Disney no longer makes its own video games.
On May 10, the entertainment conglomerate cancelled its toys-to-life series, Disney Infinity, and announced that its game publishing and development branch, Disney Interactive, was switching to a licensing-only model, pursuing partnerships rather than overhead.
It came as a shock to fans. Just months before, Disney heralded Infinity as a success, pledging support for the latest release. In March, vice president of production at Disney Interactive, John Vignocchi, claimed that Infinity was number one in its category.
"The company has been completely behind Disney Infinity," he said. "If you look at all of the creative content coming out this year, you can see they are still proud and still 100 percent behind us."
This isn't the first time that Disney has radically — or quickly — shifted its attitude toward video games. Over its 30-plus year history, Disney’s game division has gone through many similar shifts as the industry has adapted to technological advancements, shifting audiences and generational changes.
The story of Disney's game division shows a company that many who worked there feel could have been — and should have been — successful in video games, but one that over the years has repeatedly, almost consistently, switched strategies in attempts to bring the Disney magic to games.
In the late 1980s, Disney began its first major step into game development, following the success not of a mouse, but a rabbit. And even back then, its history is riddled with times when the company switched on Scrooge McDuck’s dime.
Prior to the formation of a dedicated video game division, Disney made educational PC software, and its Consumer Products division licensed its character and movie intellectual property to other companies to develop games around. But one of Disney’s first successes in games — and its first self-published non-educational title — was Who Framed Roger Rabbit, a title created internally, not licensed to another company, and before the creation of its first dedicated gaming unit: Walt Disney Computer Software.
"The trick was trying to create a really good game so it wasn't a game that had Disney stuff slapped on it, or just a bad game," says then-VP/GM of Disney Software/Disney Music Shelley Miles. "It had to be a good game and then it also had to be Disney."
Due to the short turnaround time — Disney Consumer Products wanted the game to ship in just nine months along with the film — the team was initially unable to find a licensee to take on the title.
Instead, the team built WFRR inside Disney's record company, with the help of an outside developer. Walt Disney Records was vertically integrated, meaning it had the ability to distribute and ship the game, as well as having business infrastructure like a sales force and physical warehouse.
"The trick was trying to create a really good game so it wasn't a game that had Disney stuff slapped on it, or just a bad game."
To develop the title, Disney ended up turning to Reichart Von Wolfsheild and his company Silent Software, which hired some of the movie's animators to work on the game.
"Back then, when you said you made video games, that was like basically saying you sold cocaine," says Reichart Von Wolfsheild, lead scientist at Silent Software. "All people knew was that they didn't understand it completely, they were scared of it [and] it made lot of money."
This was a time when licensed video game failures — such as Atari's E.T., where Atari had so many unsold copies it buried them in New Mexico — still haunted the industry. Frank Wells, Disney's president at the time, had previously seen the infamous E.T. situation up-close and wanted to avoid repeating that history at Disney. It was a time when "anything where it put a known brand together with technology, it was considered to be the kiss of death," Von Wolfsheild says.
It wasn't just one version of the game that Disney wanted, either. And by the time that deal made it to Silent Software, the initial nine month timeframe had become quite a bit smaller, as well.
"[We had] basically 90 days to get an Amiga, an IBM and a Commodore 64 game out the door," Von Wolfsheild says. "That seemed insane to us."
The first version of WFRR almost shipped at the same time as the movie release, with the other versions shipping later. Who Framed Roger Rabbit was a success: The game sold more than 250,000 units and appeared on the covers of numerous magazines: "It made them tons of money," Von Wolfsheild says.
That success started Disney down the path to begin its own internal game publishing and development. But back then, not everyone within Disney had a cohesive opinion on how successful the video game industry as a whole would ever be, and if Disney should even have a place in it.
"With console games, we weren't a publisher then. We were strictly a licensor," says David Mullich, the first game producer Disney hired in 1987. "[Publishing] was a business we didn't feel prepared to get into because back then it was all cartridge based and all involved manufacturing the cartridges and getting them shipped over from overseas and all that."
