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Disney Interactive Lays Off 700 Employees, Narrows Development Plans

The cuts represent about 25 percent of the unit's workforce.

Screengrab via Disney Interactive

Disney’s Interactive unit will lay off 700 workers, about 25 percent of its total, in a signal that efforts to turn around the long-struggling division haven’t done enough.

Last month, Interactive reported its second consecutive quarter of profitability after a long string of losses, credited to the success of Disney’s console game Disney Infinity. However, in tandem with the layoffs, the company will cease in-house console game development beyond supporting Infinity and publishing the as-yet-unreleased game Fantasia: Music Evolved, developed by Harmonix. New Disney games will instead be licensed out and developed by other studios.

Mobile and social game development will also decrease at the new Interactive, although “most of our [new] game development will be mobile first,” President James Pitaro said in an interview with Re/code.

Ahead of earnings last month, The Wall Street Journal had reported that layoffs would come primarily from Disney Interactive’s social division Playdom. Pitaro said today’s job losses “cut across several divisions,” including kids’ gaming, websites and Asian operations.

Mobile game development studios in Chicago and Korea will be shut down, Pitaro said, and current Japanese gaming head Justin Scarpone will lead a broader Asian gaming business, with an eye toward extending Disney’s successful Japanese carrier, platform and developer partnerships to other Eastern countries.

Also included in the reorg: A shift in Disney Interactive’s advertising focus. Instead of running banner ads on the various Disney websites that Interactive oversees, it will pursue sponsorships with like-minded brands, Pitaro said. Those sponsorships will also carry over to some games, but that will be on top of, not instead of, continuing “third-party ads from various ad networks,” Pitaro said.

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