Higher subscription revenue from virtual kids world Club Penguin and lower marketing costs for Disney Online weren’t enough to offset increased costs and lower revenue at Disney Interactive Studios for Disney’s fiscal year or for the quarter. The underlying reason is fairly simple as outgoing CFO Tom Staggs explained during the company’s earnings call: “We’re making an investment (in self-published video games). We’re currently in a loss situation and would like to see that reverse itself as we build out to scale.” Disney Online with relaunched Disney.com and the multi-player games like Club Penguin is doing better.
But digital isn’t limited to that group at Disney (NYSE: DIS). The company doesn’t break out the digital results in the Media Networks group with ABC and ESPN, for instance, but CEO Bob Iger offered an example during the earnings call — citing ESPN’s “really encouraging growth on the digital front” including ESPN.com, ESPN360 and mobile. The Score Center app has been downloaded four million times; Iger says 2 million are using it regularly, making the ad-supported app into a small but visible revenue stream.
The details: For the year, the Interactive Media Group — which should be a growth engine at some point — lost $295 million on slightly decreased revenue of $712 million. Results were looking up by Q4 but no huge strides. The group lost $114 million — 5 percent better than the same quarter last year but still red ink. Revenues rose 8 percent for the quarter to $157 million.