Bloomberg News

Disney Sees Profit From Jack Sparrow Playing With Buzz

January 15, 2013

(Corrects software sales decline in 10th paragraph of story published on Jan. 15.)

Walt Disney Co. (DIS:US), working to improve results at its interactive division, unveiled a video-game system that reduces development costs by incorporating characters from multiple movies in the same game.

The Infinity platform includes a base unit that connects to computers and game consoles, Burbank, California-based Disney said today in a statement. Plastic figures set on top of the unit appear on screen in games. The company will sell the figures, as well as discs that add scenery and features. A starter kit with the base and three figures is priced at $75.

With Infinity, Disney will be able to add content without developing new games from scratch each time a film comes out, according to John Pleasants, co-president of Disney interactive. That’s critical for a division Disney Chairman and Chief Executive Officer Robert Iger has said will be profitable in 2013 after losses of $1.6 billion in the past six years.

“It’s something we expect to be able to live on for years, and we can continuously add to it,” Pleasants said in an interview. “It’s not just a game that we’re shipping.”

Pleasants, who joined Disney with the acquisition of social-game maker Playdom in 2010, urged his designers to “think big” in developing the system, according to John Blackburn, vice president of Disney’s Avalanche Software unit in Salt Lake City, Utah, which oversaw the project.

Player Freedom

Infinity is Disney’s largest game project in terms of the cost and characters involved, Blackburn said, without giving specifics on the finances. The initial release will involve 20 Disney and Pixar characters.

Adventures within Infinity leave a lot to the player, the executives said. Captain Jack Sparrow, from the “Pirates of the Caribbean” films, could go on missions with Buzz Lightyear, one of the “Toy Story” characters, while riding in Cinderella’s coach.

“It’s like your parent’s living room floor, where nobody told you what to do with your toys,” John Vignocchi, an executive producer of the game, said in an interview.

By combining collectible figures with video-game play, the Infinity platform, which goes on sale in June, is similar to Activision Blizzard Inc. (ATVI:US)’s “Skylanders” games, which generated $500 million in sales of games and related merchandise last year.

Pirates Games

Disney is changing direction as sales of traditional video games have fallen. Video-game software sales declined 23 percent to $6.71 billion in 2012, NPD said. Disney released six titles for consoles last year, down from 23 in 2010, according to the company and VGChartz.com, a research site.

Its products have sometimes disappointed consumers. A group called Revive Potco gathered 2,000 signatures asking Disney to invest more in its Pirates of the Caribbean game.

Brad Phillips, who follows the business on a blog called In the Life of Nerd, was critical of that game and another called “World of Cars,” tied to the popular Pixar films.

“It was a terrible waste of the Cars brand and one that was likely designed and rushed out in an attempt to profit from the movies,” Phillips wrote last February, the same month Disney shut it down.

John Lasseter, chief creative officer for Disney animation studios, also thought some movie-themed games lacked substance, according to Blackburn. He was reluctant to include Pixar content in Infinity until the game makers showed him designs where the disparate characters shared a common look.

Game Challenges

Disney gained (DIS:US) 1 percent to $51.09 at the close in New York. The shares advanced 33 percent in 2012, compared with 13 percent for the S&P 500 Index.

Larry Gerbrandt, a long-time media analyst now with Media Valuation Partners in Los Angeles, said he is skeptical the interactive unit can ever produce the consistent earnings of Disney’s cable TV and theme-park businesses. He pointed to challenges facing Zynga Inc. (ZNGA:US), the social game leader, which has fallen 74 percent since it first sold shares in December 2011.

“It’s a very streaky business,” Gerbrandt said. “All you have to do is look at Zynga to see how hard it is to create hits and come up with sequels. If they could be happy with the Disney website, they’d be fine. It’s when they move beyond that they run into problems.”

Pleasants, co-president of the unit, disagrees.

“Profitability is a goal for this division for sure, for this year, for the future, for beyond,” he said. “We are very, very focused on that. We are growing nicely.”

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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    (Walt Disney Co/The)
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