Disney toy division's focus on franchises makes it a star

Wed Aug 6, 2014 9:31am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Lisa Richwine and Ronald Grover

(Reuters) - Shoppers entering a Walt Disney Co retail store these days can see company CEO Bob Iger's franchise strategy on display: walls packed with products linked to the company's famous characters, ranging from Mickey and Minnie to "Guardians of the Galaxy," Iron Man and Doc McStuffins.

Ten years after being sold off and six years after Disney bought them back, Disney's 336 retail stores have helped make its consumer products division among the fastest-growing of the media company's five segments. In the quarter that ended in June, the unit earned $273 million, a 25 percent increase from a year ago.

It was the unit's fourth consecutive quarter of double-digit earnings growth, Iger said when the company announced its results on Tuesday.

Iger's franchise strategy focuses on making larger-budget films like "Maleficent" that stand out in a crowd. Three years ago, he dispatched Bob Chapek, a veteran of the movie studio, to run the consumer products division, where he's done much the same thing.

Chapek organized the unit around franchises, rather than categories such as footwear or lunch boxes.

"Consumers know that their children love a specific Disney franchise, whether it be Doc McStuffins, Frozen, or Minnie Mouse," Chapek said. Parents think "I want to buy Doc McStuffins," he said, before considering the type of product.

Iger's franchise strategy is the reason that over the past eight years the company paid $15 billion to buy Pixar, Marvel and George Lucas' Lucasfilm "Star Wars" factory. Iger directed the company's movie studio to focus on fewer films built around franchises.

Part of Chapek's work at consumer products, which operates the Disney stores and licenses characters, is building on existing franchises.   Continued...

Disney toys are displayed inside a showroom in Hong Kong June 23, 2011. REUTERS/Tyrone Siu