Disney Shuts Down Game Studio As It Shifts Gaming Approach To Licensing Model

By Bien R. Gruba III , Sep 16, 2016 03:33 PM EDT

Disney's recent successes with the "Jungle Book," "Captain America: Civil War" and "Star Wars: The Force Awakens" have brought billions of dollars to the company. However, while it enjoys a smashing success for its movie and animated division, the globally loved entertainment conglomerate seems to be taking more steps away from video gaming even as its rivals seek to go deeper into the gaming industry.

The New York Times recently reported that Disney has closed its gaming studio responsible for the "Marvel: Avengers Alliance" games, in an apparent move to distance itself from internal video game development.

The move comes as part of the company's recent layoffs. The Times said that Disney cut five percent of its consumer products and digital media staff, which translates to the termination of 250 workers.

Disney, the largest entertainment company worldwide, has more than 180,000 employees across the world. Although its termination of 250 workers is comparatively tiny, it is one of the many downsizing activities the company has done lately in all its video gaming divisions. 

Last May, more than 300 employees were sent home when the company axed "Disney Infinity," a video game and toy line of its most loved characters. In July, 30 workers were fired from Maker Studios which is a Disney-owned video business.

Disney's retreat from developing its own games is a strategic decision, according to Brian Nelson, a Disney spokesman. Disney is said to be moving to a licensing model of its world famous intellectual property, like Mickey Mouse, Donald Duck and Goofy to third party game developers.

They are doing what Nintendo did with its "Pokemon" series. Nintendo licensed the popular franchise to Niantic who made the global smash hit "Pokemon Go" mobile game.

Disney hopes that by letting go of internal development of its video games, it can play to its strength, which is the creation of well-loved stories and characters that they can lend to game studios for repeated profits.

Disney's success in films and animation has not fully translated into video gaming in the past.

Gameindustrybiz said that the company's earnings for its consumer products and interactive media division has decreased for the last two quarters. However, Disney did post an operating income of $1.54 billion over the first three quarters of 2016.

Disney apparently had the wisdom and foresight with its plan for a licensing model to position itself where it can profit more without risking its current dominance in the industry of film and animation.

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