"We used to track our sales along with, I think, the music for Michael Jackson's 'Thriller.'"
Instead, Disney looked to the computer market: Floppy discs and CD-ROMs had nice comfy margins. So, while Disney kept using a licensing model for console games, Disney, following WFRR, continued to publish computer games in-house, and the team started with preschool software — Disney had found success in the preschool age-range toy market — and released learning titles like Mickey's ABC's - A Day at the Fair, Mickey's 123's - The Big Surprise Party and Mickey's Colors and Shapes - The Dazzling Magic Show. Disney aimed for an audience it was already comfortable with, leveraging the popularity of its iconic mouse.
And as time went on, WDCS saw success: A licensed version of The Little Mermaid made the front page of USA Today. WDCS released the Sound Source, a computer attachment that produced high quality sounds including music and voice, a novelty for the time. And WDCS also launched another Silent Software developed project: Disney Presents The Animation Studio, which retailed for $169.
"We used to track our sales along with, I think, the music for Michael Jackson's 'Thriller,'" Von Wolfsheild says. "We were making more money than Michael was on his music album, because our sales were so big."
The Animation Studio was more successful than the combined sales of the other 22 Disney games the company had out then, and pulled the division out of the red, according to Von Wolfsheild.
But even though this time period would have a lasting effect on Disney’s legacy in games — two of its licensed games from the era, Castle of Illusion Starring Mickey Mouse and DuckTales, both got re-releases in 2013 — Disney’s first of many directional shifts was about to occur.
Success, of course, wasn’t new for Disney. During the late ‘80s and early '90s the company's animation output included instant classics like 1989’s The Little Mermaid, 1991’s The Beauty and the Beast — which got the first Best Picture Academy Award nomination for an animated feature — and 1992’s Aladdin, which won two Academy Awards. But during this time period for WDCS, the company was trying to decide exactly what to do with its interactive success, and who at Disney should control it.
Disney’s higher-ups, for the most part, were open to letting WDCS decide what to create, which led to games that didn't rely on existing Disney characters. Original ideas came out during this period like Stunt Island (which Computer Gaming World named simulation game of the year), and Coaster, a roller-coaster simulation game released years before the successful Roller Coaster Tycoon.
But as press started to talk about the growing future of interactive entertainment, change was, for the first time, coming to Disney’s blossoming gaming unit.
"The processes that we were using were actually catching the attention of different divisional groups that all said 'Wait a minute,'" says Roger Hector, director of product development for WDCS from 1989 to 1993. "They all kind of wanted to manage or have a say or control what was happening. And we were so relatively low on the totem pole that it became a bigger deal, that discussion that took place over our heads."
Projects became almost impossible to get approved, according to Mullich, as pitch meetings took place in front of management teams, and after six months of continual 'no' replies, Mullich left.
"In a way, it was a victim of our own success," Mullich says. "In that, you know, we're successful, suddenly everyone else wants to get involved in it, and suddenly it transformed from this kind of small almost little family to big corporate business structure and all the politics that goes along with it."
WDCS was at this time within the Consumer Products Division, and had to find its place within the larger Disney ecosystem. Roy Disney wanted everything to include classic characters — something the games group wasn’t aware of at the time, according to one source who requested anonymity. WDCS spent two years developing a Fantasia tie-in game, which the company eventually cancelled.
Disney had to decide — at the strategic planning level — if it even wanted to be in the business of making games. At one meeting, according to the same source, the company discussed if it should shift all game development in-house while tripling the amount of people working in the division … or in six weeks cut the whole team, a direction not finalized until 1994.
To help people outside the division see the difference, the WDCS team would bring floppy discs, CD-ROMs and cartridges to budget meetings. Strategic Planning brought up the question of why children needed games that exceeded four colors. Disney as a company still had to come to a decision one way or another if it wanted to acquire an already established team or make its own; all while the game division wondered how much Disney executive staff knew about video games in general, aside from knowing it was an vital area for the company to be in.
"I don't want it to be taken in a negative way, but the politics of the company was almost as big of a challenge to overcome as almost anything," Hector says.
