Massive layoffs at Disney’s gaming arm

Disney is swinging the ax at Disney Interactive Studios, cutting hundreds of positions, sources have told Variety. Mickey mouse afraid

Disney declined to give a number of people affected, but speaking off the record, people who were affected by the move said it could be as much as half of Disney Interactive Studios. Several vice presidents and directors were among those cut. (Update: Further research by Variety has found the actual number of employees cut to be closer to 35-40 percent of the unit.

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

More than 700 people work at Disney Interactive Studios, but many have been waiting for what they saw as inevitable cuts after upper management changes were made late last year after the June 2010 acquisition of social game maker Playdom.

First out was Disney Interactive Media Group head Steve Wadsworth, who left abruptly in September. The Mouse quickly replaced him with Yahoo! vet Jimmy Pitaro and John Pleasants, CEO of Playdom, an online game company that Disney acquired for $763 million in late July.

In November, that shift continued 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 game makers, announced his departure.

During holiday 2010, the company had two major releases: “Tron: Evolution,” which was a flop and “Epic Mickey,” its biggest retail release in years – and a video game re-branding, of sorts, for the company’s most famous character.

“Epic Mickey” sold 1.3 million units in December – a respectable number and one that Disney said made it the fastest-selling game in the company’s history. The figure wasn’t quire as spectacular as some insiders were likely hoping for, though. (Analysts blame the game’s late release date – and the fact that it was only available on the Nintendo Wii – for the numbers.)

Junction Point, which made “Epic Mickey” was not spared from Monday’s layoffs, but cuts at that studio were minimal compared to the larger employee reductions at the division. Star developer Warren Spector is not leaving the company.