8-K

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                               _________________

                                   Form 8-K

                                CURRENT REPORT
                      PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934


      Date of Report (Date of earliest event reported): January 28, 1998


                          IWERKS ENTERTAINMENT, INC.
              (Exact Name of Registrant as Specified in Charter)


          Delaware                   0-22558                 95-4439361
(State or Other Jurisdiction       (Commission              (IRS Employer
      of Incorporation)           File Number)           Identification No.)


                           4540 West Valerio Street
                        Burbank, California  91505-1045
                   (Address of Principal Executive Offices)

                                (818) 841-7766
                        (Registrant's Telephone Number)





ITEM 5.   OTHER EVENTS

     Reference is made to the press release of Registrant, issued on January
28, 1998, which contains information meeting the requirements of this Item 5,
and which is incorporated herein by this reference.  A copy of this press
release is attached to this Form 8-K as Exhibit 99.1.


Page 2


                                  SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


January 28, 1998                  IWERKS ENTERTAINMENT, INC.



                                  By:     /s/ Bruce Hinckley
                                      ---------------------------
                                          Bruce Hinckley
                                          Chief Financial Officer


Page 3



                                 EXHIBIT INDEX

Exhibits                                                  Page Number
- --------                                                  -----------

99.1      Press Release dated January 28, 1998.

EX-99.1

                      LETTERHEAD OF IWERKS ENTERTAINMENT


FOR IMMEDIATE RELEASE
- ---------------------

Contact:  Bruce Hinckley                Krista Grossman
          Chief Financial Officer       Bozell Sawyer Miller Group
          Iwerks Entertainment          (310) 442-2516
          (818) 955-7800


                    IWERKS ANNOUNCES REDUCTION IN WORKFORCE
                    _______________________________________

Burbank, CA, January 28, 1998 -- Iwerks Entertainment, Inc. [NASDAQ NM: 
IWRK] announced that it has reduced its workforce by approximately 13%, 
after which Iwerks will have approximately 131 employees.  The cuts will 
affect 20 current positions of Iwerks at its Burbank, California 
headquarters.

Iwerks said the cuts occurred across all divisions and that the action was
necessitated by reduced reveues and earnings largely attributable to 
weakened sales in the Asia-Pacific region.

Iwerks announced previously that it anticipates a second quarter net loss for
the three months ended December 31, 1997, before transaction-related charges,
in connection with a previously announced merger with Showscan Entertainment,
of between $2.7 million and $3.4 million, compared to a near break-even 
quarter for the comparable period a year ago.  Revenues for the quarter are
expected to be approximately $6 million, as compared with $10 million for 
the prior year.  Much of that decline occurred in Asia where revenues were
approximately $4 million less than the comparable quarter last year.  The
company also experienced a decline in its Touring Division's revenue 
compared to the same quarter last year.

"The reduction in our workforce reflects our need to align staffing levels 
with expected revenues going forward," said Roy A. Wright, Chairman and 
Chief Executive Officer of Iwerks.  "While this action is unfortunate, it 
will result in annualized selling, general and administrative savings of 
more than $1 million, which is necessary in the context of our efforts to
return Iwerks to profitability.

"While we do not expect the situation in Asia to improve in the short term, 
we have begun to focus more heavily on domestic, European and Latin American
markets in an effort to mitigate the negative effect of weak Asia-Pacific
revenues."

                                    (more)




Iwerks Announces Reduction in Workforce - Page 2



Iwerks Entertainment is one of the world's leading producers of high-tech,
multi-sensory experiences such as ride simulation, 2D and 3D giant screen
theaters, 360 degree video dance clubs and other immersive attractions. 
Serving prestigious entertainment, information and marketing providers, more
than 250 Iwerks attractions can be found worldwide at location-based
entertainment centers, amusement parks, family entertainment centers,
shopping centers, casinos, resorts, nightclubs, restaurants, museums, fairs,
festivals and more.


                     FORWARD LOOKING STATEMENT DISCLOSURE
                     ------------------------------------

With the exception of the historical information, the matters discussed 
above include forward-looking statements that involve risks and 
uncertainties.  Among the important factors that could cause actual results
to differ from those indicated in the forward looking statements are the
ongoing economic conditions and situation in the Asia Pacific region, the 
level of available sales in the rest of the world, costs of sales and the
ability of the Company to maintain pricing levels necessary to maintain 
gross profit margins, the successful consummation and integration of the
Company's pending merger with Showscan, the level of selling, general and
administrative costs, the performance by the Company under existing purchase
contracts and the ability to obtain new contracts, the success of the 
Company's owned and operating strategy, the success of the Company's film
software and the effects of competition.