Disney abandons metaverse plans to save costs as funds run dry

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Entertainment company Disney (NASDAQ: DIS) has terminated its plans to explore the metaverse as it intends to operate on a lean budget, the Wall Street Journal (WSJ) reports.

Disney will be scrapping the entire metaverse division in the coming weeks as part of a restructuring plan, according to the report. All 50 employees in the metaverse division will see their employment contracts terminated except for the division’s head, Mike White, who steered the consumer product unit operations.

Disney’s decision to shut down its metaverse plans follows a consultation report from McKinsey & Company that recommended that the firm adopt cost-saving measures because of unfavorable market conditions. Other factors include the increased number of players in the streaming industry and lackluster product metrics.

On a broader scale, Disney’s restructuring measures will cause up to 7,000 job cuts within two months, with WSJ reporting that the company has ditched plans to create a membership program similar to Amazon Prime.

Disney’s metaverse team was created in February 2022 and tasked with finding new ways for customers to interact with the company’s products. Disney CEO Robert Iger at that time described the metaverse as the future of storytelling, and given his previous stints in a Web3-focused company, pundits predicted a bigger push into virtual worlds.

“This is a very top-of-mind thing for us because we are continuing over time to augment our skills and the types of people that we attract into The Walt Disney Company to reflect the aggressive and ambitious technology agenda that we have,” former Disney CEO Bob Chapek penned in a memo to former Apollo Group CTO Mike White.

In 2021, Disney’s patent for a virtual world simulator designed to allow visitors to Disney World parks to have augmented reality (AR) experiences was approved. In the firm’s 2021 Q4 earnings call, Chapek confirmed that Disney would be focusing on virtual worlds to improve the state of storytelling for millions of viewers.

“We’ll be able to connect the physical and digital worlds even more closely, allowing for storytelling, without boundaries in our own Disney Metaverse,” Chapek said.

Firms are rethinking their Web3 plans

With the ‘crypto’ industry facing a rough patch, several firms are bringing their Web3 ambitions to a halt. Social networking platform Snapchat (NASDAQ: SNAP) has ditched its plans to integrate non-fungible tokens (NFTs) on its platform, saying that the move did not align with its present goals.

Snapchat announced that it would be laying off the entire Web3 team, but it is not clear if the company will be opening up the chapter in the future.

Other firms are currently balking at making a full foray toward Web3 because of the catastrophic large-scale implosions like FTX and the absence of clear regulatory direction.

Watch: Web3 and BSV Blockchain