Walt Disney Co. reported first-quarter earnings yesterday, and they were fairly good: net income was up 12 percent.
But the growth came largely from ESPN and theme parks. If you study the earnings statement, you can spot something alarming in two critical parts of the business of the Mouse: movies and video games.
Seven Disney films in U.S. theaters in the quarter collected ticket sales of $239 million, a 33 percent drop from $357.6 million generated by nine movies a year ago, according to Box Office Mojo, an industry researcher.
The studio is in talks with Coinstar Inc.’s Redbox and other services to impose a 28-day delay on rentals of new DVDs, [CEO Bob] Iger said on the call. The delay is being sought because of the industrywide drop in DVD and Blu-ray sales, he said.
The consumer products unit reported profit little changed at $313 million on a 3 percent higher sales of $948 million.
Disney’s interactive division registered a loss of $28 million. Sales tumbled 20 percent to $279 million. The unit is cutting costs and taking steps to raise revenue with a goal of becoming profitable in the next fiscal year, Iger said. It hasn’t shown a profit since Disney began breaking out the results in the final three months of 2008.
So Disney got killed in movies, relative to 2011, and can't get anything going on interactive games. The movie numbers makes sense, as the company is cutting back production. Fewer films means less box office. But it does mean less spending in production.
In other words, Disney is backing away from movies, but moving forward on other types of "screen" entertainment, mainly cable TV. And on video games and other forms of interactive entertainment, the plan is for Disney to...cut its way to profitability?
For all the talk that tech and entertainment can lead media companies into a glorious future, Disney doesn't seem to be walking that walk. Rather, it's operating like a a broadast company that also runs parks and owns cruise ships.