More success meant more problems for WDCS, and the official formation of Disney Interactive was still a few years away, as the company, in the meantime, tried to figure out what to do with its new interactive venture.
To consumers, the magic of Disney may seem just that: magic. But any product of Disney’s — be it movies, television, music, or the parks — is not made with the flick of a wand, but a team of people. And while Disney was full of people who knew animation, WDCS — as it grew — faced the challenge of staffing itself with game producers, a scarcity for both that time and the area: at the time, Los Angeles wasn’t a hotbed of video game development.
WDCS was in the process of fleshing out the division and making a team: It hired game producers, and brought in TV and animation producers to learn from them.
The hope, according to Hector, was to build what would become a "substantial division of Disney" and move to internally developing titles: "We had all the assets to work with, but we didn't have any people, or any organization," Hector says. WDCS had to figure out how to be viable on a commercial level, and also faced the task of fitting into the larger Disney ecosystem.
"Disney is, well at the time, and I'm sure is still true today, is run by very disciplined and talented and visionary people," Hector says. "And one of the things we didn't want to do was put out some crappy product from the new fledgling Disney Software division that wouldn't stand up to the overall reputation that the company maintained."
Compared to his previous experiences at other game development studios, Mullich says Disney "ran much more like a formal business," and "raised the bar of what was expected in terms of performance and work habits and accountability."
"It was much more of a politically charged atmosphere, especially in my last couple years there, than I was used to elsewhere."
"I'm not certain that there really was any strategy at that time, but they made sure that they started looking into it and then building plans and trying to make sure that at the very least Disney had a good foothold in games and gaming and interactive entertainment, even though it purely was a licensing place to them at that time," Hector says.
And while Disney, on the outside, may seem to be the happiest place on Earth, the same sentiment wasn't always true for the people within the company.
"The one thing that did surprise me was, being a big Disney fan … and I love everything about Disney, working there I realized that working at Disney is not nearly as much fun as enjoying the stuff that Disney produces," Mullich says. "It was much more of a politically charged atmosphere, especially in my last couple years there, than I was used to elsewhere."
"[It] was not a fun work atmosphere," Mullich says. "… it actually got to be a little bit oppressive, the atmosphere. And that was just due to the pressures from above. My actual managers and co-workers were great to work with."
Just like any company, without happy team members, retaining key talent can be an issue. And Disney was about to find trouble in keeping its new video game department intact, especially once upper management decided to freeze the studio.
"[Disney] didn’t believe in their own stuff," Von Wolfsheild says.
In the early '90s, WDCS was about to hit its first roadbump. Instead of following the path that the company had already been developing for years, Disney as a company went the opposite direction: it slowed things down.
Talks happened at the then-Disney CEO Michael Eisner-level of Disney surrounding the want of Disney’s other various divisions to have their own stake in the interactive entertainment business.
"We were told from up above that the company … had not agreed to a finalized strategy of how to manage and how to control this, so we were told to basically 'finish off what we have but don't start any new projects' until those issues could be sorted out," Hector says.
Disney, essentially, put WDCS on hold.
"We literally had nothing to do, which was actually fine with Disney," Hector says.
This continued for over a year, with many members of the group leaving Disney. Similar to the recent situation with Disney Infinity, after putting effort into video games, Disney was starting over. The larger parts of the Disney corporate machine needed to catch up with WDCS.
"Obviously our group was maybe the first one to build itself up and establish some credibility and actually achieve some success, and then just got put in the refrigerator for safekeeping for a while," Hector says.
But that wasn’t the end for Disney's video-game efforts. Instead, a street rat with a lamp and a lucrative licensing bundle were about to — quite literally — change the game, while a potential merger almost changed Disney’s entire gaming future forever.
In today’s current landscape, a situation where Mickey and Master Chief games are developed by the same company seems nearly impossible. But in the early '90s, such a deal was not only almost possible; it almost happened.
In 1992, Marc Teren came in as director of business development for Consumer Products. His first assignment? To get Disney out of vertically integrated software.
