Disney Consumer Products and Disney Interactive: Fiscal 3Q15
Is The Walt Disney Company Losing Its Magic?
Star Wars merchandise excitement
The Walt Disney Company (DIS) announced on September 4, 2015, that merchandise for its upcoming movie Star Wars: The Force Awakens would be available from retailers around the world that day. This merchandise release followed a live toy-unboxing event that was streamed live on YouTube’s (GOOG) Star Wars channel.
The Star Wars merchandise launch is Disney’s attempt to drum up excitement among its potential audience before the movie release. The “tentpole,” or big-budget movie, Star Wars: The Force Awakens, release is on December 18, 2015.
In June this year, Disney announced it would merge Disney Consumer Products and Disney Interactive, which would become Disney Consumer Products and Interactive Media. Disney will report financial results for the newly combined segment in fiscal 2016, which begins in late September. In an earlier series, we looked at Why Is Disney Merging Consumer Products and Interactive?
Disney Consumer Products generates revenue through licensing deals with third parties for its famous characters. Disney Interactive develops and sells multiplatform games, subscriptions to online and mobile games, licensing content for Disney-branded mobile phones in Japan (EWJ), and online advertising and sponsorships.
Financial performance in fiscal 3Q15
As the above chart indicates, Disney Consumer Products had revenues of $954 million in fiscal 3Q15 and operating income of $348 million in fiscal 3Q15. Revenues for this segment rose by 6% in fiscal 3Q15 over the same quarter last year.
Around 67% of these revenues in fiscal 3Q15 consisted of licensing and publishing revenues. This indicates that the rise in total revenues was primarily driven by merchandise licensing sales for its movies such as Frozen, The Avengers, and Star Wars.
Disney Interactive had revenues of $208 million in fiscal 3Q15, falling 22% from revenues in the same quarter last year. This was due to lower unit sales of the Disney Infinity video game, which is facing tough competition from Activision Blizzard’s (ATVI) popular Skylanders game and Nintendo’s (NTDOY) amiibo.
You can get diversified exposure to Disney by investing in the iShares Russell 1000 ETF (IWB), which holds 0.87% of the stock.
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