Bob Iger, The Walt Disney Company (DIS) CEO, is a metaverse believer, but Disney’s investors aren’t convinced.
Under Iger, Disney cut its 50-person unit tasked with developing metaverse strategies for the company, according to the Wall Street Journal. Former chief executive Bob Chapek created the unit in February 2022 to find new, interactive ways to tell Disney’s stories.
The cuts are part of restructuring project and a 7,000-person layoff plan the company announced last month. Since Iger rejoined the company in November, he has been under pressure from activist investor Nelson Peltz and other shareholders to address Disney’s financial problems. This includes refocusing the company on the experiences, products and media that have traditionally made Disney money, rather than non-essential metaverse experiments.
Despite butting heads when it came to strategy and leadership style, Chapek and Iger appeared to agree on the metaverse’s value. The metaverse is the “next great storytelling frontier,” Chapek wrote in a company memo when he created the team. Between Iger’s two stints as CEO while Chapek held the position, Iger invested in and joined the board of Genies, a company developing digital avatars with metaverse capabilities. Iger’s return to Disney led some analysts to question if Disney will begin acquiring metaverse companies like Roblox, given Iger’s lengthy history of acquisitions and his personal interest in the new technology. But cutting the department suggests Iger is prioritizing investor concerns over metaverse innovation.
Not only is Disney’s stock down 50 percent from its 2021 peak, but its also lower than its pre-pandemic height, selling today (March 28) at $95 per share. The company’s total shareholder returns metric has underperformed the S&P 500 for many years, Peltz pointed out in a proxy statement. Disney’s restructuring plan is intended to make its streaming business profitable and “deliver value for our shareholders,” Iger said in an earnings report last month.
Disney’s stock is down less than 1 percent since the Journal’s report. The company didn’t immediately respond to a request for comment.
What can Disney do in the metaverse?
Disney’s metaverse plans remain unclear a year after the division was created. The word “metaverse” didn’t come up in any earnings report or earnings call with investors in the last year. But the company’s 2022 investment portfolio does indicate interest in metaverse technology.
The company’s Accelerator Program is a venture fund that provides companies with investment capital and mentorship from Disney executives. All six companies in the 2022 cohort integrate technologies like blockchain, artificial intelligence and augmented reality. Most notably, Disney’s program includes Polygon, the blockchain company most recently valued at $20 billion. Polygon is helping scale the Ethereum blockchain, or one of the biggest blockchains in use.
In 2020, former Disney parks executive Tilak Mandadi said in a LinkedIn post he envisions a theme park metaverse in the company’s future. Disney’s parks could blend the physical and the digital through the use of avatar wearables, for example, he said in the post. Mandadi left the company in 2021, and it is unclear if his vision remains. Since then, the company has launched other metaverse-adjacent projects, like the sale of non-fungible tokens.
Disney also released Remembering, its first short film that integrates augmented reality, in September. In the film, which is about where ideas go when they are forgotten, viewers can watch through a hand-held device pointed at a television to see the animations jump off the TV screen. For example, a waterfall on the TV would appear to splash onto the floor when watched through an iPad. Disney hasn’t disclosed if it is planning on producing more AR-supported films.
