The toys-to-life genre has its first major casualty. Disney has announced a $ 147 million charge related to its self-published console games business and the cancelation of its Infinity series.
Specifically cited in the company’s second quarter earnings release is that the cost is “principally Infinity” such that the charge is named the “Infinity Charge.” We already knew the game was skipping a year, focusing instead on a few new playsets.
This is the first we’ve heard that the plug is being pulled entirely. A note in the earnings statement also indicates that the $ 147 million charge includes employee severance and inventory write-down.
Disney’s game publishing arm, which appears to be defunct at this point, is part of the Consumer Products & Interactive Media division. That group saw a dip of 2 percent year-over-year for the quarter, but is up 4 percent at the half-year mark.
We’ve reached out to Disney for more information, including regarding any staff affected by this news. We’ll update should we learn more.
Update: Disney is also shuttering Infinity studio Avalanche, which has been in business for 20 years. The studio employed approximately 300.
“After a thorough evaluation, we have modified our approach to console gaming and will transition exclusively to a licensing model," says Disney consumer products and interactive media chairman Jimmy Pitaro. "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. This means that we will be shutting down Avalanche, our internal studio that developed the game. This was a difficult decision that we did not take lightly given the quality of Disney Infinity and its many passionate fans.”
Update 2: On Disney's earnings call this afternoon, chairman and CEO Bob Iger explained more about the company's decision to close down Infinity production. "We thought we had a really good opportunity to launch our own product in that space, "Iger said. "I realize it was console space, but it was also essentially– a large component of it was the toys-to-life, they call it toys-to-life business. In fact we did quite well with the first iteration of it, and we did okay with the second iteration. But that business is a changing business and we did not have enough confidence in the business in terms of it being stable enough to stay in it from a self-publishing perspective.
Iger reinforced the financial earnings report that attributed much of the write-down to lingering Infinity inventory. "You know that you take on substantially more risk, particularly when it comes to manufacturing and managing the inventory, the toy inventory, of that business," he said. "In fact, as Christine noted, a good part of the write-off that we just announced comes from having to write off that inventory that we took responsibility for when we went into the publishing business. We just feel that it's a changing space and that we're just better off at managing the risk that that business delivers by licensing instead of publishing. It's just that simple. We actually made a good product. I give the developer a lot of credit for the product that they made. It was extremely well-received. But we knew going in that there would be a lot of risk with this product and the fact that we did so well initially gave us the confidence to continue with it. The truth of the matter is that the risks that we saw at the beginning when we started this caught up with us."
Infinity had a solid run, but Toys to Life is an expensive genre. It's a shame that Disney, with its familiar properties, wasn't able to go long on the franchise. Our thoughts are with any individuals affected by this.