Here’s Why Walt Disney Lays Off 250 Employees

Walt Disney Co (NYSE: DIS) has recently laid off almost 5 percent of its consumer products and digital media segment workforce as an outcome of an ongoing effort to improve the financial performance of the restructured division. The corporation has reduced the headcount of the consumer products and digital segment by 250 employees.

This latest move is considered as part of Walt Disney’s broader cost cutting measure. The largest entertainment corporation in the world laid off 300 positions four months ago when the firm abandoned its once-famous toy-video game hybrid Infinity. Infinity was competing with the similar product from Activision Blizzard. Aside from that, the media giant also reduced the headcount at digital video company Maker Studios by 30 positions.

A Disney spokesman pointed out that many of the job cuts happened in a studio that was supporting mobile game franchise Marvel: Avenger’s Alliance, which is located in Bellevue, Washington. Other workforce reductions occurred at Disney Consumer Products and Interactive Media headquarters located in Glendale, California.

Walt Disney has stopped the development of console games and currently, it licenses its content to outside game creators. While the media giant is still creating some games for mobile devices, it is now also focused toward a licensing model there.

Following the period of exceptional growth brought about by the Star Wars and Frozen franchises, Disney Consumer Products and Interactive Media has now become one of the sources of investor concerns. During the Christmas season last year, sales of Playmation—an intensively marketed line of interactive toys—were a huge disappointment. Since the spring season, the division posted one after the other quarterly losses in terms of its profitability, although other Disney business divisions reflected improvements.

During the last reported quarter, the Consumer Products and Interactive Media segment of Walt Disney, which is the smallest of the four divisions, registered $357 million in profit. This figure is equivalent to an 8 percent decline in comparison to the year-ago quarter, which the media conglomerate attributed to the deteriorating Frozen merchandise sales and negative effect of foreign currency obstacles. The third quarter profit of the segment was valued at $324 million, representing a 7 percent drop.

As of 10:06 AM GMT -4 on September 16, the stock of Walt Disney is changing hands at $92.45, down by 0.05 percent or 0.05 points.

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