Concentrating on Core Competencies

Disney's Exit From Video Game Publishing Disney's primary strategic objective is to product high-quality content through their entire product mix which consists of a wide variety of different goods, services, and media products. Disney's mission statement reads as: "The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information.

Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world (The Walt Disney Company, N.d.)." Disney has just recently made a decision to cut its video gaming segment which was referred to as the Disney Interactive Studio and was staffed by roughly three hundred employees; despite the fact that the publically boasted about the success of the self-published video game unit and the market gains that it was making merely weeks ago (Morris, 2016).

Since Disney is typically adamant about pursing growth through its diversification strategy that leverages its famous characters over as many product lines as possible, the new has surprised many analysts. However, the news was also coupled with nearly a hundred and fifty-million-dollar charge for the quarter despite the fact that the division that housed Infinity, Disney Consumer Products and Interactive Media still posted an operating income of over three-hundred fifty million dollars (Barnes, 2016). The resulting announcement was followed by a fall in the Disney stock price of about six percent.

However, there seems to be evidence that the earnings produced by the video game division fell sharply below what it was expected to earn in the quarter and thus was subject to review. "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," said Robert Iger, Disney's chairman and CEO on an earnings call.

"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 risk that we cited at the beginning when we went into this caught up with us (Morris, 2016)." There is one phrase in the CEO's statement that seems to be the most revealing in regards to the company's perspective on the deal and what their intentions were.

Iger mentions that there was risk and that the company did not want to stay in the industry from a "self-publishing perspective." Producing the games internally with a dedicated team who develops the software and runs the related business functions can be expensive in regards of human resources and capital allocations. Thus the CEO indicates that he was not comfortable in continuing to fund these operations internally or as "self-publishers." However, it is unlikely that Disney characters will no longer appear in the video game segment in the future.

It is likely that Disney will look for strategic partners to utilize its product mix of animated characters externally through licensed ventures, as opposed.