Disney cuts metaverse division under Iger's restructuring

Disney is cutting its metaverse division as part of the layoffs set to begin this week, CNBC has confirmed.

Disney, like most companies in 2021, hopped on the metaverse hype train after Facebook changed its name to Meta and outlined bold claims to create a new digital world. Former CEO Bob Chapek established a unit focused on the company's metaverse strategy led by Mike White, who was previously in charge of Disney's consumer experiences and platforms. Chapek told employees in a memo at the time that White's task was "connecting the physical and digital worlds" for Disney entertainment.

All 50 of the employees under White were let go, but White remains at the company. His new role remains unclear.

The cuts in the metaverse division were first reported by The Wall Street Journal.

Disney never explicitly outlined what it planned to do with the metaverse, but Chapek said in a 2021 earnings call that Disney was creating "unparalleled opportunities" for consumers to engage with its products and platforms.

"Suffice it to say our efforts to date are merely a prologue to a time when we'll be able to connect the physical and digital worlds even more closely, allowing for storytelling without boundaries in our own Disney metaverse," he said during the call.

Chapek was succeeded by Bob Iger, who returned to Disney's helm late last year. 

The latest layoffs were initially announced in February and will impact about 7,000 employees, according to a memo sent by Iger. The job cuts will be cross-company, hitting Disney's media and distribution division, parks and resorts, and ESPN.

Since returning as CEO, Iger has reorganized the company and acknowledged that he'd consider selling Hulu. The layoffs are part of a broader effort to reduce corporate spending and boost free cash flow. Disney said last month it plans to cut $5.5 billion in costs, including $3 billion in content spend.

Disney will host its annual shareholder meeting April 3.

— CNBC's Alex Sherman and Julia Boorstin contributed to this report.