He met with Microsoft, EA, Westwood Studios and "every major software developer at that point in time," he says, to open up talks about licensing out Disney's entire software business. Instead of doing internal development or publishing, Disney wanted to wash its hands and just license its IP catalogue.
"The division was not yet profitable, and the licensing business is extremely profitable," Teren says.
Disney and Teren created a deal to license its whole gaming business to Microsoft, combining its software division with Microsoft's consumer division (the home to Microsoft Encarta, a digital encyclopedia) to create one massive consumer software business. A business that would have included all of Disney's licensed games. A deal that, if it had gone through, could have changed the entire history of Disney's — and Microsoft's — video game efforts.
"If Microsoft was asking for it, and it clearly went outside the bounds of what we were negotiating, that that was not a deal we could go forward with."
However, Microsoft asked for "all rights digital," according to Teren, even though the deal was for cartridges, floppy discs and CD-ROMS, and that was a red flag for the team at Disney.
"And as you can imagine, not that at that point in time anyone at the Walt Disney Company fully understood the implications of what all rights digital meant, we certainly knew enough to realize that ... if Microsoft was asking for it, and it clearly went outside the bounds of what we were negotiating, that that was not a deal we could go forward with," Teren says.
Disney’s corporate level killed the fully negotiated deal.
Then WDCS had some successes that changed the company's decision to exit the gaming business. The first was a licensing deal with Disney and IBM computers on the PS/1 — a PC, not to be confused with Sony’s PlayStation — which brought in roughly $10 million. While Teren’s task was getting Disney away from vertically integrated games, this deal "opened the door for the consideration of the vertical integration of the business," Teren says, as WDCS was no longer a "cost burden on the company." It found its products part of an "extremely profitable" deal, according to Teren.
While this was all going on, longtime Disney Studio head and current DreamWorks CEO Jeffrey Katzenberg — before Disney Interactive even existed or was fully integrated — got involved in games based on Studio’s movies. Katzenberg's first product was the licensed Disney's Aladdin on Genesis, to which he added oversight and feedback on builds of the title.
Even though Aladdin was licensed to Sega, Disney "effectively" produced it — Disney animators handled the animation, and it was "as close as you can come to being a vertically integrated product," Teren says — with the assistance of Virgin Interactive. (Sega initially had the game’s license, but when he saw Virgin's work on the Genesis Jungle Book game that used a new tool that allowed for hand drawn animation to be put into games, Teren asked Virgin to handle it.)
This was the start of the three-way collaboration between Sega, Virgin Interactive and Disney, which the three companies announced at Disney's Second Day Breakfast at CES in 1993. Aladdin became a huge success for Disney, selling around four million copies.
Aladdin's success, coupled with Katzenberg's involvement and the IBM deal, marked the tide of change for WDCS.
"[This] led to the start of the evaluation process, from a strategic and business standpoint, as to whether or not we should vertically integrate into the software business," Teren says, "after the decision had already been made to exit the software business."
This all occurred during the same period that WDCS’s internal operations ceased. Disney was essentially balancing two minds at the same time, and while it had already decided to exit the software business, WDCS’s successes brought questions about which strategy was the right one for the company to pursue. The licensing or publishing debate lingers throughout Disney’s entire history in the video game market — and the question that the company still goes back and forth on to this day.
With the success of Aladdin behind it, Disney again switched course. Teren was about to be part of a team that would greatly expand Disney’s efforts in the space. It was heading not away from video game development, but back down the path that WDCS had started years prior.
In 1994, Disney formed Disney Interactive, with Teren as vice president/general manager and Steve McBeth as founding worldwide president. WDCS had since shrunk down to around eight remaining employees, the management team left (or would leave early during DI's formation) and the division needed to be rebuilt.
"The Interactive play was designed to ramp it up significantly," McBeth says. "Make larger investments, build larger teams, and see how much of an impact we could have on the market."
With the exception of Game Boy and Game Gear games, which remained licensed to other developers, games were now vertically integrated within the Disney ecosystem — all of the moving parts of game development were now handled internally by Disney instead of other companies. The game division moved from its former home under Consumer Products, and became a joint report to Consumer Products and the Walt Disney Studios film division.
