The metaverse division was initially created to work on new ways of engaging Disney’s audience.

Entertainment giant Disney has reportedly ditched its metaverse division as part of a broader restructuring plan to cut its operating expenses by $5.5 billion and lay off 7,000 staff over two months.

The news was reported by The Wall Street Journal (WSJ) in a March 28 post, citing “people familiar with the matter.“

All of the metaverse division’s 50 or so members will be left without a new employment contract, except for Michael White, who led the broader consumer products unit, the WSJ reported.

Disney has abandoned a plan to develop its own membership program like Amazon Prime, according to @RWhelanWSJ.

Disney has also eliminated the division that was developing metaverse strategies, according to the report. https://t.co/mSm92XtqE0 pic.twitter.com/e2KqbxAC8i

— Scott Gustin (@ScottGustin) March 28, 2023

The metaverse division is understood to have been created in February 2022 to create new ways for Disney audiences to engage with its stories.

The firm also once considered how it could integrate metaverse technology into sports betting, but the idea never progressed.

The decision to cut operating expenses and staff count came following a consultation with McKinsey & Company to find cost-cutting opportunities, according to the report.

Unfavorable economic conditions and increased competition in the streaming sector were two main factors that led to the decision.

Both Disney’s former and current chief executives, Bob Chapek and Robert Iger, once considered the metaverse to be a very bullish investment opportunity.

Chapek has reportedly described the metaverse as “the next great storytelling frontier,” while Iger previously worked as a director and adviser in Genies, a digital avatar platform running on Dapper Labs’ Flow blockchain.

Cointelegraph reached out to Disney for comment but did not receive an immediate response.

Source: Cointelegraph.