Disney’s game business has been somewhat static. In 2011, Disney was ranked at No. 15 on the list of the top public video game companies when it came to revenues, according to market researcher Newzoo. And in 2015, Disney was still ranked at No. 15. That means it isn’t nearly as dominant in the $91 billion game business as it is in the rest of entertainment and toys.

But in mobile games, the market is fresh and fluid. Chris Heatherly, head of Disney Interactive’s mobile game business, believes that the company can move the needle on the rankings by focusing on fewer, better titles. That’s a familiar refrain at a number of mobile game companies, but Disney has been rebooting itself to do just that. And the company is seeing some success through a combination of licensing other game publishers to make mobile titles and by building its own experiences with internal studios.

Heatherly said that the opportunity to grow is still within reach, even though a handful of mobile-first companies has been dominating the top-grossing ranks in games. But if you add up both Disney’s internally produced and externally licensed titles, Disney’s mobile game business comes out to No. 4 in top-grossing in the world, Heatherly said. So, there’s still room to grow, but the challenge isn’t as tough as others might think. We caught up with Heatherly at the Game Developers Conference (GDC) last week in San Francisco.

Here’s an edited transcript of our interview.

Marvel Contest of Champions

Above: Artwork from Marvel Contest of Champions.

Image Credit: Kabam

GamesBeat: What do you guys have out now? What are your big upcoming titles?

Chris Heatherly: We have had 10 top-grossing titles in the last year. On the licensing side, Marvel Contest of Champions from Kabam and Star Wars: Galaxy of Heroes from EA. Those are our two top titles right now. Both are great licensees, really excited about those. Not as big in the U.S., I should have mentioned, is Disney Tsum Tsum, which is a massive phenomenon in Asia. That’s our most successful free-to-play game of all time.

GamesBeat: My kids played that one.

Heatherly: On the vertical published side, we have Frozen Free Fall as a strong title for us. That franchise has continued to be just a monster, a generational phenomenon. Star Wars: Commander continues to be very strong. We launched an Inside Out casual game, a bubble shooter game. That’s done very well. Across casual and mid-core, we have some very strong titles out there.

GamesBeat: What’s the big picture?

Heatherly: To take a step back, a couple of years ago, we restructured the business and retooled the strategy. We shut down a lot of titles. We worked on fewer, higher-quality games. That strategy’s started to pay off. Tonight and over the next several months, you’ll see a lot of titles resulting from that strategy come out. We have a Disney theme park builder from Gameloft launching. It’s a beautiful game. It has lots of Disney characters, lots of nods to the theme parks. It’s going to be a fun game, kind of a Tycoon-style game.

We’re showing the trailer for Marvel: Avengers Alliance 2. That’s a game we developed in-house. Avengers Alliance was our most successful social title to date. The sequel looks spectacular. It has a lot of depth. We’re really excited. All-new storyline that bridges the storyline from the original to the new game. We did a custom comic book with Marvel that tells the story behind it, building a bigger mythology behind some of our Marvel games.

The big one we’re announcing is Disney Crossy Road. That’s a co-development model. We’re publishing the title. Hipster Whale is developing. We’re happy with the collaboration. It has more than 100 Disney characters, nine different Disney worlds. We have all the big favorites and some really niche deep cuts. You can be Mufasa’s ghost from Lion King, when he’s a cloud. You can be the hatbox ghost from the Haunted Mansion, which if you’re a Disney park fan, is a pretty cool secret. We did 8-bit soundtracks for every one of the levels, classic Disney songs redone in 8-bit style. There are new mechanics added in. In the Haunted Mansion level, you have to light the lights as you go through or you get consumed by the darkness.

It’s great to have that in our network. We’re able to bring not just our IP but our publishing assets as well. We’re bringing the folks from Maker, the biggest YouTube multichannel network. They have guys like PewDiePie and Markiplier. We have a collection of influencers with a combined reach of around 25 million subscribers that will be working with us to get the word out about the game. We’re also making an animated short-form video series. These aren’t commercials. They’re real animation.

GamesBeat: To what degree are YouTubers the preferred form of user acquisition these days?

Heatherly: Working with the Maker guys, we’re learning a lot about YouTube. We’re getting better at YouTube from the game user acquisition side. One thing we’ve found is that people may underestimate how powerful the platform can be because of the virality and the social nature of it, and the fact that people who watch YouTube tend to be influencers themselves. We’re figuring out the right way to use it. It doesn’t quite fit into the model of [consumer price index (CPI)] based acquisition that everybody knows.

Having the Maker guys … this is the benefit of being at the Walt Disney Company. We have the experts in YouTube, short of YouTube themselves. They’re helping us figure that out. We’re doing a lot of experiments there. Earlier this year we put Maker influencer video content about Star Wars: Commander in our games. One thing we’d like to do going forward is, how do we build mechanics into our games that allow influencers to be an active part of the community and help manage their own micro-communities within our games? That’s a whole thread we’re thinking about.

PewDiePie

Above: Ah! He’s going to hit us!

