How Disney's age-old uncertainty about games led to Infinity's demise

"Disney was essentially balancing two minds at the same time, and while it had already decided to exit the software business, WDCS’s successes brought questions about which strategy was the right one for the company to pursue. The licensing or publishing debate lingers throughout Disney’s entire history in the video game market — and the question that the company still goes back and forth on to this day."

- Polygon writer Willie Clark, highlighting the central question about Disney's video game business that continues to this day

When Disney Infinity was cancelled a few months ago, its shutdown meant that Disney Interactive would no longer be making in-house console games for the company. Instead, Disney would rely exclusively on IP-licensing for its major video games, with only a small staff of mobile developers remaining under the name of Disney Interactive 

At the time, the move seemed like a result of Disney’s recent IP-focused strategy, which has involved snapping up Pixar, Marvel and Lucasfilm in order to profit off their characters and products while internally focusing on developing the Disney brand of characters.

But according to a report from Polygon’s Willie Clark, the death of Disney Infinity, and thus Disney’s personal stake in developing video games, is best viewed as the latest chapter of a 30-year struggle in games development in which the company was always grappling with whether to license its IP out to other developers, or grow an in-house studio that could become profitable on its own. 

Clark’s report, which includes interviews with former Disney Interactive execs and game designer Warren Spector, reads like a game development version of Groundhog Day when it comes to how Disney’s upper management viewed its role in the video game business.

Disney Interactive began life under the name Walt Disney Computer Software as it built off the company's success in the educational games business, while console games were licensed out to outside developers. 

From the moment its first games were labeled a success, Disney’s internal games team, no matter what name it went under, would be caught in a bind between three states of being. Either executives wanted it to be part of the consumer products division, or they wanted it to stand on its own, or they wanted to abandon the business and just license its IP to outside developers. 

According to Clark, Disney wasn’t able to wholly commit to any of these visions until 2016 because the success of certain in-house titles like Aladdin on the SNES, Hannah Montana on the Nintendo DS, or even Disney Infinity would convince Disney that having its own development studio could be more profitable then its licensing operation in the long-term. 

In 1997, former Disney Interactive president Steve McBeth says the developer was absorbed back into the consumer products division in a move that mimics the re-absorbtion that occurred in 2015. 

As McBeth explains, ”The directive was also to change strategy to move to more of a licensing model so [Disney Interactive] would not have as many ongoing significant expenses related to product development in the future, a much more conservative approach to investing and spending.” 

If that sounds familiar, it’s essentially the reason Avalanche Software was shut down earlier this year, taken to its logical extent. 

Be sure to read more of Clark’s reporting, which includes anecdotes from Disney’s 30-year history in game development, for a fuller look at how the House of Mouse approached game development over the years.