Disney Plays Games to Win

Not long ago, I wrote about Disney's (NYSE: DIS  ) success with its video-game franchise Kingdom Hearts. In that piece, I mentioned how important it is for Mickey to continue to reach for revenues in the sector of interactive gaming (without making any big plays for the likes of, say, an Activision (Nasdaq: ATVI  ) ).

The company didn't need my advice to management, of course. The powers that be at Buena Vista Games (Disney's division dedicated to game software) knew it all along, and they recently announced both the acquisition of an accomplished development studio and the establishment of another one from scratch.

Disney's Buena Vista division is purchasing Salt Lake City-based Avalanche Software. This is a pretty nice buy, in my opinion, considering the success this developer has achieved with some innovative titles.

How many parents reading this recall being enlisted by their sons or daughters to buy Tak and the Power of Juju? How about Tak 2: The Staff of Dreams? There are a lot of you out there, and the credit goes to Avalanche Software for doing some good work. Of course, the irony here is that the Tak character is the result of a partnership between THQ (Nasdaq: THQI  ) and Viacom's (NYSE: VIA  ) Nickelodeon unit, the latter being a staunch competitor of The Disney Channel.

The video games that will be derived from the computer-animated Chicken Little movie (due out this fall) are being worked on by Avalanche Software right now. How apropos, considering the film comes courtesy of the Mouse.

Disney also is establishing a start-up venture, to be located in Vancouver, Canada, led by former management and talent from Electronic Arts (Nasdaq: ERTS  ) . The Canada team helped to create the EA franchises NBA Street and Def Jam. I have no doubts regarding the abilities of this group, considering the members' past association with EA, and I'm confident that they will add value to Buena Vista Games.

Financial terms of the deal were not disclosed, but knowing Disney, I imagine it got what it wanted at a prudent price. Hey, the company has a reputation for being cheap whenever possible, something that I, as a shareholder, can't necessarily criticize.

These two moves will ensure that the Mouse continues to find ways to exploit the world's love of video games, both in terms of producing titles based on Disney properties and creating wholly original projects. And with the new hardware consoles nearing the horizon, a media company's gaming strategy is becoming increasingly important.

Recent Foolish articles about Disney:

Both Electronic Arts and Activision are Motley Fool Stock Advisor recommendations.Want to talk about the Mouse? Feel free to check out the Disney discussion board.

Fool contributor Steven Mallas owns shares of Disney.The Fool has a disclosure policy.


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