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Disney Interactive lays off 700 workers, adios social gaming

The entertainment giant cuts one quarter of its staff after social gaming proves to be a bust. However, Disney is not alone.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
2 min read

Disney Infinity is Disney's digital gaming project. Screenshot by Dara Kerr/CNET

After dismal earnings, Disney announced Thursday that it's laying off one quarter of its gaming and Internet division -- that's about 700 people, according to the Associated Press.

The cuts are in the company's Interactive unit and will most likely affect people who work on Disney's social games, according to the AP. The layoffs also come with discontinued games like Sorority Life and Tap Tap Revenge.

The restructuring was "difficult but necessary given our long-term strategy focused on sustainable profitability and innovation," Disney told the AP.

Disney put most of its Internet properties into Disney Interactive Media Group in 2008 by merging video games, online, and mobile. Reportedly, Disney Interactive has since experienced $1.41 billion in losses, along with hundreds of layoffs in 2011, the closing of video-game production studios, and canceled projects.

In an effort to revive its struggling Interactive division, Disney launched Disney Infinity last August. Reportedly, the entertainment giant spent $100 million on the project, which lets players design their own landscapes and use their own characters from Disney movies and TV shows.

Social gaming has proved to be Disney's Achilles' heel. But, it's not alone.

The once-social-gaming-giant Zynga has seen its share of doom and gloom over the past couple of years. Not only has the company had abysmal earnings, layoffs, and an executive shakeup that included getting a new CEO, but it's also shuttered games and distanced itself from Facebook.

From here forward, Disney said, it will focus on Disney Infinity and mobile gaming, which have done better as far as profits.