"The creative opportunities were exciting, and we realized that we could create and make better product if we stepped into the integration chain," McBeth says.
Disney Interactive started with two divisions — Disney Interactive Entertainment and Disney Interactive Edu-tainment — in time would later expanding to four. All development moved in-house and releases included the successful Disney Animated Storybook line, Maui Mallard in Cold Shadow (which featured Grammy award winning composer Michael Giacchino's first score for Disney), Pocahontas, The Lion King and Nightmare Ned (the first time Disney bought an outside-developed character, years before it bought brands like Star Wars and Marvel).
Disney Interactive continued to grow, and grew fast. In just Teren’s division alone at the time he left, there were between 80-120 employees, growing from the eight or so the in the division just three years prior.
The company had several full-time recruiters committed only to Disney Interactive, and for three hours, two times a week, the senior management team blocked off time to go over candidates. Disney was also trying to figure out what types of skills people needed to be successful producers and directors in video games.
"You can’t overestimate the importance of the top leaders in the company allowing freedom and the ability to maneuver in creative businesses."
"There was not a deep bench of people who were experienced in interactive storytelling at any level, because all games prior to that, at that point in time, were primarily driven through the minds and eyes of a very small team that was programming and engineering driven," Teren says.
McBeth was impressed with how Disney’s upper levels were, at the time, supporting "creative risks," and thought that support would allow for the successful creation of a new business.
"You can’t overestimate the importance of the top leaders in the company allowing freedom and the ability to maneuver in creative businesses, even creative technology businesses, when you have a great classic brand like Disney," McBeth says.
According to Teren, Interactive was now being treated similarly to other Disney products.
"Now, there were certainly people that I might argue coveted the Interactive business, but as long as the Interactive business was under [Walt Disney Studios], and reported up through Jeffrey Katzenberg, that wasn't going anywhere," Teren says. "It was shepherded in the same way every other creative product at the Walt Disney Company was built."
McBeth echoes similar sentiments.
"In some ways, we were … sort of left alone under top management tutelage to develop these products to take their place in the Disney family," McBeth says. "... We weren't under, you know, constant or undue scrutiny."
"When you go through a period of really large ramp up, that's going to be closely scrutinized in financially disciplined companies."
However, by 1997, times were again a 'changing at Disney Interactive. The cost of game development was rising: Originally, titles that may have only cost $1 or 2 million were now reaching $5-8 million. New Financial Accounting Standards Board rules went into effect, and Disney decided to make some changes in how it managed its money: the division’s costs — like game development — now impacted the department’s finances right away, not just once games were released.
"When you go through a period of really large ramp up, that's going to be closely scrutinized in financially disciplined companies," McBeth says.
As a result of this, the division faced layoffs — 25 percent of its staff — with both Teren and McBeth leaving, as well. Disney Interactive could also no longer rely on support from Katzenberg and Michael Ovitz, both no longer at Disney.
"The company felt that it should belt tighten," McBeth says. "And that there would be little or no downside to that, that we should just reexamine our business processes and see if we could license more. It was starting that pendulum swing."
Disney Interactive ultimately moved back to the Consumer Products division, as Disney Interactive again looked to licensing, in a move very similar to Disney’s handling of Disney Infinity this year: Feelings at the company shifted, where just a few years prior the company was doubling down on internal development.
"The directive was also to change strategy to move to more of a licensing model so [Disney Interactive] would not have as many ongoing significant expenses related to product development in the future, a much more conservative approach to investing and spending," McBeth says.
And Disney just happened to have a hole in its heart for a certain key-shaped licensed franchise.
There have been many key titles throughout Disney’s video game history, both licensed and internally published. And in the early 2000s, Disney saw up-close how well — and poorly — licensed projects could play out.
In the successful corner, Disney executive Jan Smith worked on a licensed product whose sequels Disney gaming fans still await eagerly today: a game called Kingdom Hearts, developed by Square, now Square Enix, which brought together Disney and Final Fantasy characters into the same universe.
