Disney Interactive hit with layoffs, consolidates studios

The hardship brought on by the tough economic climate continues today as Disney Interactive Studios has confirmed it will lay off staff and consolidate studios. The rumor began when a NeoGAF user said "enough people" had told him that Propaganda Games would see "in the neighborhood of 50" layoffs.

GameDaily BIZ spoke with Angela Emery, Vice President of Communications at Disney Interactive Studios, who confirmed the layoffs. However, the situation is worse than originally rumored. While Propaganda Games will see cuts of "less than 30" employees, other studios will also experience losses.

The publisher has decided to consolidate its Fall Line Studio with Avalanche Software, developers of Bolt, Chicken Little, Hannah Montana and The Chronicles of Narnia franchises. Merging the two studios is expected to result in the loss of "less than 20" employees. Emery said that the consolidation would allow the unified studio to focus on the Nintendo Wii, a platform she considers to be "very important." She would not confirm that the cuts at Propaganda Games would cause the cancellation of a rumored Turok sequel.

Disney Interactive's other studios, including Black Rock and Junction Point, will not be affected by the round of layoffs. An internal communication sent to remaining employees by Steve Wadsworth, president of Walt Disney Internet Group (and obtained by Kotaku), can be found after the break.
"As you can imagine, given economic conditions, every industry has been impacted on a global scale. In response to this challenging business environment, we have examined ways in which we might be able to work more efficiently. We have taken measures to control costs by freezing most open positions, deferring some capital projects, reducing support from third parties, taking significant reductions in travel and entertainment expenses and eliminating other activities. The elimination of existing positions that we communicated today was a necessary step that we had hoped to avoid. In addition to all of these changes, we have also determined that Directors and above will not be receiving merit increases this year. All of these actions are part of a focused effort to ensure we are closely managing the organization through the current economic climate, balancing our need to respond to the current environment with our goal of driving significant long-term growth."

This article was originally published on Joystiq.