Disney on Thursday laid off more than a quarter of its global video game and Internet division, or around 700 employees. The decision is part of a major restructuring effort that also includes a shift in advertising strategy on the company's main website according to a report from the New York Times.
As the publication points out, layoffs in the division weren't a surprise but most didn't expect such drastic cuts.
The layoffs were also influenced by Disney's decision to combine two of its businesses: the mobile games sector and the fledgling social games division. To bolster the latter, Disney acquired social gaming company Playdom in 2010 during the social gaming boom.
It's a decision that is now looking more and more like a bust as gamers have abruptly shifted from social platforms like Facebook to mobile games played on smartphones on tablets. Playdom hasn't had a hit title since the acquisition, the publication notes.
Additionally, Disney is also scaling back production of in-house games and will instead license its characters to outside developers for future projects.
As for the Internet division, Disney will be closing two websites, BabyZone.com and Spoonful.com, and move the company's main website from banner ads to sponsorship-based advertising. James A. Pitaro, the president of Disney Interactive, was quick to point out that they weren't exiting any business and will pursue licensing partnerships in which they retain a lot of creative input.