Disney Interactive lays off about 700 employees

Disney Interactive has laid off about 700 employees today, about a quarter of its workforce. The cuts are a result of the company's decision to combine two divisions of their company--mobile and social games--while also significantly scaling back in-house development of games, relying more heavily on licensing. Game output from Disney is expected to half after disappointing returns from games like Where's My Water 2.

The company's decision to increase outsourcing of its properties reflects the recent decision to hand over the Star Wars license to EA.

"These are large-scale changes as we focus not just on getting to profitability but sustained profitability and scalability," Disney Interactive president James A. Pitaro told The New York Times. "This is a doubling down on mobile and an effort to focus much more intently on a core set of priorities."

Disney Interactive has been profitable ever since it launched Disney Infinity, which has shipped over three million units worldwide. However, its Playdom division has failed to produce a major hit since its acquisition in 2010.