The metaverse is among the first victims of Walt Disney Co.’s cost-cutting purge.
The Magic Kingdom is shutting down its next-generation storytelling and consumer-experiences unit, the small division that was developing metaverse strategies, as part of a plan to slash 7,000 jobs, according to a Wall Street Journal report on Tuesday.
Disney DIS, -0.42% employed 50 people in the division, which was assigned to tell interactive stories in new technological formats using Disney’s extensive library of intellectual property.
Disney had no official comment, but a person familiar with the company’s strategy who is not authorized to speak publicly on the matter confirmed the report.
Former Disney Chief Executive Bob Chapek, who was ousted in November, described the metaverse as “the next great storytelling frontier” and helped create the metaverse division in early 2022. Chapek’s successor, Bob Iger, has been equally ebullient about the metaverse. Last year, Iger joined the board of startup Genies Inc., which sells tools that let users design online avatars for use in the metaverse.
However, Disney’s austerity program, which will chop $5.5 billion in costs as part of a restructuring plan, had no room for nonessential businesses like the metaverse.
Before artificial intelligence became the technology du jour for many companies, the metaverse was creating the most buzz. But the long-hyped concept that blends the digital and physical worlds has so far underperformed and appears several years away from broad use, despite efforts by Facebook parent Meta Platforms Inc. META, -1.78% and others. This month, Meta slashed the price of its Oculus mixed-reality headset amid stinging criticism that it has squandered billions of dollars developing its own metaverse.
Apple Inc. AAPL, -1.05% is expected to unveil its own headset in June, in a move that could kick-start a middling market. An estimated 8.8 million augmented- and virtual-reality headsets shipped last year, a drop of 21% from 2021, according to an IDC report last week. The market-research firm had forecast annual sales of about 9.7 million units a few months earlier.
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