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Finance

Full year losses increase at Disney Interactive

Fri 11 Nov 2011 9:26am GMT / 4:26am EST / 1:26am PST
Finance

Interactive the only division to make a loss in record-breaking year for the Walt Disney Company

The Disney Interactive Media Group was the only division of the Walt Disney Company to make a loss this financial year.

Despite the company beating analysts estimates on Q4 profits, and posting record-breaking full year profits, the Interactive Media Group division continues to struggle.

Revenue for the fourth quarter - ending September 30 - was up 19 per cent year-on-year to $223 million. Operating losses decreased 10 per cent to $94 million.

For the full year, revenue increased by 29 per cent to $982 million, but net losses also grew by 32 per cent to $308 million.

Disney attributed the division's spiralling losses to costs associated with acquiring Playdom: $110 million of the amount paid for the social studio fell this fiscal year, while only $50 million will fall in fiscal 2012. This was also the first full-year of operating costs for Playdom.

Disney CEO Robert Iger has pledged to make the Interactive Media Group profitable by fiscal year 2013, and, in an investor call, claimed that the company was still on track to meet that target.

"We purposely dialled back the games that we were launching in 2011 for a variety of different reasons: one, monitoring developments in that social game space; two, really reflecting on the technological infrastructure of our business and wanting to make sure that it was sound; and three, focusing on the intellectual property that we were ultimately going to mine in that space."

Disney plans to launch as many as 8 social games over the next 12 months, some of which will be based on Disney and Marvel IP.

"And this 2012 will be a big step in the direction of us using the assets that we bought when we acquired Playdom, and ultimately, driving toward profitability in 2013," Iger added.

The Walt Disney Company posted full year revenue of $40.9 billion, up 7 per cent from the previous year. Full year profits increased 21 per cent to a record $4.8 billion.

7 Comments

Terence Gage
Freelance writer

1,288 120 0.1
Y'know, they really could have done with a couple of heavily marketed core PS360 releases to help keep that branch of the company profitable...

Posted:2 years ago

#1
To be frank, I feel (from analysis of various media coverage and tracking the release of games over the past 5 years) that the direction of DIS was they mismanaged (POOR PRODUCT & BUSINESS MANAGEMENT) their AAA Ips poorly for no good reason (they hired some of the top creative stuff for sure) , and the switch to social/casual (may have sounded like a good idea) but have yet to be fully realised.

With such swift evolution of the gaming genre, its smartphones, handhelds and tablets next, so it wont be a case of simply purchasing another playdom and expecting it to fire out golden hits! Its about hiring, managing and producing the right culture. And with it, hopefully the fringe benefits of success (money?).

Traditionally, there have been too many head chefs at Disney, and not many strong vision keepers (or perhaps the top chiefs hired have not been allowed the chance to mature their products into worthwhile IPs due to politics, politics, more politics, internal culture and mismanagement - this must the most obvious conclusion because Disney are not short on a IP portfolio, they probably just dont have the right top down staff).

They need a Brad bird or John Lassater equivalent of gaming, excommunicate any external board from dabbling with the creative process, let the game folk do their work and produce the goods without micro managing and wallah. Profit!

If only it were that simple!
Lets look towards 2013 and beyond. Walt was once great, it can be so again.

Posted:2 years ago

#2

Terence Gage
Freelance writer

1,288 120 0.1
How about making Warren Spector the creative head of the gaming division?

I think it was foolish of them to decide to focus specifically on social gaming and cut almost everything else from the company. Following trends like that rarely yields a lot of success except for the very biggest players in the field, and Disney's gaming focus is now very narrow and focused on a volatile and unproven market.

Posted:2 years ago

#3
I tell you what, what has passed will happen again.

Remember Pixar and walt animation studio,
chances are they will restart up a AAA type studio again when hard core titles become trendy.

BUT, as long as the tradition of multiple VPs and multi headed hydra are in place, the culture of inefficient creative indifferences are likely to be in place. This in itself wont be good for work morale, creativity or a good end product. Lets see if some sensible folk see the light!

I wonder what Warren Spector thinks of it all, he seemed to have all the creative cards and potential when he last gave talks at GDC Europe espousing the potential of Epic Mickey.

Posted:2 years ago

#4

Andrew Goodchild
Studying development

1,241 400 0.3
"I wonder what Warren Spector thinks of it all, he seemed to have all the creative cards and potential when he last gave talks at GDC Europe espousing the potential of Epic Mickey.
"

It seemed like he started Epic Mickey with a lot of freedom, but seemingly got steered away from his original vision greatly.

I think Disney's rival Warner Brothers has started taking great pains to do the game thing correctly, and when Rocksteady did an astounding job on Arkham Asylum, WB snapped them up and gave them the resources to make an even better sequel. Disney should be doing this with the Marvel franchises, but instead they continue to licence them out to make poor movie tie ins and rushed cash-ins.
Of course I'm saying this as a massive Marvel fan who wants a Spider-man game that is as good as the Treyarch PS One Spider-man games were in their time.

Posted:2 years ago

#5

Terence Gage
Freelance writer

1,288 120 0.1
Could it be though that studios like Sega, Activision etc have long-term deals in place for the Marvel characters? Maybe Disney can't make their own games based on those properties unless they buy the licences back for a shed-load of money.

But I agree with you in principal; Disney need to find a couple of their own Rocksteadys, and churn out some awesome Wolverine, Spider-Man, etc games and really make the best use of the Marvel brand's gaming potential.

Posted:2 years ago

#6

Andrew Clayton
QA Weapons Tester

150 7 0.0
I remember first seeing the demo of Split/Second and how surprised I was to find out it was a Disney game. When a company is willing to scrap a successful game like that, it's no wonder that the interactive division is struggling.

Disney's management has always been about creating a profit for as little work possible. It's not about creating good products. I remember when a manager flew out from Burbank to London to tell the JetixUK office that they needed their own version of "High School Musical". It was unbelievably frustrating and I was just an intern.

Disney will never be as good as the other publishers because they don't know what "good" is nor what to do with it.

Posted:2 years ago

#7

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