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Disney's interactive group seeks to turn a profit by 2013

February 17, 2011 |  1:40 pm

The new co-presidents of Walt Disney Co.'s digital media group used the platform of the company's investor conference in Anaheim on Thursday to say what Wall Street has been longing to hear: that the money-losing division will achieve profitability in 2013.

John Pleasants, co-president of Disney Interactive Media Group, said the division made significant layoffs in January and plans an additional 25% cut in operational overhead "in our march to profitability." No details on timing were offered.

"In the last 90 days, we've focused on getting the right team and scaling the team to where the business is today," Pleasants said, adding that the earlier wave of job reductions had already "taken millions of overhead out of the Interactive media group."

Pleasants and Co-President Jimmy Pitaro talked about refocusing the business to take advantage of new opportunities online and on mobile devices  -- a theme Disney Chief Executive Robert A. Iger has underscored in earnings calls with investors. 

The interactive group will begin shifting resources away from developing games for the mature console market, reducing spending by 50% over the next four years, Pleasants said. "That does not mean we won't be making boxed product," he hastened to add, noting the popularity of the Epic Mickey title released late last year.

Pleasants, who oversees games and social media within the division, talked about better capitalizing on opportunities -- not only on emerging technological platforms, but in burgeoning international markets. He said the division will narrow its focus to "four to six major franchises," creating content to take advantage of growth areas, while experimenting with business models -- from free to subscription to micro-transactions, in which players pay modest sums to enhance their online experience.

The group aspires to create its own world-class character franchises that can flow to other parts of the entertainment giant's businesses, much as Pixar Animation's "Toy Story" characters or Marvel Entertainment's superheroes fuel merchandise sales. 

One such home-grown franchise Pleasants highlighted is Club Penguin, an online world for children that has grown by 400% in the last three years.

Pitaro, who has oversight of the Disney.com portal and a collection of websites for mothers and families,talked about creating a more personal experience that's shaped by a user's interests.

"When we deliver the right content to the right user at the right time," Pitaro said, "we'll grow reach and engagement and have a more powerful platform to surface the fantastic content we have across our company,"

-- Dawn C. Chmielewski

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