worth?! Why are they buying these companies if they are just going to then fire the talent?

 

[dwelty]

I can't believe they shuttered Lucas which has made some of the best and most imaginative games to date. Disney has been mired in an industry that it should be excelling in and they don't have the brains to use LA for all its worth?! Why are they buying these companies if they are just going to then fire the talent?

For several years now Lucas Arts has contracted with other game manufactures to do the work, and have just slapped their name on the finished product. An example of this is the Lego Star Wars game and Star Wars: The Clone Wars. Why keep a bunch of people on payroll when the heavy lifting is done by someone else?

 

[jeffbear]

For several years now Lucas Arts has contracted with other game manufactures to do the work, and have just slapped their name on the finished product. An example of this is the Lego Star Wars game and Star Wars: The Clone Wars. Why keep a bunch of people on payroll when the heavy lifting is done by someone else?

Which seems to be the same thing Disney is panning with this most recent round of layoffs. A lot of the old line game developers are going more and more with farmed out work. Disney never really did seem to have a handle on this sector of their business anyway. The best Disney-driven stuff has come from other shops under licensing agreements ... a la Kindgom Hearts.

 

[xie]

Disney announced in Feb., that they were considering laying off over two hundred from Disney Interactive. Today they announced that the actual number is over 700 with the majority coming from the Playdom group (Marvel Alliance, Disney City Girl). This is going to make it very difficult for Disney to hire game developers in the future.

Unfortunately, this is incorrect. Game development companies are notorious for "staffing up" to build a title, then laying off masses of developers when the title is shipped (or simply decide to move their development shop to a town where the cost of living is lower, so they can pay lower wages). It's what they do. There are a very few companies out there who don't do the boom/bust layoff cycle, but not many.

Source: I worked in the game development industry myself, and deliberately chose to leave it for development work in a steadier industry (one where we could stay in one town long enough to raise our children, instead of moving every year or two to follow the next gaming job). Love games and may go back to it once the kids are grown and moving every year or two is feasible again. I still have a huge network of friends and former coworkers in gaming so I know how often they are forced to switch jobs for various reasons (funding falls through, title gets cancelled, title ships and devs are no longer needed, companies merge, etc. etc.).

I also know someone who got laid off at DI in this wave, but thankfully at this point in the economic recovery, most of these folks will find jobs relatively quickly, if they are experienced in current languages and tools.

 

[frank430316]

While Disney Interactive does have the boom/bust cycle so prevalent in the gaming industry, they are better at it than most. But in this case, the problem is a little different. When they purchased Playdom in 2011, part of the deal stipulated that Playdom would be profitable by 2013 (and in exchange they kept their independence). But they never quite made it, they lost significantly in all but one quarter over the years, and were on track for even worse in 2014. That's probably why Playdom got the worse of the layoffs. Now if their crystal ball had been working, and they had moved to mobile devices, instead of staying on Facebook far too long, things might have been different. But the current economy is really tough for gaming companies.

 

[Shunasee]

Even mobile games are hard to get a hit on.

My SO is in the business, and there have been some big changes. More and more of the "name brands" are going to other devlopers to do the work. A lot of the small game developers focus on either mobile or console/pc games.
It is cheaper for the name brands to farm out the work than to keep gaming staff around.

 

[Tonka's Skipper]

The last time I read anything about gaming is that the whole industry is slowly (or fast according to some articles) dying. Sales are falling big time.

If there is not the market, the companies have to cut back.

Now the reason I know this is my nephew is in it and he's getting his resume dusted off, because he figures 2 or 3 more years and it will be a very small industry.

AKK

 

[Tonka's Skipper]

delete

 

[xie]

The last time I read anything about gaming is that the whole industry is slowly (or fast according to some articles) dying. Sales are falling big time.

If there is not the market, the companies have to cut back.

Now the reason I know this is my nephew is in it and he's getting his resume dusted off, because he figures 2 or 3 more years and it will be a very small industry.

AKK

It's not dying. It's just changing.

As with many things, outsourcing to foreign countries can be rampant in some areas; developers cost less overseas than they do in the US, because our cost of living here is so high. More so in some of the hottest markets in CA and WA.

Games themselves are changing because consumers' tastes are changing. Gone are the days when you can spend 2-3 years of investor money building a title with a few hundred devs and be guaranteed of at least breaking even (due to limited games available, among other things). Back in the day the majority of games were for the PC, then consoles came along and the boom/bust hiring cycles that go along with building console titles. Now, so much is shifting to "app" style development by small studios with tiny teams. There are still some behemoth companies around, but they are making the move to app-style games, too. Consumers' attention spans are shorter, their time available is shorter, they play on smaller devices than they did 5-10-20 years ago.

