When a one liner slipped past us last week about Disney actually bringing together a specialist team to build Massively Multiplayer Online Games (MMOGs) our first thought was that this was a stroke of genius by Bob Iger, the CEO that has transformed Disney since taking over in 2005.
In fact the activity pre-dates Iger by quite a way and largely Disney is considered one of the weaker players in the market with its games considered poor in terms of game play, decent in terms of storyline, on every games review website on the planet. But we’re not sure that counts.
First the news, which is that Disney will create a new team focused entirely on the creation and management of virtual worlds. Now this doesn’t mean that Disney wants to compete with Second Life, no it’s worse than that, it wants to capture gamers before they are old enough to be seduced by World of Warcraft, the game that has 10 million active players globally, paying roughly $20 a month, and playing it on PCs or MACs. Anybody that can do basic math can see that this is a revenue of around $2.4 billion invested in a single game, and with franchises like the Pirates of the Caribbean, Disney hopes to carve out a similar empire among the 6 to 16 year old crowd. The plan is to attract (and hopefully keep) more people who don’t yet play online games.
A cursory glance at the Disney accounts shows that in its last financial year it grew its gaming business by $61 million through Disney Interactive Studios, part of the $2.3 billion consumer products at Disney while it increased spending by $113 million, primarily due to spending on games. If it is just now creating a new dedicated team it is either planning to spend a lot more, or it is fed up with the spending increases and trying to bring the segment into profit. We think it is the former, and given the global brand reach of Disney and the fact that it can also call upon both the brands it acquired with Pixar, and the technical expertise of its largest shareholder, in Apple CEO Steve Jobs, which came about through the same transaction, then it is sensible to think that this is Disney using its spending and its brand to drive into the gaming market, aiming to build franchises every bit as large as World of Warcraft.
Disney Online Studios will now be headed up by Steve Parkis, a long term Disney veteran, promoted to senior vice president to oversee product development, operations and marketing. Parkis has most recently served in finance and corporate development at the Walt Disney Internet Group.
The foundations for this group was begun over ten years ago with work on what are now its mildly successful MMOG titles such as Toontown, which has over 1.1 million players, most of them paying $10 a month to play although some levels can be played for free. However this may have already been overtaken in its target age group by Nickelodeon’s Nicktropolis which comScore reckons has 1.4 million visitors, hence the need for a new management team and more spending.
In other moves related to the new team, Mike Goslin, vice president of virtual worlds and one of the lead developers of Toontown and Pirates of the Caribbean Online, has been appointed to run development.
Disney Online Studios’ responsibilities will include expanding and growing Playhouse Disney Preschool Time Online, Pirates of the Caribbean Online and Toontown, along with previously announced development for virtual worlds created around Disney’s fairies franchise and the animated film “Cars”. Already more than 4.5 million personalized fairies have been created at DisneyFaries.com.
The company said that there will also be a significant expansion of the development, community, operations and publishing teams, so more and more investment as Disney challenges to be one of the leading MMOG suppliers globally, and plans dominance in the younger player space.
One of the key steps that Disney must make, in our view, is to plan for the development of games for older children, so that it can acquire players once and then move them up a graduated series of games that suit different ages. Perhaps it would achieve that in partnership with another game maker, or by buying one.
Already Disney.com claims to be the most visited site for young families with more than 27 million unique visitors a month, which is the gateway into these virtual worlds.
In August 2007 Disney acquired Club Penguin, a Canadian company that was challenging its lead in this area, which operates clubpenguin.com, another online virtual world for children, for $350 million cash with another $350 million possible through milestones.
Meanwhile almost as if to underline the hugely improved state of Disney under Bob Iger, last month the board changed his contract, improving bonus cash and shares incentives and extending it out to 2013 (from 2010).
There are no official player numbers for Pirates of the Caribbean, but around 100,000 people registered ahead of its launch, and it is likely that it has already overtaken the Toontown title since its official launch back in October 2007.
In Pirates of the Caribbean Online, players create and customize their own pirate, captain their own ship, and assemble a crew of their fellow rogues, forge alliances, hunt for buried treasure and battle evil undead forces.