Despite Disney’s unstoppable streak at the box office, other parts of the company aren’t doing as well.
In a surprise announcement today, Disney revealed that it is shutting down Disney Infinity, its three-year-old interactive game/collectible franchise. The company also announced that it is taking a $147 million charge against its second-quarter earnings to shut down its console game business.
“After a thorough evaluation, we have modified our approach to console gaming and will transition exclusively to a licensing model,“ Disney consumer products and interactive chairman James Pitaro said in a statement. “This shift in strategy means we will cease production of Disney Infinity, where the lack of growth in the toys-to-life market, coupled with high development costs, has created a challenging business model.”
In addition, Disney will also shutter its Salt Lake City subsidiary Avalanche Software, which it acquired in 2005. The layoffs across Avalanche and Disney Interactive will number “between 250 and 300 jobs,” a Disney spokesperson told the Wall Street Journal.
Other video game companies are extending a helping hand to the hundreds of people that Disney is laying off. Insomiac Games, for example, posted this message on Twitter:
— Insomniac Games (@insomniacgames) May 10, 2016
Avalance founder John Blackburn, who was svp and gm of Disney Infinity, wrote on the Disney Interactive site that a few more Infinity releases were still to come: “We have two final retail releases coming, including three new characters from Alice Through the Looking Glass later this month, and the Finding Dory Play Set launching in June.”
Disney Interactive launched the Infinity line in August 2013, envisioning it as a way to tie together all of the company’s entertainment properties into a single gaming universe. At the time, Disney CEO Bob Iger hinted at how the concept was a last-ditch effort to save Disney Interactive: “If Infinity does well, it bodes very well for the bottom line of this unit. If it doesn’t do well, the opposite will be the case.”
The opposite indeed happened: declining sales of the Infinity toys and overall lagging consumer interest in the “toys-to-life” category has forced Disney to re-evaluate its strategy of developing games internally. The company is now widely expected to invest more resources in online and mobile gaming.
Disney’s retreat from console gaming has happened gradually over time; the company laid off around 700 employees two years ago when it scaled back Disney Interactive.