Disney Interactive lays off 700, plans to scale back annual game output [Update]

Disney laid off one-quarter of its global staff in its video games and Internet division, Disney Interactive, The New York Times reported Thursday. The 26 percent decrease in staff amounts to roughly 700 job losses and also points to a change in strategy for the company, which is expected to scale back annual game output "by as much as 50 percent," the report reads.

While profits for Disney Interactive rose in Q1 2014 thanks to the success of Disney Infinity, as it reported a 38 percent increase in revenue year-over-year for that period, it also reported losses in Q3 2013 and Q2 2013 to the tune of $58 million and $54 million, respectively. The layoffs also affect the Internet side of the company's interactive division, which will shutter BabyZone.com and Spoonful.com and move towards sponsorship-based advertising for Disney.com as a result.

Prospective layoffs for Disney Interactive were numbered in the hundreds according to reports from one month ago. We've reached out to Disney to determine whether today's layoffs are the same ones in question, and will update as we learn more.

Update: Disney Interactive responded to Joystiq with the following statement: "Disney Interactive has consolidated several lines of business as part of an effort to focus the division on a streamlined suite of high quality digital products. As a result of this restructuring, we have undergone a reduction in workforce. These actions were difficult but necessary given our long-term strategy focused on sustainable profitability and innovation."

[Image: Disney Interactive]