In a recent development, Disney has reportedly abandoned its metaverse division. According to sources, this move is part of a broader restructuring plan to cut down the company’s operating expenses by a whopping $5.5 billion, leading to the layoff of around 7,000 employees over the next two months.
It is undoubtedly a significant shake-up in the entertainment industry and has caused quite a buzz in the market.
Initially, the metaverse division was set up to explore innovative ways to engage Disney’s audience. The idea was to create a new platform enabling Disney fans to interact with their favorite stories in unique and immersive ways.
However, with the recent decision to scrap the division, all of its 50 or so members will be left without a new employment contract. The exception is Michael White, who led the broader consumer products unit.
The Wall Street Journal first reported the news of Disney abandoning its metaverse division. This development has surprised many industry experts who considered the metaverse the next big thing in entertainment.
With its immense potential to create a virtual world that seamlessly integrates with our daily lives, the metaverse was expected to be the future of storytelling and engagement.
It is important to note that Disney has already made significant investments in the metaverse space. For instance, the company had patented a “virtual-world simulator” to facilitate headset-free augmented reality (AR) attractions at Disney theme parks on December 28, 2021.
Disney had also explored integrating metaverse technology into sports betting, though the idea never progressed.
So why did Disney decide to abandon its metaverse division?
According to the WSJ report, the decision to cut operating expenses and staff count came following a consultation with McKinsey & Company to find cost-cutting opportunities. Unfavorable economic conditions and increased competition in the streaming sector were also cited as contributing factors.
Interestingly, Disney’s former and current chief executives, Bob Chapek and Robert Iger, had once considered the metaverse a very bullish investment opportunity.
Chapek has reportedly described the metaverse as “the next great storytelling frontier.” At the same time, Iger previously worked as a director and adviser in Genies, a digital avatar platform running on Dapper Labs’ Flow blockchain.
Assuming the rumors are true, Disney abandoning its metaverse division is another example of how big companies chasing buzzwords can be a recipe for disaster. While the metaverse certainly has immense potential, it is still in its nascent stages, and companies need to be careful when investing in this space.
While the future of the metaverse remains uncertain, it is clear that companies need to be more cautious when investing in emerging technologies. The world is changing fast, and businesses must adapt quickly to stay relevant and competitive.
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