Why Disney’s In-House Video Game Business Failed

In its modern form, Disney isn’t just a movie company. It does everything. With multiple streaming services, a vast theme park empire, countless film studios, Disney has so much at its disposal that it’s come under constant controversy and scrutiny over whether or not it’s violated laws related to American monopolies. But one area Disney isn’t as invested in is video games. You’ll see Disney characters crop up in licensed video games – namely the Kingdom Hearts franchise – but the days of Disney having an in-house video game company are long gone. Former Disney CEOs like Bob Iger have even been open about Disney’s inability to get into the video game space. But why? What has kept Disney from moving into this medium when its reach expands to so many different places?

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Disney’s forays into gaming began with a company named Walt Disney Computer Software Inc. By 1993, The Los Angeles Times did a breakdown of the company that remarked on how little impact this division had left on the Disney empire. While by 1993 Disney’s animation division was in the middle of one of its greatest peaks, Walt Disney Computer Software Inc., which housed just 46 employees at the time, was barely leaving a ripple. Key people in the company noted that the ambitions of this outfit were to emphasize putting recognizable characters in video games rather than pioneer new technology, while outside critics were disappointed by the quality of video games released so far with the Disney label on them.

Disney’s Video Game Downfall Was All About Timing

A key problem with the division was perceived to be its heavy reliance on making video games for various Disney movies but failing to release those titles when the films were hot. A good example of this was how a video game based on Aladdin was noted in the article as being a hot upcoming title for Walt Disney Computer Software Inc…but the movie had already come out six months before the piece was published. Still, even at this troubled stage, the Mouse House had released its share of acclaimed and even highly lucrative games, including Disney’s Stunt Island and a Who Framed Roger Rabbit? game. Disney was capable of releasing successful video games…the conditions just had to be exactly right.

Walt Disney Computer Software Inc. Became Disney Interactive

In December 1994, the company got renamed the less wordy Disney Interactive. There were initially long-term plans for the new form of Disney Interactive to usher in an era of Disney producing in-house video games that dominated the world. Some of the ensuing titles did manage to take off thanks to being associated with beloved brands like Toy Story or The Lion King, but these ambitions were short-lived. Disney got out of the in-house video game business (not for the last time) in April 1997. The change was largely chalked up to new video game technologies being on the horizon. Rather than spending large sums of money to overhaul Disney Interactive so that it could create in-house games that lived up to all the new tech, Disney cut its losses and decided to solely license its various characters and brands to third-party developers.

It’s doubtful Disney would’ve gone this route if in-house video games had turned into a massive business for the Mouse House or if they had created something very popular in the 1990s gaming scene: a video game exclusive mascot character. In this era, everything from Sonic the Hedgehog to Crash Bandicoot to Gex the Gecko managed to leave a mark on gamers. These characters created a bond with players and offered up adventures you couldn’t get in any other medium. Because Disney saw games as only a way to extend the shelf life and brand viability of movies and TV shows, Disney Interactive never produced the kind of exciting original character that could’ve justified keeping in-house gaming around longer.

Bob Iger Brought Sweeping Changes to Disney

A decade passes. Time marches on. Just as the sun rises and sets, so too does a new regime come into power at Disney. The Bob Iger era of Disney brought many sweeping changes to the company. Disney Interactive and its briefly lived successor Buena Vista Games were no more. Disney Interactive Studios would now be the umbrella label for all games published by Disney. While Disney would still license characters to outside game companies, the greater focus now was on making more and more projects in-house. Acquiring a variety of video game developers was key to this task. For instance, Avalanche Software was purchased in 2005 and the company was tasked with making games like Bolt and Toy Story 3. Propaganda Games, meanwhile, developed Tron: Evolution and the unreleased Pirates of the Caribbean: Armada of the Damned for Disney.

Picking up these companies to have them make new projects for Disney was in line with Bob Iger’s general approach to entertainment in his tenure leading this corporation, as seen by his purchases of Pixar, Marvel, and Lucasfilm. However, the new version of Disney Interactive wasn’t quite taking off like they should have. For one thing, in the late 2000s and early 2010s, Disney didn’t have a massive amount of new hit movies it could turn into big video games. The studio wasn’t devoid of hits, but projects like G-Force or Bedtime Stories weren’t going to inspire hit Playstation 3 titles. Disney Animation wouldn’t get its mojo back fully until Tangled in 2010 and Disney being able to release new Marvel movies was still years away. Once again, relying so hard on movie tie-in games was hurting Disney Interactive.

Video Game Franchises Struggled to Get Off the Ground

Perhaps more fatally, attempts to get video game franchises off the ground struggled. Turok was a hit, but it failed to materialize a sequel. Ultimate Band, an attempt to cash in on the Guitar Hero and Rock Band craze of the late 2000s, quickly languished in obscurity. An attempt to relaunch Mickey Mouse as a modernized video game hero in Epic Mickey also failed to grab gamers. It had been well over a decade, but Disney Interactive Studios was still struggling to produce the kind of standalone hits that define a video game company. Its in-house release plan desperately needed an original impactful concept to give it an extra jolt of life. This became even more urgently important as video game tie-ins for movies drastically decreased in presence by the early 2010s. Disney needed to find another route to produce hit video games and fast.

There was one big swing from Disney Interaction in the early 2010s that had the potential to change its approach to in-house gaming forever: Disney Infinity. Building on the popularity of Skylanders, Disney Infinity combined action figures with video gaming and allowed players to combine a slew of different Disney characters (from Jack Sparrow to Olaf the snowman) in one game. It was an enticing concept, and unlike many other high-profile Disney Interactive projects, this one took off. Nearly six months after its launch, news broke that the Disney Infinity game (complete with three starter action figures) had sold over three million copies.

With the next two years delivering new versions of Disney Infinity that added Marvel superheroes and various Star Wars characters into the mix, it seemed like this franchise could go on forever. However, by the summer of 2015, dark clouds were forming over the series that was supposed to function as the savior of Disney Interactive. Sales of the game and its assorted figures had slowed considerably by this point. Disney Interactive as a whole had a rough quarter in the middle of 2015, which executes at the company attributed to adjustments in what kind of games people played on consoles. Once again, we see how a familiar issue comes back to harm Disney’s video game ambitions. Much like in the late 1990s, changes in gaming were upending Disney rather than being seen as an opportunity for the company to grow and change.

The Writing Was On the Wall

The writing was already on the wall that Disney Interactive’s future was growing dim in early 2014 when the division laid off 700 people. The outlook grew even bleaker with the simultaneous news in May 2016 that Disney Infinity would be shutting down and that Disney Interactive would be getting out of the in-house video game business. The news did make sense on several fronts, including how the newest big Disney acquisition, Star Wars, had previously made a deal in 2013 to have EA Games develop new video games in the franchise. Disney Interactive couldn’t even turn to newly acquired Disney properties to help juice up profits, among countless other issues.

The continued failures of Disney in the world of in-house video game titles were so pronounced that former CEO Bob Iger even openly admitted in February 2019 that the company was just not especially good in this field. It’s not hard to see why. Between an overreliance on leaning on movie tie-in games, a lack of must-have original game characters, and especially an inability to adapt to the changing game world, Disney’s time in the in-house video game business had more misses than wins.