Not all games shared that level of success, though.
In 2002, Graham Hopper followed Smith and started as executive vice president/general manager of Disney Interactive Studios. The unit had also just downsized.
Hopper had been working with the Disney Interactive team (and a consulting firm) prior to that, trying to "restructure the business and put it on the right path," while some members of the division, instead, still thought that it could have success if it kept operating as it was.
"When I got in there it was obvious that we had some really good people and we had some really good products, but we also had some products that were, you know, not as successful, they were done more for financial reasons than for product quality perspectives," Hopper says.
The quality of games was harder to control in licensed products, as well. "Because some licensees, like Square, invest significantly in quality and produce fantastic product, and other licensees, not so much," Hopper says.
At the time, all console products were licensed, Disney mostly self-published PC titles, and learning content (where Disney was only behind Jumpstart, according to Hopper) was also done in-house. Disney, however, didn’t have luck with the learning content in older age demographics, and the PC market was shrinking.
"We were in the two worst spots," Hopper says.
Consumer Products' chairman Andy Mooney sent Hopper into Disney Interactive. Mooney wanted Hopper to take the group, change it to an entirely licensing business and begin bringing in money. Before Disney Interactive received more investment or implemented the strategic review plan, it needed to start making profits.
"He was really frustrated that that wasn't the case prior," Hopper says.
Hopper had to convince Disney that the reason Interactive was doing poorly was because of its position in the market. He argued that DI should move to where growing opportunities were and that it should take the same "quality product will drive financial results in the end" ideology that the other areas of Disney used, instead of just focusing on making money in the short term.
"The nature of the games business, is that every few years, everything changes," Hopper says.
Hopper closed the last of Disney's PC studios — "It wasn't obvious that we could make money," Hopper says — given the continually lower and lower prices of children's PC titles.
"The nature of the games business, is that every few years, everything changes."
"There are mass extinction events that happen every few years in gaming," Hopper says. "And, you know, it does a lot of damage to a lot of players in the space ... the games industry has only gotten bigger and better and stronger every time."
Hopper noticed that if Disney Interactive were to switch over to a model that was focused only on licensing Disney franchises, the company could only make a set amount of money: it would make roughly the same amount of money every year, nothing more, and any growth would be hard to show.
Hopper also recounts — in a warning forbearer of part of what sunk Disney Infinity — that there was a past inventory write-off that was still haunting the company, and that was something to make sure not to have happen again.
Disney Interactive released its first vertical Game Boy Advance titles in 2002: Peter Pan Return to Neverland and Lilo & Stitch. Originally approved under Jan Smith, these two titles performed well, and were an example of how the team could manage inventory without write offs. They also supported Hopper's claim that Disney needed to — again — start publishing its own titles.
Disney Interactive ultimately dipped its toes into console development, and had better than expected success with its initial titles: The Chronicles of Narnia and then Chicken Little. Chicken Little was the first title that the company worked on with a Utah-based studio that really wanted to do kids content — Avalanche Software, the studio behind Disney Infinity — which Disney then went on to acquire. Disney continued to expand: it purchased and formed studios including Black Rock Studio (Pure and Split/Second), Junction Point (Epic Mickey) and Propaganda Games (Turok).
"As we were growing, the faster we were growing, it kind of looked like we were losing money," Hopper says, "when in essence what we were doing was investing in future titles."
"It kind of looked like we were losing money, when in essence what we were doing was investing in future titles."
Disney's animation output was not doing well, meaning the game's side of the business couldn't count on those tie-in games for revenue, but it did have unexpected success with Disney Channel content: Hannah Montana on the Nintendo DS was a multi-million seller, while on the other hand, original series like Spectrobes, which had two titles, never made any money.
And while the female audience — which not many other publishers were paying attention to — was a lucrative consumer segment, Disney also felt that it needed to make gaming content for older boys.
Disney had yet to purchase either Marvel or Star Wars at this point, and Hopper wanted to reach segments of the population where Disney characters might not have appeal. However, content like this, and the Turok license which Disney had acquired, were not the most "Disney-friendly," and could clash with the family-friendly Disney image.
