Disney Interactive has laid off 90 employees, 20 percent of the staff of its retail software group, and refocused on its core business of providing interactive CD-ROMs for 3- to 12-year-old children. The company is also positioning itself for new licensing agreements and partnerships with third parties to develop console games based on Disney properties. Disney had failed to convert popular live-action films and 16-bit video games into successful CD-ROM titles, and sales of arcade-style children's games have fallen. Its Toy Story Animated Storybook has sold very well, but several children's arcade titles co-developed with publisher 7th Level failed as a result of what one laid-off worker describes as a 'very spotty relationship.' Observers say Disney Interactive mistakenly believed it could spend freely and build markets where research said none existed. The firm will now concentrate on leveraging hit films into multimedia titles and de-emphasize hardcore games.