Disney Scales Back the Dream at its Maker Studios Video Unit

February 23, 2017, 11:17 PM UTC
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When Disney acquired Maker Studios in 2014 for about $675 million, it was hailed as a classic blend of new and old—a 93-year-old animation and movie house with a powerhouse brand, combined with a nimble startup specializing in monetizing user-generated videos on YouTube.

Since the deal closed, however, much of the bloom has come off the Maker Studios rose. On Thursday, Disney announced that it would cut about 80 jobs at the video unit and scale back dramatically on the Maker network, which at one time included as many as 60,000 video creators under a variety of different brands.

The entertainment giant said that it would now confine itself to working with about 300 star YouTube video creators who have a large number of followers and whose content will integrate well with Disney’s brand. The cuts were first disclosed by The Hollywood Reporter.

The cutbacks have reportedly been in the planning stages for some time, and are unrelated to the recent controversy involving YouTube’s biggest star, a Swedish gamer who goes by the name PewDiePie. Disney cut off its relationship with the video artist and comedian after some of his videos included anti-Semitic slogans.

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When Disney first acquired Maker, it agreed to pay close to $1 billion in cash and stock, with some part of that money pegged to the performance of the company after its acquisition. According to a number of reports, Maker’s revenue growth has been much lower than Disney expected and it is still not generating a profit.

At the time of the deal, Disney CEO Bob Iger said that Disney planned to use Maker’s network to expand the distribution and audience for short-form content related to Disney’s various sub-brands, such as Star Wars.

“We see Maker first and foremost as a distribution platform and a successful one,” Iger told Variety magazine. “There’s a huge marketing opportunity for this company.”

It appears that the network—which claimed to generate over 5 billion views—wasn’t quite as valuable as Disney originally thought, however. Most of the YouTube artists who belonged to the Maker Studios family had relatively small audiences and generated little in the way of revenue, especially after YouTube took its 30% cut.

According to The Hollywood Reporter, the cuts at Maker are part of a broader restructuring within Disney’s consumer products and interactive unit, which the company started folding Maker into last year. That group also includes the Babble “mommy blogger” network that the company acquired in 2011.

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