To fix this, Eisner told the team to do the same thing that Disney movies did with the Touchstone label. So Disney Interactive renamed itself to Buena Vista Games in 2003 for "strategic flexibility," according to Hopper, and used different publishing labels: the Disney Interactive label and the Buena Vista Games label, the latter used for content that wasn't suitable for the Disney brand. However, this soon led Disney have problems with console makers (now having two publishing agreements with each company), leading to a simplification: the Buena Vista Games label published most games.
When Bob Iger took the reins at Disney in 2005, a shift occurred toward focusing on items that were important to Disney's core brand. Buena Vista Games, in similar fashion to the other Disney units, reverted to its older name, Disney Interactive, in 2007, seldom using other brands (like ABC for Desperate Housewives or Touchstone for Turok).
"We had ... a priority pass through a lot of red tape through a lot of issues."
"I don’t think that Disney couldn’t be successful in the games space if it really wanted to," Hopper says. "But I think if you look at where does capital go, right now they can probably make more money per dollar investment in the next Marvel game than they can investing in a game that is not yet a franchise ... they’re making rational business decisions for them."
But, Iger also gave Disney Interactive freedom.
"We had ... a priority pass through a lot of red tape through a lot of issues," Hopper says.
But, that didn't extend to quite everything. Toy Story 3 was the first Pixar movie not part of a preexisting licensing deal with THQ, and the Disney Interactive team hoped that it would get to develop the game. Instead of just handing the license to one of its own internal studios, though, Iger left the choice to Pixar head John Lasseter and had both THQ and Disney Interactive pitch ideas.
The idea that Disney Interactive and Avalanche Software pitched was a game where all the characters could play together in a toy box, which served as the seed for what would later become Disney Infinity.
Of course, just because Disney was having success in one area, didn’t mean it neglected the other. Kingdom Hearts is still an ongoing franchise, and for the first time ever, Disney Interactive was about to find itself standing alone amongst Disney’s other divisions; no longer beholden to the Consumer Products division that its history had long been tied to.
The gaming landscape of the 2000s was quite different from that of the '90s, as that of the '90s was different from gaming in the '80s. The number of companies that have survived all three decades is much smaller than those who have come and gone, and Disney’s most recent years in the space still echo that same question: If Disney finds success in making its own games … what happens next?
By 2008, things were going so well that there was a feeling among some at Disney that Disney Interactive's growth should stand on its own, instead of hiding within the results of a larger division. The Walt Disney Internet Group also still housed mobile and online games like ToonTown. The two divisions combined, creating the Disney Interactive Media Group.
"Suddenly, we were, by far and away, the least profitable division of the company, as opposed to being part of the Consumer Products Group," says Craig Relyea, senior vice president, global marketing, Disney Interactive Media Group, 2007-2013.
Some within the group felt that putting everyone together showed support from the company, and could help Disney Interactive breed even more success.
"The flip side of all this is that, you know, none of this stuff ever lasts too long it seems … so even though it felt exciting and kind of energizing to have that happen, I think there was sort of at least self-conscious sense that it could all change the next year," Relyea says.
The growth, however, wasn’t something everybody within the company thought was was a good thing.
"We were always 'Well, let's grow faster, let's create more studios,'" says Howard Donaldson, vice president, studio operation for Disney Interactive from 2007-2011. "And I kind of felt that we should have gotten one studio right and then maybe tried to create another one ... like Sony Santa Monica or Naughty Dog or Dreamworks. They do one game at a time and it's a big blockbuster."
By 2009, with the economic downturn, title performance was lagging. The gaming industry's growth was also shifting: Facebook gaming was big, and more of Disney Interactive's resources were diverted to mobile gaming at the expense of console development. While Disney Interactive was the 22nd publisher in North America when Hopper started (it had broken the top 10 by 2010) change was on the horizon.
