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Disney lays off 700 employees from interactive division

Disney has laid off 700 employees from its video games and Internet division, or roughly one-quarter of its global staff. The news comes via The New York Times which reports the 26 percent decrease in staff is part of Disney's decision to combine two businesses: mobile games and social games.

“These are large-scale changes as we focus not just on getting to profitability but sustained profitability and scalability,” explained Disney Interactive president James A. Pitaro.

Despite Disney Interactive reporting a 38 percent increase in revenue last year (mostly thanks to Disney Infinity), many of its browser- and mobile-based games underperformed. This includes Where's My Water? 2 and BabyZone.com. Disney maintains they are "not exiting any businesses" and will "pursue licensing partnerships in which we retain a lot of creative input."

In May of last year, Disney agreed to allow Electronic Arts to develop and publish new Star Wars games for a "core gaming audience" -- meaning, core gaming consoles like Xbox and PlayStation. It's these types of partnerships that Disney, I believe, is seeking. Give the volatile nature of the gaming industry it's not surprising that Disney is looking to get away from developing large AAA titles in-house.

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Matt Liebl You can follow Senior News Editor Matt Liebl on Twitter @Matt_GZ. He likes games, sports, musicals, and his adorable dog, Wrigley. And his wife.
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