In the corporate world, even long-awaited good news doesn’t mean there isn’t bad news for some people in the organization.
That was the case for Disney Interactive, which despite turning a profit in the last quarter of 2013 on the strength of Disney Infinity nevertheless laid off 700 employees this week, or just over a quarter of its total workforce. Along with the job cuts, the division is closing several offices in the U.S., plus one each in South Korea and India.
As you might expect with such a drastic reduction in headcount, Disney Interactive will simply develop less games moving forward, relying on partnerships with outside studios instead. It also may avoid big ticket purchases, as many media reports are spinning the company’s latest move as a referendum on its 2010 acquisition of Playdom.
In a tale that no doubt would make Zynga executives sadly nod their heads in sympathy, Playdom was riding high on its success with social games when Disney paid $563 million to buy it. To put that in perspective, Disney Interactive’s operating income in its most recent quarter was only $403 million.
But even aligned with access to Disney brands and marketing muscle for titles like Disney City Girl, it’s clear that Playdom wasn’t pulling its weight. Marvel: Avengers Alliance stands out as notable success story, but even that game took what seemed like ages to move from Facebook to mobile.
The lesson here is that even companies as mighty as Disney could (and did) get caught flatfooted by the rapid rise of mobile gaming. The New York Times reports that Disney Interactive’s mobile games have found success in Japan, but it looks like a “less is more” approach is what lies ahead in North America – and unfortunately, that means less jobs and less games.