“The video game industry is a hit-based industry and if your game doesn’t sell well, then your job is at risk,” said a source.
For a time,
Disney Infinity was a hit for a company without much success in games. Between 2008 and 2013, Disney’s gaming division lost $1.3 billion, according to
Reuters. This stood in stark contrast to the company’s ongoing success on TV and film.
Disney Infinity got off to a fast start in 2013, generating $550 million in revenue in its first 10 months. Disney predicted it’d be a billion-dollar empire. When
Disney Infinity 2.0 and
3.0were released in 2014 and 2015, sales would spike.
According to analyst estimates, the
Star Wars toys generated $200 million on their own last fall.
But the market Disney Infinity was competing in, commonly dubbed the toys to life genre, was getting more competitive. It used to be justSkylanders from Activision and Disney Infinity. Then, those two were joined by LEGO Dimensions from Warner Bros., which leveraged mega franchises like Ghostbusters and Doctor Who. Yet, by all accounts, Disney Infinityremained king.
“The company has been completely behind Disney Infinity,” Disney Interactive VP John Vignocchi told the website
Polygon just this past March. “If you look at all of the creative content coming out this year, you can see they are still proud and still 100 percent behind us.”
Obviously, things have taken a turn since then.
“It’s weird to be the number one in a genre but still have your sales be disappointing,” said one source.
“
Disney Infinity was a big seller and earned a lot of revenue for Disney Interactive,” said another source. “I don’t know of another high selling ‘AAA’ game that has been killed like this.”
Competition wasn’t the only problem for
Disney Infinity, though.
When
Disney Infinity first took off in 2013, it was very hard to find the toys for some of the characters. Though it’s easy to suspect shortages are nothing more than cynical manipulations by corporations, it’s also lost revenue. The sources I spoke to said Disney took the shortages during
Disney Infinity 1.0 seriously. Disney wanted to avoid that problem in the future.
“The biggest issue with [
Disney Infinity]
2.0,” said one source, “and probably the reason for the closure of the studio and the end of
Infinitywas that they made too many toys.
Infinity 1.0 had a major shortage of toys. They were almost always off the shelf and manufacturing was behind by months. [...] The expectation was that the brand would grow and they would sell more units and toys. It’s hard to put in perspective how big of a failure this was since all those additional units were added to the books destroyed any chance for
2.0 to be profitable.”
You started to see evidence of this in
Disney’s own financial report in 2016 about declining revenue:
“The decrease from Disney Infinity was due to higher inventory reserves and lower unit sales volume.”
How far off were they? Once source pointed to Hulk, one of the game’s most popular characters. A story bouncing around the company was that expectations for Hulk were so huge, they produced two million toys. Unfortunately, as the story went, they only ended up selling one million units.
Both of our sources heard independently that Disney had a plan to salvage things: a possible deal with Hasbro, the toy giant behind
Transformers and
G.I. Joe, to help with the manufacturing of the toys. (While the idea of the Hasbro franchises showing up in
Infinity is tantalizing, neither source was aware of any such plans). Hasbro didn’t respond to a request for comment.
Given the troubles with making so many toys and getting them all sold, you can see why Disney would be interested in working with Hasbro to manage expectations. Disney had tried to resolve their backlog of unsold toys with creative development, as well. The most recent playset for
Captain America: Civil War, for example, not only focuses on new characters like Black Panther and Vision, but includes support for Marvel-based figures from years past. The hope was that people would dig into their wallets and purchase some of the old toys, as well.
Another less public challenge for the
Disney Infinity project was the balancing act of collaborating with the other Disney-owned stakeholders Marvel and LucasFilm that led to overreach. One said that when the developers wanted Marvel’s
Guardians of the Galaxy included, they had to include a full range of characters, including a toy for the blue-skinned Yondu, a relatively minor character from the film. Yondu’s inclusion may have been a well-intentioned gesture to represent the full cast, but the toy was a flop.
“They couldn’t give them away,” said one source.
“You can get a Yondu if you want Yondu,” said another. “He’s a cool-playing character and all but...yeah.”
The
Infinity 3.0 team ran into similar challenges with
Star Wars, according to one source, juggling priorities to make levels and characters for
Star Wars Rebels, a popular animated series even as the game’s developers wanted to focus more on the movies, particularly the then-upcoming
Star Wars: The Force Awakens. But LucasFilm said no, and a compromise was reached where
Rebels and
The Force Awakens would be included in
Disney Infinity 3.0. Over the course of development, the focus was pushed toward the new movie.
“Those kind of ultimatums were very prevalent in negotiations for creating new toys for
Disney Infinity,” said one source.
As much as
Skylanders might have been seen by the outside world as
Infinity’s foremost competitor, it was another
Star Wars game that added yet another challenge to Disney franchise. Last fall’s
Star Wars Battlefront, the online shooter collaboration with
Electronic Arts, was a quick success. Unlike
Infinity, Disney only licensed out
Star Wars to EA, which meant EA was bore more of the the risk. For Disney, it was the cheaper play, but the company seemed committed to support both games. The plan was for
Disney Infinity and
Battlefront to exist alongside one another, targeting different age groups.
“Our methodology was we’re [
Disney Infinity] going to hit this 7-12 range,” said one source, “[and]
Battlefront is going to the teen and up range. But it turns out even the younger kids wanted to play
Battlefrontstill.”
Battlefront went on to sell 13 million copies, exceeding financial expectations.
It seems like a combination factors—increased competition, miscalculated inventory, complex corporate interests—contributed to
Disney Infinity’s demise. The result is that Disney seems to be getting out of making their own console games altogether and scuttling its most ambitious gaming project right as it was on the cusp of realizing its full franchise crossover potential. When the latest news about
Disney Infinity hit, the company said it would pivot towards licensing properties, as was the case with
Battlefront.
“[The games] business is a changing business,” said Disney boss Bob Iger on an investor call this week. “We did not have enough confidence in the business in terms of it being stable enough.”
And thus, the end of
Disney Infinity.
