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Disney is laying off 80 employees across its digital media unit, including Maker Studios, as it takes steps to further integrate the YouTube network into its consumer products and interactive media business.
The cuts, which The Hollywood Reporter reported last week, are part of a larger restructuring within DCPI’s content and media group, which has encompassed Maker since December. The business, which is led by executive vp Andrew Sugerman and also includes the websites Oh My Disney and Babble as well as most of Disney’s social media operations, is being rebranded as the publishing and digital media group. It’s part of a renewed focus within the company to create a more cohesive cross-platform programming strategy.
“We’re building a digital media network of Disney and non-Disney content for kids and millennials on the platforms they use every day,” Sugerman said Thursday in a statement. “For advertisers, this network offers mobile, video, short-form content, micro-content, and influencers, all at scale.”
Since acquiring Maker in 2014 for more than $500 million, Disney has faced challenges in realizing the potential of the digital media business, which sells advertising against its network of digital creators. This latest round of changes, positioned as a way to better align Maker’s efforts with that of Sugerman’s group, serves as a tacit acknowledgement that Maker functions better not as a stand-alone unit.
The layoffs will hit both Maker and Disney’s publishing and digital media group and are the result of redundancies created by folding Maker into the unit.
As part of the restructuring, Disney also is planning to shrink the size of Maker’s talent network, which at one time ballooned to 55,000 digital creators, to less than 1,000 creators. THR previously reported that the network could slim down to about 300 creators, but Disney declined comment on the exact number of creators affected. Some of the layoffs are coming as a result of the shrinking of the talent network business.
Disney plans to work more closely with the talent that remains a part of the network through programming and as a way to leverage Disney’s existing brands. The company is expected to unveil its strategy during the New Fronts this May, a year after holding a much smaller, advertiser-only presentation.
Already, Maker has lost its biggest star. It cut ties with gamer PewDiePie, aka Felix Kjellberg, last week after a report revealing that he had made a series of anti-Semitic jokes in several of his videos. Kjellberg since has apologized. With 53 million subscribers, the Swedish star was Maker’s premiere partner and the driving force behind its recently launched gaming network Revelmode. Disney has not said what will happen to Revelmode in the wake of Kjellberg’s departure from the network.
When Disney bought Maker three years ago, nearly every legacy media company was looking for its digital strategy. DreamWorks Animation already had scooped up tween-skewing AwesomenessTV, and The Chernin Group and AT&T soon would jointly acquire a majority stake in Maker competitor Fullscreen. Maker, which reported up through then-CFO Jay Rasulo instead of through the interactive division, and its network of creators were seen as a way for Disney to reach young audiences on new platforms, giving it an opportunity to market its tentpole franchises.
But what it got was a business that struggled to turn a profit, according to sources familiar with the company’s financials, and didn’t own most of the content that was helping line its stars’ wallets through lucrative sponsorship deals. Though Disney promised up to $450 million in performance incentives, it paid out just $175 million. Once the earn-out ended, Maker began to lose many of its longtime executives, including CEO Ynon Kreiz.
Though Maker as it exists today is a vastly different business than it was when Disney bought it, the brand will be preserved through its talent network. Employees also will continue to work out of Maker’s Culver City offices.
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