For the second fiscal quarter ending in April, Disney Interactive Studios recorded a staggering operating loss of $115 million. Six month losses sit at $128 million, a drop from the $65 million loss for the same period in the previous fiscal year. After acquiring Playdom, the company has slowly been divesting itself of its traditional console studios, moving towards a future filled with social games.
Disney is hoping the division will approach a break-even point some time in 2013 under this strategy. 2012 is when the unit will begin to roll out its larger titles.
"We took a five month hiatus which has not been planned from releasing games, to build a higher quality game, and then also, to restack our technical capabilities to deal with volume, or to deal with scale, which we are hoping to achieve," said CEO Robert Igor.
Some are wondering why Disney is even in the game-making business at all, instead of licensing its properties out like competitor Dreamworks.
"I think there's a lot of concern about the interactive side and why you're bothering with this piece of the business at all," said Richard Greenfield of BTIG. "Looking at people's reaction, people are just kind of shocked at the size of the Interactive Media losses, and so there's a lot of questions like why did Disney need to be in this business versus just licensing its content. Why is this so important to you?"
"We're looking at the social media space today, particularly games and believe that there's an opportunity to leverage current IP or create new IP in a space that we think is still in its infancy, still going through a bit of a shakedown but we still thought that it would be a wise bet on new technology platform earlier than maybe when we were betting our resources on the console space," Igor replied.
"So the opportunity for growth on the social games side, at least at this point of our entry, is probably greater than it had been when we entered the space on the console side. I guess the same would be true on the mobile side. We just feel that controlling our destiny and making some smart bets that have potentially greater upside, albeit bearing some more risks would be the right thing for us to do."
Think the new strategy will work out for Disney?
[Via GI.biz]