Management changed again in 2010 — Disney bought Facebook and mobile developer Playdom, and Playdom's John Pleasants and Yahoo's James Pitaro became co-presidents of Disney Interactive in October of that year. Pleasants left in November of 2013, with Pitaro remaining as president. In 2014, Interactive cut a quarter of its staff — 700 employees. In February, Disney promoted James Pirato to run Disney's then-combined Consumer Products and Interactive division, bringing Disney Interactive back with the division it had split off from years prior.
"Disney’s commitment may have seemed ... variable at times, at least from the outside."
Between 2010 and the present, Disney closed its console studios. Junction Point closed in 2013, after the studio released its second game, the poorly reviewed Epic Mickey 2: The Power of Two, in November 2012.
"Mickey 2 had nothing to do with the closure of Junction Point as far as I know," says creative director Warren Spector via email. "It was just that Disney saw Disney Infinity as a platform they could build on and didn’t see much future in standalone console games."
With Disney Infinity on the way, Disney Interactive was a different landscape for console studios like Junction Point.
"No surprise Disney’s commitment may have seemed ... variable at times, at least from the outside," Spector says. "Junction Point certainly got caught up in some of that variability. We were a console studio and remaking ourselves as anything else would have been an expensive and risky proposition. I wanted to make the transition, but Disney wasn’t particularly supportive of that, I can tell you."
However, even as Disney close its other console efforts before Infinity's launch in 2013, doubt within the company lingered as to if the toys-to-life product itself would be a success.
"It was not a given within the company, or certainly within the Disney Interactive group itself, that Disney Infinity would be successful," Relyea says. There was a "strong belief" in the title however, within those who had been on working on the project for awhile, he adds.
"[Disney has become] this big ocean liner ... in this space you need to be like a startup."
But, that belief wasn't universal. Throughout the course of development, Avalanche had gone through several management changes, leading to the feeling that the project could be on shaky ground.
"There were people at the executive level with the company — and even within the Disney Interactive Group — that weren't really sure about keeping Disney Infinity alive," Relyea said.
Instead, the company was pulling toward mobile games and other projects that didn't require the same investment that Infinity did.
"We believed it in so much, that it seemed a little frightening at certain points [that] it wouldn't move forward," Relyea says.
Disney Infinity, of course, did launch, and went on to become — according to Vignocchi — the most popular game in the toys-to-life genre. But Infinity 3.0 — a product Vignocchi once promised would contain more Disney content than any video game ever — became another title caught up in Disney’s gaming history of going one way ... and then heading back the other.
"[Disney has become] this big ocean liner ... in this space you need to be like a startup. You need to be more nimble. You need to be able to pivot, because things change so fast ... [Disney is] just too big to do that at this point," Relyea says.
Disney Infinity launched three games three years in a row: 1.0 in 2013, 2.0 in 2014 and then 3.0 in 2015. In May, when the company announced its decision to cancel Infinity and switch back to solely to licensing game development, Iger mentioned a lack of confidence in the toys-to-life business as one reason for the decision.
And with the cancellation of Disney Infinity, Disney has again decided — not for the first time — to shift back to a licensing model for development, following in a pattern of back-and-forth dances that the company has been making internally since the early '80s.
But if there's one thing the history of Disney Interactive shows, it's that Disney's game division — just like the game market — is ever in flux, and that while one year may show Disney stepping away from interactive entertainment, history suggests it might not be long before the company takes another turn and tries again.
In the meantime, Disney has had licensing deals in place since before this decision that are still on the horizon — Square Enix’s Kingdom Hearts 3 is in development, and EA is making multiple titles set in the Star Wars universe. Other licensed products are in the pipeline as well, including a new Spider-Man game being developed by Insomniac Games.
"As a fan, and a shareholder, I think it's really important for the [Disney] brand to be relevant in the interactive entertainment space," Relyea says. "I just think that the pendulum needs to swing back the other way at some point."
So while, for now, 2016 marks the end of Disney Infinity and could very well be the end of Disney's 30 year long history with internal game development. But, it’s far from the first time that Disney has made such a decision to then, only a few years later, have the house that Mickey built decide that video game creation is an area that Disney should, one more time, head for the second star to the right, and straight on till morning, into.Illustrations: Natalie Andrewson