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Author: DCWD40 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 49678  
Subject: Re: PS4 Coming this Christmas Date: 2/21/2013 11:31 PM
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Buying EA would also result in Disney owning game titles, such as EA Sports or Dead Space, that do not exactly fit in its family entertainment image. Do you sell those off? If so, you sell off a chunk of profitability.

EA has games like SimCity that are family friendly. At the other extreme is Crysis. In between are Star Wars (yes, a Lusasfilm licensed product), The Simpsons, and Poker. Plus, it is expected to make almost $300 million (after taxes) in the fiscal year that ends March 2013. EA would yield a 5% after-tax return to Disney on the basis of a $6 billion purchase price. Or, thought another way, it could cover-up the poor performance of today's limping operation. I'd leave EA untouched in terms of the games they would offer under Disney ownership.

Speaking of a family image, I remember the days when Walt Disney was fearful of serving alcohol in the theme parks. Now, it is a featured item in such events as EPCOT's Flower and Garden Festival. [I could have mentioned the EPCOT Food and Wine Festival but that was too obvious.] Even the Magic Kingdom has it on the menu at Be Our Guest [after years offering it at Club 33 -- a private affair inside the park.].

https://disneyworld.disney.go.com/events-tours/epcot/epcot-i...

http://www.hlntv.com/article/2012/09/14/alcohol-magic-kingdo...

Disney seems to have no problem moving away from a family image at the corporate level. Touchstone Pictures was created so Disney could release more adult-oriented movies. Pulp Fiction, a cult classic and a very profitable movie for Disney, is a Miramax release and is not aimed at Bible Belt families. ABC recently had no problem bringing Good Christian B*tches to prime time. So, worrying that an EA title may not be family friendly is hardly something that would cause a problem at Disney headquarters.

An EA buy could fix a broken and money losing Division while at the same time trying to build long-term synergies. For example, Disney is not a distribution powerhouse in games. EA may have lost its #1 position but it still knows how to market a game -- and kill one before it becomes an embarrassment in the marketplace. These are skills that Disney does not seem to have in its current structure.

As others have mentioned, there are natural synergies like ESPN and Madden NFL. But, there are lots of backgrounds in games that could provide good advertising space for other Disney properties. Plus, there is the ability to write in places like Disney World into plots for games like The Simpsons. Instead of licensing a name to use in a game, use a Disney property name that you already own. Save money. Self-promote.

There are obvious concerns that dedicated home game consoles may be a dying market. That may be true but gaming isn't dying. As phones and tablets become more powerful, the simple games found on them today will yield to more graphically exciting products. Those games will require the development resources of an EA and that in my mind is what cements EA into game entertainment's future.

Disney has tried to steer clear of gambling in its theme parks. While I don't see why that is so taboo, I do realize that a gambling oriented hotel probably isn't critical to any theme park's future. But, the idea of gambling via the Internet is something I think EA could be used to develop. Governor Christie wants to bring it to NJ casinos.

http://news.yahoo.com/nj-gov-ill-quickly-sign-204454532.html...

Disney has in Lucasfilm the game developers that could bring the eye candy and sounds to take an Internet-based gambling over the top. EA has the same thing too. The two could combine to produce something quite powerful and, potentially, be the ESPN-like asset that people do not know brings in the bulk of the earnings at Disney. US gambling, in 2007 (according to Wikipedia), was a $168 million business in legal book making, $34 billion in commercial casinos, and $92 billion in all its legal forms (including Indian casinos).

http://en.wikipedia.org/wiki/Gambling_in_the_United_States

Like I said, I see EA as the finishing touch on Mr. Iger's desire to be big in gaming. It just might also allow Disney to become #1 in gambling. Imagine an ESPN book making operation (and I am not talking about children's books). ABC Family BINGO (with the option to not play for money). Retirement homes with Disney on-line games...

I was in a retirement home this week and they had scheduled games. That takes dedicated staff and, although popular, is offered on a limited basis. BINGO is the most popular activity! If Disney could find a way to weave their games into retirement homes, maybe there is the opportunity to lower staffing costs for the operator while at the same time providing 24-hour a day mental stimulation for the patients. Just a thought...

How that for a long answer to a two sentence question? Ha!

W.D.
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