Disney sharpens its competitive edge
Will the company be able to make magic in its new ventures?
By Katey Stapleton, Benzinga Staff Writer
The Walt Disney Co. (DIS), known for moving into almost every medium possible, has discovered two more ways to reach a larger demographic: social gaming and developing new animation content.
Just as Zynga (ZNGA) and others have found success in the popular social gaming industry, Disney is set to do the same in Japan and America. While this isn't the first crop of digital games the company has announced (Disney joined the social gaming market in 2010) it is an expansion worth noting.
Still, analysts say the move won't do much for Disney's bottom line. "Although there's a lot of activity around the company's gaming business, the incremental benefit for Disney is likely to be small," research firm Trefis said in an April 5 stock report. Trefis estimates that Disney's consumer products business accounts for about 6.5% of its stock value. "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."
Disney found it cannot ignore the mobile gaming platform, and partnered Japan's DeNA in an effort to up the playing ante. They are developing games based on Disney characters for Japan and the U.S.
Japan saw social-gaming sales approach $1.5 billion in 2010, according to Trefis.
Disney is also developing more animation in China, and has announced another partnership with China Animation Group and Tencent. This new venture is expected to churn out professional story-writing, screening and market research across television, film and digital platforms.
Research firms are seeing this team-up as a positive step for China.
"The announcement comes less than two months after China eased long-standing restrictions on foreign studios, such as the number of foreign films released in China each year (34 films, up from 20) and the proportion of box-office receipts granted to foreign studios (25% of receipts, up from 13%)," Goldman Sachs said in a research report Tuesday.
With added expertise in a field Disney is already quite familiar and well-versed in, the company is becoming known as insurmountable competition for those pitted against it.
DreamWorks Animation (DWA) recently announced a similar partnership in China. Disney's copycat undertaking will likely overshadow the animation company, but not for at least a few years. As the happiest place on earth continues to gleefully expand and hammer the competition, Walt Disney's worldwide endeavors appear to have only just begun catching steam.
Disney closed Tuesday at $40.99, up 9.31% this year. Zynga closed at $11.51, up 22.32% this year. DreamWorks closed at $17.24, up 3.89% this year.
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