Disney Shifting Focus, Mass Layoffs Ensue

Disney Interactive - the electronic entertainment division for the multi-billion dollar film producer - has been undergoing mass layoffs this past week in order to shift focus on its development position in the near future.

Last week, 3RM reported that Disney developer Propaganda Games had been shuttered, but it appears as though this was not the end of Disney's layoffs. Earlier this week, CNBC reported that Disney had begun to reduce the staff of its 700-employee division by as many as 200, and some believe that layoffs will continue to be distributed over the year. Affected, beyond the closure of Propaganda Games, was a portion of the team at Junction Point, the developer headed by Warren Spector which recently released Disney Epic Mickey for the Wii this holiday season.

Word of the layoffs spread through Twitter among local developers who shared condolences for those laid off from Junction Point. Since then, more reports of mass layoffs have spread around the Internet. Disney's official response in regards to Junction Point is that the layoffs from the company were minimal and part of a much larger shift in focus for the branch.

All of these layoffs are part of the plan to shift from the company's current retail and high-budget focus to one more concerned with digital distribution and social gaming platforms. The first sign of this arose when Disney purchased webgame developer Playdom back in July, but the first major hint at a full-blown shift in practices was the replacement of CEO Steve Wadsworth with Playdom CEO John Pleasants along with Jimmy Pitaro from Yahoo.

Disney Epic Mickey was the company's latest retail offering, and considering it sold 1.3 million copies in its launch month, it could be seen as a rousing success. Unfortunately, it has not fared as well in Europe, and considering that Disney appeared to be changing its ways well before Epic Mickey released, its sales did not matter much in the long-term.

To further complete the change within Disney's executive group, Disney Interactive's new Senior VP of Publishing is Adam Sussman, the ex-Vice President for EA Mobile.

The fates of other major Disney developers such as Wideload Games, creator of Guilty Party, and Blackrock Studio, the developer behind Pure and Split/Second, are currently unknown. Furthermore, it is still uncertain whether Junction Point will still be developing retail titles in the future or will cancel or downsize projects to fit into the social, downloadable, and mobile markets.

SOURCES: Gamasutra / CNBC