Disney game division loses $115 million

Despite layoffs, Mouse House's interactive arm reports major quarterly shortfall despite slight uptick in revenues.


The January-March quarter was a rough one for the Walt Disney Company's Interactive Media group. The division reported a three-month shortfall in operating income of $115 million, an increased loss from the $55 million deficit it reported during the same period in 2010. The shortcoming came despite a slight uptick in revenue, which rose $4 million to $159 million for the quarter.

The January-March quarter was a grim one for Disney's Interactive Media group.
The January-March quarter was a grim one for Disney's Interactive Media group.

Interactive Media losses were even higher for the six months ended April 2, 2011. During that period, the division lost $128 million, nearly double the $65 million it lost during the same time frame the year prior. Revenue was $508 million, up year-on-year from $376 million.

Part of the reason for the Disney Interactive Media group's deepening losses was a $34 million accounting charge relating to the purchase of Playdom. Last July, the multimedia conglomerate purchased the casual online gaming portal for a whopping $563 million.

Disney's January-March shortfall comes despite the fact the company trimmed the division's payroll significantly during the quarter. In January, the corporation closed Vancouver-based Propaganda Games, the internal developer behind the reboot of Turok and the Tron: Legacy film tie-in Tron: Evolution. Shortly thereafter, the company also culled nearly 350 positions inside the Interactive Media group, including Disney Interactive Studios and Epic Mickey-maker Junction Point Studios. The layoffs continued in March and, most recently, affected Split/Second developer Black Rock Studios just last week.

Overall, the Walt Disney Company saw $942 million in net income on $9.08 billion of revenue for the January-March quarter, the second of its fiscal year. Six-month net income was $2.24 billion on revenue of $19.79 billion for the half-year.

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