Disney Interactive Revenues Up, But Profits Down

For the first time, Disney reported results for its Interactive Media Group separately from the larger organization, showing a 13 percent increase in revenues of $313 million. However, the group still reported a $45 million loss in operating income, compared to a profit of $13 million the previous year. Rearranging fiscal 2008 results to reflect the new reporting system, results from the previous year show Interactive Media Group revenues increased by 47 percent to $719 million, with Disney Interactive accounting for a $160 million increase. The rise was attributed to the positive performance of new self-published titles such as High School Musical, Hannah Montana and Turok. However, the release of the games saw a 25 percent increase in costs and expenses for the video game arm, to a total of $193 million. The Interactive Media Group includes the Interactive Studios video game division, as well as Web and massively multiplayer online publisher Disney Online (Pirates Of The Caribbean Online), and mobile phone products. Previously these divisions were reported as part of the Consumer Products and Media Networks segments. The fall in operating income was due to an increase in the unit cost of sales and higher marketing expenses for the company’s video game business, despite an increase in overall sales. The Walt Disney Company as a whole saw a 32 percent fall in quarterly profits, in what CEO Robert Iger called "the weakest economy in our lifetime". Disney Interactive reported a $45 million loss, despite revenues increasing to $313 million. Overall company profits fell to $845 million, for the first quarter ended December 27th, as revenues dropped by 8 percent to $9.60 billion. DVD sales declined alongside the increasing popularity of digital distribution.