Search form

Disney Drops ‘Infinity’ Console Game, Shutters Avalanche Software

Disney falls short of analyst expectations for the second quarter of 2016; discontinues ‘Infinity’ gaming line with plans to lay off 250-300 artists and other staff.

Despite a consistent winning streak at the box office, The Walt Disney Company reported lower than expected second quarter profits on Tuesday for the first time in five years. The downturn was driven by declines in the company’s cable TV and consumer products units, but feature films continued to be big earners for the media giant, thanks to a string of blockbuster successes including Star Wars: The Force Awakens and Zootopia.

Disney delivered a profit of $2.1 billion in the three months ended April 2, up two percent from the same quarter a year ago. But its earnings per share of $1.36 missed analysts’ expectations of $1.40, according to investment research firm Zacks. Revenue rose four percent from the same quarter a year ago, to $12.97 billion, but also was below the $13.26 billion that analysts had predicted.

The film studio generated $542 million in operating income, a 27 percent increase over last year, and revenue jumped 22 percent to $2 billion. That boost was driven by the December release of Star Wars: The Force Awakens, which has grossed more than $2 billion worldwide, and Zootopia, which was released March 4 and has grossed $959 million at the global box office.

The news sent Disney shares tumbling down more than five percent in after-hours trading following a conference call with investors and analysts, according to a report by The Wall Street Journal. (The full earnings report can be read here.)

Incurring an unexpected $147 million charge, the company also announced it was discontinuing its interactive console game, Disney Infinity. Additionally, Utah-based Disney Infinity principal developer Avalanche Software is being shut down, with between 250-300 developers losing their jobs, according to a report by The Wall Street Journal analyst Ben Fritz, who commented that the move was the “end of Disney as video game publisher.”

“After a thorough evaluation, we have modified our approach to console gaming and will transition exclusively to a licensing model,” Disney consumer products and interactive chairman James Pitaro said in a statement. “This shift in strategy means we will cease production of Disney Infinity, where the lack of growth in the toys-to-life market, coupled with high development costs, has created a challenging business model.”

You can read the statement from Disney Infinity SVP & GM John Blackburn, which was posted on the Disney Interactive blog following the earnings report, below:

By now you may have heard the news that we have made the difficult decision to discontinue production of Disney Infinity. From the beginning, Disney Infinity was built for you -- our fans -- and I wanted to take a moment to thank you not just for your support over the years, but for creating a community that made Disney Infinity more than just a game.

Our goal for Disney Infinity was to bring the best of Disney storytelling to life in homes around the world, and with your support we accomplished that. We hope you had as much fun playing the game as we had making it.

So what’s next for Disney Infinity? We have two final retail releases coming, including three new characters from Alice Through the Looking Glass later this month, and the Finding Dory Play Set launching in June.

And as we turn to the next chapter in our story, I want to thank everyone who helped bring Disney Infinity to life, particularly Disney’s Glendale-based production and publishing teams, our external development partners, and of course the incredible Avalanche team for their tireless dedication to this project.

But most of all, I want to again thank you for making Disney Infinity a part of your lives -- and for adding to the Disney legacy by being a part of this community.

Disney launched Infinity in December 2013 with interactive scenarios and characters from the worlds of Disney and Pixar features such as Pirates of the Caribbean, The Incredibles and Monsters University. Since then, additional content featuring Marvel and Star Wars characters have been released as well. Going forward, Disney will reportedly continue publishing games for mobile devices and will license its characters to other companies such as Electronic Arts, the makers of last year’s highly successful Star Wars: Battlefront game.

This isn’t the first time Disney Interactive has come under fire -- the division shed 200 jobs in February 2014, followed by a whopping 700 jobs in March 2014 following the closing of its offices in Chicago, New Jersey, Colorado, South Korea and Hyderabad, India. The troubled unit also cut 50 jobs and closed Austin, Texas-based Junction Point Studios in September 2012, and, in January 2011, the company shut down Propaganda Games, the development studio responsible for the Tron: Evolution video game, and laid off roughly 200 people.

Disney chief Bob Iger also addressed succession issues in the wake of last month’s announcement that Disney COO Tom Staggs would depart the company. According to a report by The Los Angeles Times, Iger said he has no plans to extend his contract after it expires in 2018, and that Disney’s board has “ample time” to select a new CEO. Staggs, who had been widely viewed as Iger’s successor, left the company on May 6.

“Obviously, Tom was a valued colleague and a friend of mine and many others at the company,” Iger reportedly said during the investor call. “And so we’re sorry [about] what came to pass, but we don’t really have much more to say about that.”

Jennifer Wolfe's picture

Formerly Editor-in-Chief of Animation World Network, Jennifer Wolfe has worked in the Media & Entertainment industry as a writer and PR professional since 2003.