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A Look at Disney’s Consumer Products and Interactive Segment

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Aug. 16 2016, Updated 11:04 a.m. ET

Disney’s Consumer Products and Interactive segment

The Walt Disney Company’s (DIS) Consumer Products and Interactive segment had revenue of $1.1 billion in fiscal 3Q16, a rise of 1% year-over-year (or YoY). The segment had an operating income of $324 million in fiscal 3Q16, a fall of 7% over fiscal 3Q15. This fall was the result of falls in its merchandise licensing and retail businesses.

The factors that resulted in a fall in revenue for the company’s merchandise licensing business reflected a negative impact of currency fluctuations and a difficult comparison to higher merchandise licensing revenue for Frozen in fiscal 3Q15.

Disney’s Consumer Products and Interactive segment saw improvement in its games business in fiscal 3Q16, driven by a fall in costs as the company exited its Infinity games business.

As the above chart indicates, licensing, publishing, and games made up 68% of the company’s Consumer Products and Interactive segment, with revenue of $776 million in fiscal 3Q16.

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Disney’s acquisitions and Consumer Products business

Disney’s Consumer Products business has also benefited from the acquisitions of Marvel, Lucasfilm, and Pixar. Disney has always maintained that a core part of its business strategy is effectively monetizing its intellectual property. Disney’s acquisitions have further added to its intellectual property portfolio.

At the MoffettNathanson Media & Communications Summit early this year, the company stated that monetizing the intellectual property created through its Marvel and Lucasfilm acquisitions contributed to the growth of its Consumer Products business.

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