Title: The Rise and Fall of Disney’s Metaverse: A Rollercoaster Journey
— Disney and Microsoft Say Meh to the Metaverse?

26 July 2023, Monica Cai monica.cai@crm.szc-group.com
Intro：
According to The Wall Street Journal, as part of its plan to cut 7,000 jobs, Disney has dissolved its metaverse division.

CEO Robert Iger stated that the job cuts will begin this week as part of cost-cutting efforts and to streamline operations. All 50 members of the metaverse division were let go in the latest wave of layoffs.

The division aimed to create immersive storytelling experiences based on Disney’s rich intellectual property, which includes well-known animations, Pixar films, Marvel, and Star Wars franchises.

Part 1: Disney’s Metaverse Dream
Former Disney CEO Bob Chapek hired Mike White in February 2022, stating in an internal memo that Disney’s metaverse goal was to “create a whole new paradigm for how audiences experience and participate in our storytelling.” The metaverse was described as the “next generation storytelling”. Specifically, Disney aimed to bring together the real and digital worlds through wearable devices, smartphones, and digital access points to create a metaverse-themed amusement park.

This virtual, interactive, multiplayer game world would allow users to engage in various activities such as shopping, socializing, and entertainment.

However, while the company was confident that major tech giants like Meta (formerly Facebook) would take action in the metaverse space, for many in the tech industry, the metaverse remained little more than a buzzword—a virtual world effort where the only “innovation” was seeing friends using silly avatars.
Part 2: From Ambitious Plans to Termination – A Quick Overview of the Timeline
In July 2020, Disney filed a patent application with the US Patent and Trademark Office for a “Virtual World Simulator of the Real World,” which was approved on December 28, 2021. The application aimed to allow visitors to interact with virtual content without the need for headsets.

In November 2021, former Disney CEO Bob Chapek announced Disney’s entry into the metaverse arena, focusing on combining elements of the real and digital worlds to enhance Disney storytelling, making the metaverse a key part of the company’s strategy. On November 12, Disney collaborated with the VeVe NFT platform to launch the Golden Moments NFT collection.

In February 2022, Disney established its metaverse division, led by Mike White, who was appointed head of the division.

By mid-2022, Disney began formulating its metaverse strategy and announced Polygon as its preferred blockchain. The company also launched an accelerator program during the summer to drive the growth of global innovation companies. The selected accelerator program companies included Flickplay, Inworld, Lockerverse, Obsess, Red6, and Polygon, covering Web3, metaverse, and blockchain technology.

In September 2022, Disney ramped up resource deployment, hiring dedicated consultants for NFT and DeFi. Additionally, former CEO Bob Chapek announced plans to incorporate blockchain technology into the entertainment business to achieve monetization, with Disney+ being part of Disney’s metaverse—providing streaming services.

In October 2022, Disney collaborated with virtual e-commerce platform Obsess to launch a Web3 experience event in its music store to celebrate Disney Music’s 100th anniversary.

In March 2023, Disney announced the dissolution of its metaverse division. According to The Wall Street Journal, Disney’s metaverse plan remained uncertain after over a year of development. Poor performance and intensifying competition in the streaming industry were the two main factors contributing to Disney’s decision.

Part 3: Many Titans Retreat from the Metaverse
Notably, major companies like Meta (formerly Facebook) and Microsoft have faced challenges in metaverse development and have decided to retreat from the metaverse space.

On February 9, The Information reported that Microsoft disbanded its industrial metaverse team, established just four months prior to help customers use the metaverse in industrial settings, resulting in the layoff of 100 team members. The following day, insiders revealed that Microsoft began layoffs in departments like Surface devices, mixed-reality hardware HoloLens, and Xbox.

Since Facebook’s renaming to Meta and its focus on the metaverse business, the Reality Labs division, which focuses on metaverse project development, has experienced consecutive losses. Total operating losses for the division reached $9.4 billion in the first three quarters of 2022, surpassing $6.9 billion in 2021. Since 2019, the division’s total operating losses have exceeded $30 billion. On March 14, Meta CEO Mark Zuckerberg announced plans to lay off tens of thousands of employees.

Zuckerberg attributed the layoffs to difficult economic conditions, citing higher interest rates leading to an economic downturn, geopolitical instability causing economic fluctuations, and increased growth and innovation costs due to strengthened regulations. He also mentioned that cost-cutting actions would continue for many years. In November 2022, Meta laid off 11,000 employees.

Conclusion: The Future of the Metaverse
Meta’s rebranding in 2021 ignited the metaverse craze, with many companies rushing into this blue ocean, seeking to gain an advantage. However, the fervor has subsided, and the setbacks faced by tech giants have brought the development of the metaverse into a state of uncertainty.

While ChatGPT is currently the darling of many, seemingly overshadowing the metaverse, the long-term vision for the metaverse remains promising.

According to a recent report by McKinsey, global annual spending related to enterprises and consumers in connection with the metaverse could reach $50 trillion by 2030.

While it remains unclear whether companies like Disney will continue developing metaverse applications through other teams (Bob Chapek and Robert Iger have both expressed optimism about the metaverse’s prospects), the layoffs and division dissolutions do reflect issues in the development of their metaverse businesses.

Bonus! – Disney’s Metaverse Advantages and the Future
Although Disney’s metaverse vision seems to have come to an end for now, some results have emerged based on its past accumulations. Many virtual reality experiences based on Disney’s assets have been created.

Some aspects of Disney’s metaverse plan can still be found in a patent application, which involves a technology called SLAM (Simultaneous Localization and Mapping) used to address robot localization and mapping in unknown environments.

Bob Chapek once said about Disney’s advantages in entering the metaverse: “We have something others don’t… Our parks. If the metaverse is the fusion of the physical and digital worlds in one environment, then who can do it better than Disney?”

Reference:
Disney Plans to Cut 7,000 Jobs, $5.5 Billion in Costs – The Wall Street …

Disney CEO Bob Chapek appoints executive to lead metaverse ..…
Disney US Patents, Patent Applications and Patent …
Disney Launching Series of “Golden Moments” NFT Collectibles for …
Is the Disney Metaverse Becoming Reality? Here’s What We Know
Disney cuts metaverse division under Iger’s restructuring …
Disney, Microsoft Say Meh to the Metaverse – WSJ – The Wall Street Journal

Microsoft is disbanding its Industrial Metaverse
Meta Reality Labs reports $10 billion loss – CNBC
Meta Lays Off More Than 11,000 Employees – The …

Financial Markets | McKinsey Global Institute | McKinsey …
Disney patent proves it is readying itself for the metaverse