Walt Disney Co., the world's second- largest media company, is creating a video-game studio to make titles exclusively for Nintendo Co., targeting audiences for its animated characters. The studio, called Fall Line, will be based in Salt Lake City and run by Scott Novis, who led the team that created the game based on the Pixar film ``Cars.'' Novis's designers will build games for the Nintendo ``Wii'' console to be released this month and the ``DS'' and ``Game Boy'' handheld players.
Chief Executive Officer Robert Iger said in September that Disney can earn more by developing its own games rather than licensing characters and content. Disney has spent $200 million in the past two years to buy or start game-development studios. The Burbank, California-based company will spend another $200 million in the next two years, said Graham Hopper, general manager of Disney's Buena Vista Games.
``Disney is naturally set up for video games,'' said Imran Khan, an analyst with JPMorgan Chase & Co. ``It makes sense because of their characters and their content, and because they already have a strong consumer product group, which others like Time Warner and Paramount don't.''
Shares of Disney rose 57 cents to $32.46 yesterday in New York Stock Exchange composite trading. They have gained 35 percent this year.
Buena Vista wants to produce 80 percent of its games internally, Hopper said. Of the games it makes, Buena Vista wants 80 percent based on Disney movies, TV shows or other content.
Fourth Studio
Fall Line is the fourth game developer Disney has bought or started in the past 19 months. The company has more than tripled its video-game payroll to 600 employees.
In April 2005, Buena Vista bought Salt Lake City-based Avalanche Software for undisclosed terms and established a start- up studio in Vancouver called Propaganda Games, led by former executives of Electronic Arts Canada. In September, the company purchased Brighton, England-based Climax Racing, maker of auto- racing games ``MotoGP'' and ``ATV Offroad Fury'' for undisclosed terms.
Khan expects Disney to rely less on licensing agreements, such as the accord with publisher THQ Inc. it inherited with the $8.06 billion purchase of Pixar in May. THQ, based in Agoura Hills, California, has game rights to the next four Pixar films.
``They are building the capability to do these games on their own,'' said Khan, who rates the shares ``overweight'' and doesn't own them.
`Chicken Little'
Disney is releasing a second ``Chicken Little'' video game for Nintendo's Wii around the same time the console is expected to go on sale this month.
The game follows a formula that Hopper and other Disney executives want to serve as a blueprint for future titles. Designers at Avalanche worked with the film's producers and animators to get scenes that were created entirely for the game.
``That lets us tell a story in the same universe and time frame as the movie,'' said John Blackburn, Avalanche Software's general manager. ``But we can expand the universe in a way that makes better sense for a video game.''
Collaboration between designers and animators has grown, Blackburn said. Designers get early access to footage, gaining more time to build a game and make it closer to the movie.
``Before we were with Disney, we wouldn't always get access to the movie team and because of the lack of trust, they wouldn't let us do things with the character,'' Blackburn said.
Natural Partner
Disney views Nintendo as a natural partner since its users tend to be younger. While Microsoft Corp. and Sony Corp. compete for ardent video game fans with high-end graphics and complex games, Nintendo has made the Wii simple and easy to use with a controller sensitive to motion.
Novis said kids find Xbox and PlayStation games technical and difficult to learn, while they typically can pick up a Nintendo game and start playing quickly. At $250, Nintendo's Wii costs less than the Xbox and PlayStation 3.
``It seems like with our brand, the Nintendo platform is a really good place to put our development effort and focus,'' Novis said.