Image Credit: PewDiePie

GamesBeat: Are they still sponsored links? They talk about the game and put a sponsored link in, so you can trace it back to them.

Heatherly: We clearly call out when it’s sponsored content, yes.

GamesBeat: The Roostr guys were trying to reach smaller communities, it seems like. They wanted to go beyond the top influencers to connect people with small, but very targeted, communities.

Heatherly: We have a company Maker bought called Instafluence that does something like that on other social networks — Twitter, Vine, Facebook. They’re also working with us on promoting this game. That’s exactly what they do. They find people who are organically already into a game or a genre and amplify their message.

You brought up user acquisition. You can get multiple companies out there with licenses to the IP who are all competing against each other driving CPIs up. We’re always going to do licensing. Licensing is a big, important part of our business. But we think that if we only work with the top five or six guys — not all of those even do licensing. We’re leaving a lot of opportunity on the table because hundreds of creative devs out there can make great games with us.

We’re trying to build a Disney network where we build relationships with our customers over multiple games and not just across our games but video and e-books and other stuff. We’re able to keep those people in the network and give them new games to play instead of having to go out and reacquire them through the app store, which is the model everyone else is struggling with.

GamesBeat: Why was the Avengers title a good one to do in-house?

Heatherly: The first one was in-house. That’s why we did the second one in-house as well. The team knows the game, knows the game style. They were one of the first teams in the world to take that JRPG gameplay and free-to-play it. They’re spectacular at live ops. That game has lasted for years because they’re great at events and character rollouts and everything else. We stuck with those guys through the mobile transition. We have a good studio there with a game we’re proud of.

GamesBeat: How many other studios do you have internally?

Heatherly: We have five. We’re trying to do somewhere between three and four titles a year internally. We’re not doing a lot of internal titles at once. We’re trying to focus on quality, keeping the teams strong, being cautious about how we scale. We’ve learned from the past that overexpanding internally is the kiss of death. We’ve tried to keep those teams high quality, putting out great stuff.

They’re genre focused, but we’re also trying to do some more innovative things with them going forward as well. We feel like part of the benefit of having internal teams is you can try some things that will be hard to get a third-party developer on board with because they want to take an easier path to success.

Star Wars: Commander.

Above: Artwork from Star Wars: Commander.

Image Credit: Disney

GamesBeat: Where’s the overall mobile industry at right now, do you think? Investors are all moving on to VR. It feels like mobile is a lonely place, even with a billion users.

Heatherly: The handwringing and the bearishness is way overwrought. To me, mobile is becoming a real business. It’s less interesting to the early-stage startup guys. They tend to drive a lot of ink, but a lot of people make proclamations. “There’s only going to be one mobile game company. Nobody else can come in.” You hear that all the time, and it never happens. Guys like Hipster Whale come out of nowhere and launch a game that gets 100 million downloads.

The beautiful thing about the app stores and Steam as well is they’re a democratic marketplace for content. We have to fight, as a big brand, along with all the other great creative forces out there. Sometimes we win, and sometimes we lose. It comes down to quality.

The market is only going to get better. Everybody’s talking about Clash Royale. That game has broken through on three or four levels that indicate where the industry is going. Synchronous PvP, community features. One of the most interesting things I’ve seen at the show is people who are doing games built to be watched by audiences. They’re building off the trend of YouTube and Twitch, building those features directly into their games, which is very interesting to us from a game and a maker standpoint.

The industry struggled for five years to get to free to play. Now, you have a lot of competent free-to-play teams that know how to make money. That’s going to be the table stakes. The stuff that gets more exciting is richer, deeper communities, smarter meta-mechanics. I feel like a lot of people are losing focus on the mobile market, and that’s fine by me. We think we have a great opportunity here.

We’re doing VR stuff. Disney and Lucasfilm have a huge investment in their X-Labs project, doing leading content development in that area. We’re doing some other stuff behind the scenes. We helped fund, through Imagineering, a lot of the IP around VR over the last 20 years. We’re not new to the VR space. We’ve been there a long time. But we know from being there a long time … that it’s always just a little bit further away than people think it is.

We’ll be in that area, and we’ll do some smart things, but we’re not losing focus on the mobile business. What you’re seeing is companies like us getting more excited as the investors get less excited. It’s becoming a real business you can make money in.

The way we look at mobile games … what you want when you have IP like this is to create a vehicle through which you can bring together a large number of people on a daily basis to stay engaged with your IP. That’s what comic books have done. That’s what TV shows do. But a new comic or a new TV show comes out once a week, maybe 13 times a year or whatever. Games as a service, live-operated games, we have new content every week. Big feature drops every month. We’re building multimillion-player audiences around each of these IPs.

That direct relationship with guests is strategically important to Disney in a broader way than just the games market. It’s the vehicle through which we can touch our fans every day.

DisneyLife

Above: DisneyLife is a digital membership service.

