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Disney says expanding video game investment

Walt Disney Co. is increasing investment in video games for hand-held devices and plans to look for acquisitions of small game publishers and developers, Disney consumer products Chairman Andy Mooney said Monday.
/ Source: Reuters

Walt Disney Co. is increasing investment in video games for hand-held devices and plans to look for acquisitions of small game publishers and developers, Disney consumer products Chairman Andy Mooney said Monday.

Disney will raise game development investment by up to $40 million this year, which would suppress operating income, Mooney told an investment conference hosted by investment bank Harris Nesbitt. He said the consumer products group would have sustainable operating growth in the low double-digit range.

The unit responsible for Disney toys and licensing of characters such as Mickey Mouse and Winnie the Pooh was restructured in the last year.

It has established direct relationships with retailers, rather than working through middle men, and recently agreed to sell its money-losing chain of North American retail stores to Children's Place Retails Stores Inc..

Mooney said Children's Place would pay mid-single-digit royalties after an initial two-year grace period. Mooney said he expected The Children's Place to expand the Disney franchise long term.

Disney has shown a growing interest in video games, with Chief Executive Michael Eisner making an appearance at games industry trade show E3 earlier this year.

Mooney said Disney was interested in the hand-held market, which appeals to a younger crowd than video-console games.

Mooney added that Disney would tie in video games to movies, and potentially launch games before films to help promote them, as with "The Chronicles of Narnia," a new movie franchise that Disney will launch next year based on the books by C.S. Lewis.

He said Disney would consider buying game publishers, but would not make any acquisitions that would dilute earnings.