Disney Interactive slashed about 700 jobs on Thursday, more than one-quarter of its entire staff, as part of entertainment giant’s continuing battle to make its video game and Internet division profitable. Although the cuts had been anticipated for some time, few expected them to run that deep.
The Playdom group, which produces social-media games, is believed to be hit hardest. Disney purchased that company in 2010 for $563 million, an investment that clearly didn’t pay off.
Disney also plans to dramatically scale back in-house development of games, relying instead on outside licensing, which The New York Times characterizes as “a major shift in strategy.” The newspaper reports the company, which last year released about two dozen games, will reduce its output by 50 percent, and merge Playdom with the more successful mobile games unit.