The entertainment industry is facing difficult times, and the latest victim is Disney. Despite many considering 2023 as the year when metaverse projects would rise, Disney is backtracking from its anticipated Web3 storytelling experience. The company is cutting costs by laying off 7,000 employees over the next two months, which will help it cut operating costs by $5.5 billion.
Disney’s 50-member metaverse strategy team was also impacted by the layoffs. The Magic Kingdom sought to use Web3 technology to “create an entirely new paradigm” for how audiences experienced and engaged with their stories, as per Ex-CEO Bob Chapek. The decision was influenced by economic struggles affecting businesses worldwide. Disney’s consultants, McKinsey & Co., advised that laying off employees would be the best course of action moving forward.
The strategy team, led by former Disney consumer products executive Michael White, was responsible for finding innovative ways to tell interactive stories using Disney’s extensive lineup of intellectual property. Although White will remain at Disney in an unspecified role, other members of the unit will not. Disney set up the metaverse division in February 2022 under Bob Chapek’s leadership, who touted metaverse as “the next great storytelling frontier.” However, due to the underwhelming performance of the crypto industry in 2022, the plans were left comatose, and the division made little progress.
Despite the layoffs and the decision to shutter its metaverse division, Disney’s return to the metaverse is still a possibility. The company patented a “virtual-world simulator” in December 2021, aiming to provide headset-free augmented reality (AR) rides at theme parks. Although Disney is under new leadership, current CEO Robert Iger is enthusiastic about the metaverse sector. The CEO has invested in and joined the board of Genies Inc., a Web3 startup that creates avatars for the metaverse.
Disney’s decision to exit the metaverse sector could affect the entire industry, with other major companies using it as an example to follow. If Disney had taken its library of blockbuster intellectual properties to Web3, it could have surged the sector’s adoption. On the other hand, Meta’s restructuring led to the company laying off 11,000 employees on March 14. The firm pulled the plugs on many of its projects, including Facebook and Instagram NFTs. Law firm Cooper & Kirk alleged US federal regulators are engaging in a war against the crypto sector by threatening to debank businesses.
In conclusion, the metaverse sector continues to claim major victims, and Disney’s decision to cut costs and exit the sector is not surprising. Although the company may revisit the metaverse in the future, its exit could affect the entire industry, and other major companies may follow its example. It remains to be seen how the metaverse sector will evolve in the coming years and whether it will live up to its hype as the next great storytelling frontier.
