Disney's push into social games
The entertainment company finds new ways to market its movies and other products.
Disney (DIS) plans to develop social games for the mobile platform in partnership with Japan's DeNA Co. Ltd. Japan is a substantial market for social gaming, with total sales in 2010 near $1.5 billion. Disney and DeNA plan to launch two games based on the Disney characters in Japan and the U.S.
Social gaming has significantly picked up with the success of social networking platforms such as Facebook and social game developers such as Zynga (ZNGA). This development gives Disney an opportunity to leverage its brand and successful characters to create games that can attract millions of users.
Disney recently launched a game on Facebook based on its "Avengers" franchise, and the user base is already approaching 4 million. Disney is also going to launch the game "Disney Animal Kingdom," which is based on its theme parks. It appears that the company has kept its acquired social gaming unit, Playdom, quite busy. Disney acquired Playdom in 2010 for $763 million, marking its entry into social gaming (see Disney Needs 30% Annual Revenue Growth from Playdom).
Although there's a lot of activity around the company's gaming business, the incremental benefit for Disney is likely to be small. We estimate that the consumer products business, under which these revenues are accounted, constitutes just about 6.5% to its stock. Nevertheless, the expansion into social gaming gives Disney an opportunity to better engage its customers and market additional products, including theme park tickets, other games, holiday packages and promotion of new movies.
Our price estimate for Disney stands at $52.15, implying a premium of little under 20% to the current market price.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.