Disney Interactive Media Group Suffers $234 Million Loss, Changes Game Plan

By on Nov 14, 2010 at 6:07 pm

During a fourth quarter earnings call last Friday, Disney’s CEO, Bob Iger made statements about a disruption in company performance after posting a $234 million dollar loss with their media division, Disney Interactive Media Group. Iger is changing the division’s road map by shifting their focus from the console gaming space to social and mobile games, citing a restructuring of management and the appointment of John Pleasants of Playdom (a social gaming company which Disney acquired back in July) to run the division.

Bob Iger: “On the interactive front, obviously we’re quite mindful of the losses that we’ve delivered in that business, which is basically a collection of businesses. Just about a month ago we restructured from a management perspective the business to accomplish a few things. One, we wanted to add more focus primarily so that we could both create and implement a strategy that was designed to deliver profitability because we don’t want to be in this business if we’re not going to be able to make money. So, we’re looking at it two ways. On one side we’ve got a collection of games businesses, and the other side we have a collection of largely dotcom businesses.

On the games front, we’ve seen a pretty big shift in games from console to what I’ll call multiplatform, everything from mobile apps to social networking games, and by putting John Pleasants in to run games, not only will be the focus on turning those businesses into profitability, but diversifying our presence in the business.

So, we’re not reliant on one platform that’s obviously facing challenges. It’s our goal not only to be profitable, but obviously to get there by shifting our investment and reducing our investment too. We probably will end up investing less on the console side than we have because of the shift we’re seeing in consumption and have a presence albeit with probably less investment in terms of game manufacturing on some of the newer platforms.

Consumers are obviously spending time playing games from casual games online to mobile apps to social networking to console, and we felt all along that we need to be where the consumer are and we know that our games work in a variety of places and we want to be there. We felt for a while that we should be both a licensor, which we do in some cases, but also a publisher. And I would say the shift that we’ve made in terms of personnel and ultimately in how we invest our money and how we distribute this product is going to continue to reflect that philosophy, but in a slightly different manner.”

With a premium TRON iPhone game coming in December that follows the huge TRON Legacy movie release next month, as well as other titles up their sleeves from Disney Mobile, Tapulous and Playdom, the company should be able to recover sometime in 2011. As Iger stated “By putting John Pleasants in to run games, not only will be the focus on turning those businesses into profitability, but diversifying our presence in the business”. Only time will tell.

[Full earnings transcript at Seeking Alpha]

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