Disney Interactive to cut 10 percent of staff

Disney Interactive is laying off 40 staffers, or about 10 percent of its workforce, MSNBC has learned. The cuts at the Walt Disney Co. games unit follow a larger round of layoffs last April, in which 90 permanent staffers and an undisclosed number of contractors were let go. The unit is left with about 400 employees worldwide.

"This is a continuation of a process begun earlier this year which we believe is now completed," said Amy Malsin, a Disney spokeswoman. This year's layoffs, which have involved a wide range of staffers in both the creative and marketing sides of the business, reflect a difficult sales environment in the game industry in general. Studios have flooded the market with titles, only to find that just a portion of them get substantial shelf space in overcrowded retail aisles.

Disney Interactive - whose interactive software division is among the largest of any of the major studios ' produces CD-ROM games in-house. It turns to outside developers to create Disney titles for other platforms, such as the Sony PlayStation console.

The cutbacks notwithstanding, Disney has quickly established itself as an important player in the games industry, especially in the area of so-called "edutainment" for children. Formed in 1994, Disney Interactive became the No. 3 publisher of children's educational software last year on the strength of such hits as "101 Dalmatians" animated storybook and the "Toy Story" activity center. "Disney is committed 100 percent to this business, and we're excited about its future, Malsin said.