As I said in a post earlier this year, Disney’s model follows this playbook:
Step 1: Create or Acquire Appealing Characters
Step2: Then Make TV Shows and/or Movies, along with Happy Meals & Assorted Junk
Step 3: Success = Merchandising, Sequels and Prequels
Step 4: Huge Success = Rides In Parks and Resorts
Step 5: Go back to Step 1
But in the last year or two, Step 1 = Brand/character Building (not that kind of character building) has been increasingly happening in SmartPhone and tablet games. [Exhibit A: Angry Birds].
Naturally, Disney has been trying to jump on the SmartPhone/Tablet game bandwagon. The road has been bumpy though, writes Brooks Barnes, on The NYT:
Two months ago, Disney released a sequel to Where’s My Water?, a hit smartphone game about a showering alligator. Hopes were high: Disney had pointed to the original game as evidence of overdue traction in mobile gaming.
For the Walt Disney Company — where theme parks, TV, merchandise and films deliver more than $6 billion in annual profit — the failure of one smartphone game, even an important one, has no financial consequence. But mobile games are a major growth opportunity, and analysts say Where’s My Water 2 underscores the degree to which Disney is encountering new challenges in a shifting marketplace.
In particular, mobile game publishers are rapidly moving from apps that cost 99 cents per download to free apps that make money by selling virtual goods and upgrades. This “freemium,” Zynga-style model can be much more profitable. Of the 100 highest-grossing iPhone games in September, analysts note, 94 percent were free with in-game purchases — titles like Candy Crush Saga from King, based in London.
Of course, if anyone has the desire and the muscle, not to mention the need, to succeed, that is Disney. And therefore, IMO, it’s just a question of when, not if, Disney will succeed in this space.
Still this little example highlights the challenges that companies – even large, hugely successful ones – face, in changing or adapting established business models to account for rapidly changing consumer behavior, spurred by the rise of SmartPhones and Tablets.