October 10, 2011 at 14:49 PM EDT
Disney Missing the $14B Games Business It Should Have
Disney's long-term shot at building its own game-making business might pan out through Playdom and others, but licensing out could make a mint.

Despite recent challenges, mobile and social game-maker Zynga still is valued around $14 billion. Its games like FarmVille and Mafia Wars remain the recognizable face of the growing games industry on Facebook. The company has more than 232 monthly users. This is undoubtedly frustrating to much larger companies that would like to see their own mobile and social game businesses yield the same rewards. Disney (NYSE:DIS) is a perfect example.

The company has spent significant sums to secure a place in the social/mobile space during the past 18 months. While it spent undisclosed sums on HTML 5 technology-developer Rocket Pack in May and iPhone game maker Tapulous in July 2010, it also made a buy with an actual number attached — $563 million — on Facebook and mobile game studio Playdom that same month.

Yet as of 2011′s second quarter, the $61 billion company — with control of some of the world’s most recognizable brands and characters — has just 3.3 million users on Facebook. Its entire Disney Interactive segment brought in just $251 million in revenues during that same quarter — a segment that suffered an $86 million operating loss (its second in a row) “driven by the inclusion of Playdom.”

Shouldn’t a powerhouse like Disney at least be able to match some young blood like Zynga?

Well, now that Playdom is fully incorporated into Disney Interactive’s operations — Playdom and Tapulous are now one studio called Disney Mobile — it should have a greater opportunity to bring in some of that Zynga-like revenue. A Monday report at All Things Digital said Playdom alone has 12 titles ready to release on Facebook during the next year, and these games will use Disney’s oh-so-lucrative brands.

Also, Playdom has 3 million daily users for its recently released Facebook game Gardens of Time alone, so Disney’s audience already is multiplying on the social network to a degree that will put it on par with Zynga, Electronic Arts (NASDAQ:ERTS) and other leaders in the space. So while the spending on Playdom certainly set Disney back in Q2, CEO Bob Iger expects Disney Interactive to be back in the black by 2013.


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