Disney to shut down Blue Sky studio

Walt Disney Co. has decided to shutter Blue Sky Studios, the computer animation company behind the “Ice Age” films, roughly two years after acquiring it as part of the larger purchase of 21st Century Fox assets.

The decision will result in about 450 layoffs after the closure takes effect in April. Besides the five “Ice Age” features, Blue Sky was also known for such films as “Rio” and “Ferdinand,” which was nominated for the 2018 Oscar for the best-animated feature.

Blue Sky’s demise, first reported by Deadline, comes as the COVID-19 pandemic continues to buffet Disney’s film business by keeping most U.S. theaters closed. In some cases, Disney has delayed its big films or sent them straight to streaming on Disney+. Disney’s business has been challenged by restrictions on theme parks, retail stores, and cruise lines. The Disneyland theme park in Anaheim has been closed throughout the public health crisis.

At its peak, Blue Sky was a formidable competitor against dominant animation brands DreamWorks Animation, Disney, and Pixar. But when Disney bought 21st Century Fox for $71 billion in 2019, the company absorbed Blue Sky into its studio division that was already home to two successful animation brands — Walt Disney Animation and Pixar Animation. Amid the economic challenges in the industry, sustaining three animation studios became untenable.

“Given the current economic realities, after much consideration and evaluation, we have made the difficult decision to close filmmaking operations at Blue Sky Studios,” Walt Disney Studios said Tuesday in an emailed statement.

Disney has laid off tens of thousands of workers during the pandemic. The Burbank, California-based company disclosed that it would cut 32,000 jobs in a filing last year, including a significant portion of its theme park staff. Cuts also hit Disney’s studio division. Disney posted a net loss of $2.8 billion for the 2020 fiscal year.