Disney cuts jobs in video game reboot

Mouse's interactive unit shifts focus to digital vidgames

Disney is swinging the axe at its gaming arm, cutting a substantial number of positions as it transitions from being a packaged goods company to a player in the growing digital videogame space.

Disney declined to give the number of people affected, but Mouse House insiders said the layoffs would total around 200.

“As part of setting a strategic direction for future success in the digital media space, the Disney Interactive Media Group today began a restructuring process,” Disney said in a statement.

Many at Disney Interactive Studios have been bracing for cuts after upper management changes were made late last year, starting with the departure of Disney Interactive Media Group head Steve Wadsworth in September. Disney quickly replaced him with Yahoo exec Jimmy Pitaro and John Pleasants, CEO of Playdom, an online game company that Disney acquired for $763 million in late July.

That shift continued in November as Graham Hopper, who had guided Disney’s gaming division for the past eight years and had built the company into a viable force among gamemakers, announced his departure.

At the time of Pleasants’ appointment, Disney CEO Bob Iger said the exec would not only “focus on turning those businesses into profitability but diversifying our presence in the business, so we’re not reliant on one platform that’s obviously facing challenges.”

The Playdom acquisition was the most definitive sign of Disney’s move to a digital format, but it wasn’t the first. Previously, ithad acquired mobile gamemaker Tapulous, source of the hit “Tap Tap Revolution” iPhone games.

Playdom, at the time of its purchase, was the industry’s third-largest developer of social games, behind Zynga and Playfish, with 42 million active users.

But soon after the ink on the deal dried, it became clear that Disney wasn’t interested in merely expanding its gaming division but in completely changing its focus.

The “Pirates of the Caribbean: Armada of the Damned” game, in which Disney had invested millions of dollars and which was far along in the development cycle, was canceled without explanation. The development studio behind it was downsized and then shuttered for good late last week.

During the holiday season, the company had two major releases: “Tron: Evolution,” which was a flop, and “Epic Mickey,” which marked Disney’s biggest retail vidgame release in years and a rebranding of sorts for the company’s most famous character.

“Epic Mickey” sold 1.3 million units in December, making it the fastest-selling game in the company’s history.