20 years ago a big successful market was stand-alone PC titles. 18-15 years ago console games grew into their own as console hardware improved. 16-14 years ago the internet improved enough to support graphical MMOs, many of which are still going strong today. But these days, the way to make a fortune in gaming is not to borrow a bunch of investor money and try to build another console game or World of Warcraft. It's building little apps in your garage or as a small business, and pray you stumble on the next Angry Birds or Candy Crush.

If you want to be in the industry, it's totally doable, but you have to be prepared to swap employers fairly often, and save money for dry spells. In addition, you're going to do even better if you have the high level game design skill (which is different from programming or graphic design skills) to develop your own apps and sell them.

 

[Tonka's Skipper]

It's not dying. It's just changing.

As with many things, outsourcing to foreign countries can be rampant in some areas; developers cost less overseas than they do in the US, because our cost of living here is so high. More so in some of the hottest markets in CA and WA.

Games themselves are changing because consumers' tastes are changing. Gone are the days when you can spend 2-3 years of investor money building a title with a few hundred devs and be guaranteed of at least breaking even (due to limited games available, among other things). Back in the day the majority of games were for the PC, then consoles came along and the boom/bust hiring cycles that go along with building console titles. Now, so much is shifting to "app" style development by small studios with tiny teams. There are still some behemoth companies around, but they are making the move to app-style games, too. Consumers' attention spans are shorter, their time available is shorter, they play on smaller devices than they did 5-10-20 years ago.

20 years ago a big successful market was stand-alone PC titles. 18-15 years ago console games grew into their own as console hardware improved. 16-14 years ago the internet improved enough to support graphical MMOs, many of which are still going strong today. But these days, the way to make a fortune in gaming is not to borrow a bunch of investor money and try to build another console game or World of Warcraft. It's building little apps in your garage or as a small business, and pray you stumble on the next Angry Birds or Candy Crush.

If you want to be in the industry, it's totally doable, but you have to be prepared to swap employers fairly often, and save money for dry spells. In addition, you're going to do even better if you have the high level game design skill (which is different from programming or graphic design skills) to develop your own apps and sell them.

I can only say you need to explain the massive drop in sales the last year or so, especially Christmas season.


AKK

 

[xie]

I can only say you need to explain the massive drop in sales the last year or so, especially Christmas season.


AKK

The money is going to app sales. People are still buying games. In fact, more people buy computer games today than did 5, 10 and 20 years ago - exponentially more. What is important to note is where the growth in the market is: and that's apps on handheld devices. Phones, tablets, etc. Console makers get this, which is why they have online shops where consumers can buy small games via device-specific currency (i.e. xBox points, etc.) that would never be "big enough" to support releasing as a stand-alone, 50-60 dollar console game.

A lot of this money is not well tracked by the industry because it's going to small shops, instead of flowing through game publishers as it historically did. Don't underestimate the massive amounts of money that flow through apps. Not necessarily the initial price of the app, which can be free, but the in-app boosts that people buy in endless 1-2 dollar transactions (see: Candy Crush and so many others like it).

I mean, look at Supercell, who made Clash of Clans. They started tiny in 2011 and make bank off the in-game purchases (two people in my household play that game and love it, so far I have resisted the lure). Between Clash of Clans and one other game, they reportedly make more than 2 million dollars per day via in-game purchases.

 

[Tonka's Skipper]

The money is going to app sales. People are still buying games. In fact, more people buy computer games today than did 5, 10 and 20 years ago - exponentially more. What is important to note is where the growth in the market is: and that's apps on handheld devices. Phones, tablets, etc. Console makers get this, which is why they have online shops where consumers can buy small games via device-specific currency (i.e. xBox points, etc.) that would never be "big enough" to support releasing as a stand-alone, 50-60 dollar console game.

A lot of this money is not well tracked by the industry because it's going to small shops, instead of flowing through game publishers as it historically did. Don't underestimate the massive amounts of money that flow through apps. Not necessarily the initial price of the app, which can be free, but the in-app boosts that people buy in endless 1-2 dollar transactions (see: Candy Crush and so many others like it).

I mean, look at Supercell, who made Clash of Clans. They started tiny in 2011 and make bank off the in-game purchases (two people in my household play that game and love it, so far I have resisted the lure). Between Clash of Clans and one other game, they reportedly make more than 2 million dollars per day via in-game purchases.

You are entitled to your opinion, I am going on what I am reading and being told by people in the industry.

The overall opinion is that gaming has crested and is fading. now I am not saying it's all going away, there will always be some gamers. However, fewer people will be needed to service what is still going to be around. As you said if Apps are the only thing growing, you don't need people to design games systems and you don't need people to design games for individual systems. A game is designed for all the apps.

The bottom line is you need much fewer designers.

AKK