Image Credit: Disney

GamesBeat: On Newzoo’s list of the top 25 public game companies in the world, Disney came in at 15. They tried to measure everybody’s internal revenues for each game-related division. Tencent comes out to number one. Activision is pretty high up there. But at 15, Disney seemed like it was low. What you think are some things that could move you up that list? What are the opportunities?

Heatherly: We rebooted the business. Our rank has seen an impact. I’m not as worried about rank or market share as I am about the quality of the stuff we’re putting out there and whether we’re engaging fans and making stuff people want to pay for. One of the problems we had in the past with our strategy was trying to be big for the sake of being big. A studio like Pixar puts out one movie a year. We’re not going to make one a year, but that’s the discipline we want to have.

You’re seeing the pieces of the strategy come into place. In the console market, we’re taking very selective shots. We’re doing things like Battlefront or Kingdom Hearts. Triple-A games. Not a lot of them. Very fan friendly. We’re trying to make the most out of those games.

We have more market share in the console space, between Disney Infinity and Battlefront, than we probably ever had with 10 games published in a year. Focusing on top-10 hits in the console space through our licensing partners will yield more.

In the mobile space, it’s a similar thing. We’re going to take more shots than just two or three, but we have multiple IP to do it with. We’re starting to grow our casual network with multiple IP. We have several new movies a year. Between Disney Animation and Pixar, we’ll have two new properties a year, plus stuff from the live-action side. Plus the whole catalog of characters. In mid-core we’re taking some very selective, high-quality shots, either through licensing or our published business.

It’s about high-quality game execution and building our network. Bringing stuff like Hipster Whale in, that’s a great example of what we want to do. The other thing we’re doing is going very heavily against rewarded video advertising. Probably about as heavy as any major out there. If you look at Disney as a whole, we’re one of the biggest ad sellers in the world. We have ABC. We have the Maker network. We have ESPN. We work with those groups.

When advertisers come to us and they want [to make] a digital buy, if you want to be in front of eyeballs in mobile, it’s in a game. We’re not doing that through interstitials. We’re not violating your game experience. But if you want to opt in to an ad, you have a choice. You can pay, or you can watch an ad. We’re seeing people want to do it. It’s not cannibalistic. People enjoy the user experience. We can now work with advertisers who can buy across all of our media, including games.

The point there is that we used to look at games only from the perspective of, “How much can we make in [in-app purchases]?” If you did that, you would never make a casual game. Everyone ran away from the casual market. The casual market is going to monetize better than it has in the past because you see mid-core mechanics starting to migrate into that market. People get into things like character collection that’s new to that market. But you’re also seeing stuff like rewarded video advertising. People have multiple ways to pay us. They can pay us by being social. They can pay us with money. They can pay us by watching ads. It’s their choice. We’ll be focused on the size and quality of our network, as well as balancing that with the revenue-making potential.

In mobile, not in console, if you put our licensing and published business together, we’re the number four grossing brand in the world. In Asia, we exclusively license. In the West, it’s a mix. If you just look at our published business in the West, it’s number 22. We have a lot of room to move up in our published business, and we still have a lot of IP that doesn’t have hit games against it.

Star Wars: Galaxy of Heroes.

Above: More from Star Wars: Galaxy of Heroes.

Image Credit: EA

GamesBeat: How many Star Wars games is enough for you?

Heatherly: [Laughs] We feel like there’s a market for couple a year and then probably a casual game or so. We’re not doing a lot of Star Wars games. If you look at our Star Wars mobile portfolio, we have two real active games — Galaxy of Heroes and Commander. We have a few legacy games that are not really getting installs anymore, but they still have active players. But we’re trying to keep the slate tight.

If you look at both Star Wars and Marvel, we’ve been able to maintain multiple games successfully at the same time. But we spend a lot of time talking about how much is too much and what’s the most complementary portfolio.

GamesBeat: The particulars of Disney Crossy Road — how did that come together?

Heatherly: We met them at GDC, actually. They said they were huge Disney fans. We said, “Well, how about making a Disney version of Crossy Road?” These guys, for the success they’ve had, are incredibly humble, gracious, wonderful to work with. One of the best partners we’ve ever had. They love Disney.

In this business, it’s not hard to find Marvel and Star Wars fans. It’s harder to find hardcore Disney fans. When you find them, it’s a beautiful thing. These guys love the Disney characters. They’re in a place where this collaboration is fun for them. They did the Pac-Man thing. They’re doing this. They’re doing their own original stuff. But it came together pretty quickly.

GamesBeat: What are you putting on tonight?

Heatherly: Every year, I get up and give a little state of the union, and then we’re doing a storytellers’ panel. We want to stand for something more at the show than just business. What do we have to contribute to GDC? It’s really story. Last year, we brought down several filmmakers. This year, we have Ronnie del Carmen, who was a co-director on Inside Out. We’ll have Chris Buck, the art director for Frozen. We’ll have the producer of both Alice films. Every year, we want to vary the talent up. We have so many great people at Disney. We could keep doing this forever.

Disney Crossy Road

Above: The upcoming Disney Crossy Road.

Image Credit: Disney
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