As some big companies join the metaverse space, many leave the platform. The latest exit news is hovering around Disney’s metaverse division. According to the Wall Street Journal, the company will do away with its metaverse division in the next round of job cuts.
The giant entertainment company is on the precipice of 7,000 job cuts that are a mitigation measure against the economic onslaught arising from the Ukraine-Russia war. Disney is one of the latest companies to announce layoffs among the top-tier companies. Some of the earlier inclusions were Alphabet, the parent company of Google, Amazon, and Microsoft.
There are some similarities to the job cuts between Microsoft and Disney, who chose to eliminate their Metaverse divisions. On the other hand, Amazon announced that it would be cutting jobs; however, they are willing to venture further into the NFT and virtual worlds.
Disney No Longer Prioritizes the Metaverse
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According to the Wall Street Journal, the CEO of Disney, Robert Iger, said the mass layoffs would start in the first week of April. The CEO says that 49 out of 50 personnel in the metaverse division would lose their jobs with the latest job cuts. The SVP of consumer experiences in the Disney metaverse was promoted to the role in Feb 2022, with Disney tasking the SSVB with establishing the company in the Web 3 space.
After the pay cuts, Mike White will be the only person with a job in the division. However, at the moment, it remains unclear what Mike White’s role will have going forward.
According to diverging online sources, Disney was under immense pressure from shareholders. The reports detail that the shareholders were unhappy with the current business performance and wanted the company to end all non-essential elements.
As a result, Disney turned to McKinsey & Co to help the company identify new opportunities for cost-cutting. Some top content executives at the firm were not happy with the move due to the implications of the lack of technology as we advance.
In addition to the massive job cuts, the company has made some budgetary cuts with talk of extending the cuts to over $5 billion. Disney has been taking on many new projects and stiff competition in some avenues, including the streaming world.
The company also notes that the revenues from their cable TV and cinematic sectors were below the needed levels. The metaverse has been in the limelight, but the new job and division cuts indicate that the metaverse projects are a long-term bet.
Companies entering the space should understand that the metaverse is still in its infancy and that adoption will take time. This more extended aspect has frustrated many shareholders in different companies, given the billions poured into the metaverse such as Meta.
Meta Playing the Long Game
Meta’s current frustration with the metaverse indicates the frustration among companies in the game. In Q4, Zuckerberg’s Metaverse division lost over $13 billion as the VR and AR arms tried to build up. The cost of the metaverse gear has been the biggest problem that the sector faces.
Meta expects the losses to continue in the year, with the metaverse division struggling to pick up momentum. The gear costs upward of $1,500, roughly the cost of 3 PS5 standard editions. Only a few people are willing to part with the amount in the current economic conditions.