2nd UPDATE: Disney To Acquire Chicago Videogame Maker Wideload
September 08 2009 - 2:47PM
Dow Jones News
The Walt Disney Co. (DIS) made another foray into the videogame
business Tuesday, hiring game creator Alexander Seropian and
agreeing to buy his Chicago-based firm, Wideload Games.
The move comes as media conglomerates contend with a slowdown in
advertising revenue and DVD sales; they see videogames as a
business with more growth potential where they can exploit some of
their popular entertainment franchises.
Disney didn't disclose the terms of the deal but it came on the
heels of last week's announcement the entertainment giant had
agreed to pay $4 billion for Marvel Entertainment Inc. (MVL),
creator of videogame-friendly comic book characters and such box
office draws as Spiderman, the Incredible Hulk and the X-Men.
Shares of Disney were recently trading up 1.2% to $26.20.
Disney's dealmaking is a sign of confidence in an industry that
has been rattled by the rise of digital media and a breakdown in
the economics of many of its traditional business models.
Seropian's hiring demonstrates that video gaming continues to be
a business where the company sees opportunity in an economic
recovery.
"In the long term, we're still bullish about where this industry
is going to be," said Graham Hopper, general manager of Disney
Interactive Studios. "Alex is valuable to us with or without
Marvel."
A rare bright spot in the media and entertainment landscape,
videogame sales have dropped off as the recession has worsened.
However, analysts view it as a business that can continue its
growth spurt as the economy rebounds because studies show young
consumers spending more time playing videogames than they do with
other media.
"Clearly, the amount of time spent with videogames is
significant relative to other forms of media and it fits with
Disney's assets," said UBS analyst Michael Morris.
That said, Morris said Disney's Marvel acquisition likely
signaled the company wasn't planning a major acquisition of a
videogame publisher like Take-Two Interactive Software Inc. (TTWO)
or Electronic Arts Inc. (ERTS), two struggling game companies that
are widely viewed as potential acquisition targets.
The Wideload acquisition "fits its strategy of investing in
small, creative firms that can build out Disney's gaming business
organically," said Morris.
Wideload, which is based in Chicago and has 25 full-time
workers, was founded in 2003 by Seropian, who will become vice
president of creative at Disney Interactive Studios, the company's
game division located in Glendale, Calif.
Seropian was a co-founder of Bungie, a game company that was
acquired in 2000 by Microsoft Corp. (MSFT), where Seropian oversaw
the development, production and delivery of Halo, the flagship
title for the 2001 launch of Microsoft's Xbox game system.
Currently, the firm is developing a family console game
scheduled for release in 2010 from Disney. The studio will focus on
creating new intellectual properties that target a broad
audience.
Seropian will join game designer Warren Spector, who sold his
firm, Junction Point Studios, to Disney in 2007 and joined its
creative ranks.
Disney Interactive Studios has produced games based on the
company's popular franchises, like Hannah Montana and High School
Musical, but it has yet to break into the world of hard-core gaming
with a big hit. Hopper aims to change that, saying that with the
hiring of Seropian the company is "trying to be a magnet in this
industry for talent."
-By Nat Worden, Dow Jones Newswires; 212-416-2472;
nat.worden@dowjones.com