Disruption Report #75: Big Layoffs at Funko and Disney, Game Stop Returns to Its Roots

Walt Disney Co. Eliminates 7,000 Jobs and One Executive

Walt Disney CEO Bob Iger is taking no prisoners. He engineered his return by forcing CEO Bob Chapek out of his CEO role. Seven thousand layoffs later, he fired Ike Perlmutter, Chairman of Marvel Entertainment.

Perlmutter was an old-time toy guy with stops at Coleco Entertainment and Toy Biz/Marvel Toys. He also spent time at Revco Drug Stores and Remington Razors. Like many of that generation of toy executives, Perlmutter was an aggressive guy who stirred things up. Apparently, he stirred up things too much for Iger’s liking. Marvel Entertainment is now gone, folded into the rest of Disney, and Perlmutter, at age 80, may or may not be finished with the toy and entertainment industry.

Funko Lays Off Most of Its Mondo Division Employees then Does Damage Control

One year ago, Funko purchased Mondo, a company famous for producing limited editions of movie posters, clothing, and toys. Yesterday, Funko did a house cleaning of its purchase, laying off most of the staff, including the company’s founders, Rob Jones and Mitch Putnam.

Mondo fans are in an uproar, and Funko has tried to calm things down with CEO Brian Mariotti issuing a statement.

“Since there is a lot of misinformation about the recent change in leadership and the poster division of Mondo currently out there, I can tell you that our strategy is very clear…While we did reduce the workforce by about 10% across Funko, the majority of the company-wide layoffs weren’t in Mondo.”

The Mondo posters business will continue, period…We are 100% committed to providing all the support we possibly can for the folks at Mondo.

Here is the full statement:

This is the second time in the last two months that a toy company has underestimated the passions of its fans. Hasbro had to back down from decisions regarding its “Magic: The Gathering” business, and now Funko has had to do the same with “Mondo.”

What we can learn from these two incidents is that thanks to social media, fans have far more power than ever before. It’s best to check their temperature before significantly changing the brands they love.

Game Stop Returns to Its Roots – Bricks and Mortar

There has been any number of bricks and mortar retailers who have successfully dived into e-commerce. That strategy would have appeared natural for Game Stop, a video game retailer. Apparently, it wasn’t.

According to an article by Wall Street Journal writers Sarah E. Needleman and Dana Mattioli, the company’s owner, Ryan Cohen, vowed when he took over in 2021 “to transform the faltering videogame retailer into an e-commerce juggernaut.”

Things did not go according to plan. As Needleman and Mattioli report:

Meme-stock investors loved the idea. Ordinary consumers, it turns out, did not. 

E-commerce sales didn’t take off—they declined. Losses grew, and a succession of online-sales executives Mr. Cohen brought in left. 

Last year, to little fanfare, the billionaire investor reversed course and slammed the brakes on the e-commerce push to refocus GameStop on its roughly 4,400 bricks-and-mortar stores. In other words, the original meme stock reverted to a business model with the mall at its center. 

Ryan Cohen’s Grand Plans for GameStop Keep Shrinking, Sarah E. Needleman and Dana Mattioli, Wall Street Journal, March 29, 2023

Funko stock closed out last week (March 24, 2023) at $8.02. As of 2:23 PM today, March 31, 2023 it is $9.44. Apparently the investment community approves of Mr. Cohen’s decision.

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