Disney Interactive scaling back 'highest end console games'

Mickey Mouse outfit still expects high-end Marvel titles to do extremely well; gaming division sales slip 29 percent, but losses also declining.

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Gamers still holding out hope for sequels to sales disappointments Turok or Pure might be advised to give up the ghost, as Disney executives have indicated the company will be making fewer investments in "highest end console games" in the future.

Split/Second is an increasingly rare Disney title for core gamers not built on an established brand.
Split/Second is an increasingly rare Disney title for core gamers not built on an established brand.

Speaking with analysts after Disney's latest quarterly financial report, CEO Bob Iger addressed a change in the company's gaming strategy, as shaped by a handful of observations. First off, Iger said that traditional high-end console games are an increasingly difficult market thanks to their increased development and marketing costs and the abundance of competition from more casual games and nontraditional platforms like the iPhone.

"We also learned that the typical game that we set out to make, which I'll call it Disney branded game, seems to perform better on the Nintendo Wii and DS platforms and on the platform basically that are not the high end console games," Iger said. "So while we're going to continue to make games for the high end, we'll be very, very judicious in how many and which ones we choose."

That doesn't necessarily mean fewer "high end" games based on Disney's freshly acquired stable of Marvel characters. While Iger said the company was going to expand its focus and be less reliant on that segment of the industry, he specifically called out Marvel as a brand he expects to do "extremely well on the higher end consoles."

While Disney pulls back its investments on traditional console games, Iger said it will be stepping up its push into casual games and Apple's platforms, including the iPad. Iger said the company is already working on new apps for ABC, ESPN, and Marvel.

As for Disney's numbers, the Interactive Media gaming and online division posted revenues of $221 million for the quarter ended January 2, 2010, down 29 percent year-over-year due to the release of fewer self-published Disney games. However, the bottom line still improved for the division, as it posted losses of $10 million, as opposed to the $45 million in losses from the previous year's same quarter. The improvement was attributed partly to reduced marketing and inventory costs, as well as an uptick in paid subscriptions for Disney Online's popular Club Penguin.

Overall, Disney's quarter was essentially flat. The company posted revenues of $9.74 billion, up 1 percent from the comparable period the year before. Meanwhile, net income was down less than 1 percent to $844 million.

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