Disney Hopes New Videogame Will Bolster Its Worst Performing Division
Every three months, Walt Disney Co. regales Wall Street with its quarterly results. There hasn’t been much for CEO Bob Iger to worry about since each of his divisions, from cable TV to theme parks, has performed strongly, with even the film studio showing signs of a turnaround this year. One laggard, however, has remained : Disney Interactive.
The group, which oversees games and online efforts, spent 16 consecutive quarters in the red until posting its first profit in February. But a $54 million loss the subsequent quarter means Iger’s pledge to investors that the division would be profitable for the duration of the company’s fiscal 2013 year, which wraps up in September, is unlikely.
To say that Disney hasn’t truly excited the videogame industry in years is an understatement.
“We have always had successful things, but we’ve never had enough of them or our hit ratio hasn’t been good enough,” says John Pleasants, who serves as co-president of Disney Interactive alongside James Pitaro. “We haven’t been focused enough and haven’t executed as well as we should have, given the opportunity that’s unique to us. Our division is acutely aware of that.”
But heading into the videogame industry’s annual E3 conference in Los Angeles this week, Disney Interactive looks like an entirely different animal — one that’s generating positive buzz rather than rumors of its demise. While the spotlight will be put on the next-generation videogame consoles and tentpole games coming to market this fall, the Mouse House will be putting its promotional weight behind “Disney Infinity,” a game reliant upon toy figurines of popular characters from Disney’s films and TV shows. The toys are used to trigger avatars that can be played across an array of minigames and virtual worlds via consoles including Microsoft’s Xbox 360, Sony’s PlayStation 3 and Nintendo’s Wii U.
Disney had hoped to get “Infinity” out sooner, but retailers requested Disney shift the June launch date closer to August in order to coincide with the start of the back-to-school shopping season. That will push the game’s financial haul to 2014.
Michael Pachter, an analyst of the media and videogame industries at Wedbush Securities, believes Disney is well advised to leverage its iconic characters, but still could be biting off more than it can chew considering the difficulty inherent in mastering so many different businesses.
“Disney thinking they can do this themselves and do it better is being pretty presumptuous,” he says. “I know Iger wants to execute on this, but that doesn’t mean he can.”
Disney has much riding on Infinity. It’s invested more in the game than it has in any other title, making it a risky bet. But if it succeeds, Disney will have a major new franchise on its hands, and, inasmuch as it brings toys to life, it’s an example of the type of project Iger has long requested from his conglomerate’s various divisions — a property the entire company can benefit from both creatively and financially for years to come.
“It’s the biggest product we’ve made by a factor of three,” says John Blackburn, CEO of Avalanche Software, which has been developing “Infinity” since 2010, and has spent north of $100 million to produce the game, according to multiple sources.