The roughly 700 layoffs have been widely anticipated for the operation, Disney‘s only money-losing division in the fiscal year that ended in September. With the cuts, Disney Interactive will trim by half the number of games it puts out each year and will reduce the number of concepts it will develop in-house –relying more on ideas licensed from outsiders. It also will close websites BabyZone.com and Spoonful.com as it looks for sponsors to support Disney.com, eliminating the need to sell banner ads. The company says that it “has consolidated several lines of business” to help “focus the division on a streamlined suite of high-quality digital products. As a result of this restructuring, we have undergone a reduction in workforce. These actions were difficult but necessary given our long-term strategy focused on sustainable profitability and innovation.” A shakeup seemed inevitable after CEO Bob Iger tapped Jimmy Pitaro in November to run the division solo. Its social games operation likely will suffer from the brunt of the cuts. Disney placed a big bet on the format in2010 when it paid $563.2M for Playdom, only to watch the games decline in popularity as many gamers began to focus on smartphones and tablets.
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