Not long ago, Rick Munarriz wrote about the impending release of Disney's (NYSE: DIS) new video game for the Sony (NYSE: SNE) PlayStation 2, Kingdom Hearts II. He predicted success for the title. Boy, was he right.
According to a press release issued last week, 1.3 million discs of the sequel were shipped to the North American market. That number is impressive in itself, but remember, this franchise is a worldwide phenomenon. In Japan, 1.2 million discs also made their way to retail channels. As for the first Kingdom Hearts, more than 2.6 million copies have been shipped in North America. In addition, there was another entry developed for the Nintendo Game Boy Advance platform, entitled Kingdom Hearts: Chain of Memories, which also did well. Taking everything together, the total shipments for all three games have surpassed 8.5 million. And Disney isn't indulging in hyperbole when it claims it will hit the 10-million mark, since the sequel has yet to hit the European markets.
Disney definitely believes in the future of video games. Not only has the company invested in online gaming projects, but it has also been in the business of acquiring developers. Media companies have no choice but to deploy capital to this sector, especially since video games are becoming more and more like movies -- if you don't believe me, just check out Electronic Arts' (Nasdaq: ERTS) The Godfather game for either the PlayStation 2 or Microsoft's Xbox. Since the format has already encroached on the studios' territory, it's no wonder that they would want to export their intellectual property and expertise to this area.
But sometimes you've got to know when it makes sense to partner up with somebody. In my opinion, Disney's partnership with Square Enix made all the difference here; that company has a long history of making fantasy role-playing games that people can lose many hours to. In fact, as Rick mentioned in his article, the Kingdom Hearts franchise was actually so well-done that it served as an antidote to the dreaded concept of age compression -- i.e., kids outgrowing toys, Mickey Mouse, and the like increasingly early in their young lives. Tweens and teens are more jaded than ever these days, yet they love Kingdom Hearts. I even know of some who were desperately awaiting this next installment. So the synergy potential in terms of propping up the Disney brand is inarguable.
These statistics hopefully imply that Disney's consumer-products operating segment will have a nice year. And if the franchise can be extended through the next-generation console cycle, then so much the better. Granted, developing video games is no longer a cheap endeavor, but it should be worth it in the end for the Mouse, especially if CEO Robert Iger and his minions can figure out ways to enhance other parts of the company with a bit of that Kingdom cachet.
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