Disney leverages entertainment IP for business success

By Steve Brachmann
May 22, 2015

disney-castle-nightThere might be no better patron of innovation in the entertainment industry than the Walt Disney Company (NYSE:DIS) of Burbank, CA. From the Carousel of Progress to Imagineers to Epcot’s Innoventions, Disney has always evinced a great deal of faith in the meaningful impacts that innovation can provide to the benefit of all people. On Friday, May 22nd, Disney will release the film Tomorrowland to theaters nationwide. The film follows a teen with a keen scientific curiosity who partners with a former boy-genius inventor played by George Clooney to unearth the secrets of a time and place existing in their collective memory, according to IMDb’s synopsis.

Interestingly, all that focus on innovation has been amazingly profitable for Disney over the years. If anyone wants a primer on how to make billions of dollars in today’s entertainment industry they would get exactly that by looking at the recent business activities of the Walt Disney Company. The media and entertainment industry in America, as declared by the federal government’s business project SelectUSA, includes production and distribution companies involved in movies, music, television, commercials, radio, games and publishing. In 2014, this entire sector in the United States saw $546 billion worth of economic activity. In almost every area of this industry, Disney is either gaining strength or outright flexing its muscles.

Just take a look at the films that Disney has been involved with. Marvel’s Avengers: Age of Ultron, distributed by Disney, earned $187.7 million during its opening weekend early in May, the second-highest opening weekend box office total in history. It’s the third Marvel film to gross more than $500 million, achieving the feat in 17 days. Which, by the way, Marvel just happens to be a Disney subsidiary, so the Burbank, CA, media giant owns that extremely profitable brand as well. Excitement has been building for the coming release of Star Wars: The Force Awakens in December and Disney is already working its cross promotional magic with a Star Wars-themed restaurant at its Orlando theme park and a video game developed by Electronic Arts which licensed the rights to develop Star Wars games for 10 years. The ability to re-inspire disgruntled fans which Disney has shown by reinvigorating a brand that had languished for years deserves its own huge round of applause.

The most recent quarterly earnings report released by Disney shows that, overall, the company is in fine financial shape and getting stronger. The company took in $2.1 billion in revenues for its second quarter of FY2015, increasing its year-over-year revenues by more than $800 million. Net income and earnings per share also saw increases. CEO Robert Iger’s statement in the earnings report pins the credit for the strong corporate showings on “the incredible ability of our strong brands and quality content to drive results.”

It should be noted that the success isn’t level across the board. Incredibly, despite Disney’s smash successes at the box office, sales of Disney’s studio entertainment offerings dropped by about 6 percent, though this is likely because last year’s sales numbers were bolstered by the incredible showing of the animated motion picture Frozen. But some of the successes are staggering. Operating income for Disney’s theme and amusement parks rose by 24 percent and occupancy at Disney’s North American hotels, which number about two dozen, has been around 89 percent. That smashes the hotel industry’s average occupancy rate of 62.2 percent as of 2013.

Disney’s even making profitable waves in the mobile gaming environment. The success of Disney’s Tsum Tsum, a puzzle game available both through the Apple Store and Google Play, was cited in Disney’s report as a big reason why operating income for Disney Interactive almost doubled year-over-year to $26 million during the quarter despite poor performance for Disney Infinity, an action-adventure video game featuring characters from Disney, Star Wars and Marvel. Again, Disney’s incredibly powerful cross-promotional engine is on full display with Tsum Tsum, a game featuring such stalwart Disney characters as Winnie the Pooh, Mickey Mouse and Frozen’s Olaf. The game app itself is a free download but there are in-app purchases and Disney also sells Tsum Tsum merchandise ranging from $5 plush character dolls to a $53 Tsum Tsum lampshade. The simple fact alone that a game Disney is distributing for free has become the main contributor to a $12 million year-over-year growth in operating income for an entire corporate division is pretty incredible.

Disney’s business is booming. They are investing a great deal into the upkeep and development of its theme parks. The company’s recent purchase of the Carousel Inn in Anaheim further strengthens its hotel and lodging accommodations in its home base of southern California, adding another soldier to the division which, as we pointed out above, Disney has marshalled into a successful battalion. The company has faith in its employees, evidenced by CEO Iger’s recent decision to name a consumer products division head with 16 years of experience in Disney theme parks and no experience in toys. That lack of experience might not matter, however, as Disney’s consumer products division looks strong and it may actually be a very smart business decision given the profitability of Disney’s cross-promotional model. Elsewhere, Disney is extending its international reach, entering into a comprehensive agreement with Filipino firm Globe Telecom which brings Disney’s on-demand movie and TV content along with merchandising and Disney Interactive products to the Phillippines. Best of all? Investors are very happy.

Research and development investment into both patented technologies and trademarks is alive and well at the Walt Disney Company. Innography’s IP portfolio analysis tools show us that the company holds 2,257 active patents as well as 2,287 trademarks, many of which protect design and character marks for beloved characters like Tinkerbell and Mickey Mouse. We’ll take a quick look at Disney’s recent intellectual property gains in both of these areas.

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Disney’s Recent Trademarks: From African Coffee to Sportscasting

One of Disney’s recently registered character marks reflects a decision to increase the food items made available through its Boma Flavors of Africa marketplace, situated in Walt Disney World’s Animal Kingdom. U.S. Trademark No. 862075578, titled Flavors of Africa, protects the words “Flavors of Africa” without claiming any particular font style, size or color. Specifically, this trademark was registered for its use on coffee products. Disney’s web design trademarks increased with the issuance of the untitled U.S. Trademark No. 86337829. The illustration drawing protected here, essentially a tilted Mickey Mouse head outline with a large checkmark running through it, was developed for use on a website featuring and providing information on health and nutrition. Disney’s operations over the radio airwaves can be more effectively licensed to broadcasters thanks to the July 2014 issuance of U.S. Trademark No. 86121929, entitled Radio Disney. The illustration drawing including words protected here for radio broadcast services consisting of the stylized words “Radio Disney” and a circle design connected to two crescent shapes which essentially make up half of the iconic Mickey Mouse head

One other trademark registered in December 2014 will wrap up our look at Disney’s trademarks and show just how vast the company’s trademark holdings in the entertainment industry really are. Included in Disney’s portfolio is U.S. Trademark No. 86261266, titled ScoreCenter. It protects the use of the standard character mark “ScoreCenter” when used with an electronic scoreboard service for athletic events which is distributed to computers and wireless devices by means of a global computer network. The owner of this trademark is ESPN Inc. but ESPN is a subsidiary of Disney so at the end of the day, this sports entertainment trademark is Disney property.

 

Disney’s Recent Patents: From Amusement Park Rides to Interactive Toys

Our last Companies We Follow profile of Disney showed us some incredible technologies involving drone-operated marionettes and electronically levitating objects for shows. Our survey of recently patented Disney technologies show us that the company’s brand of innovation know as Imagineering is still going strong.

canopyDisney’s recent success in theme park operations have led to the development of a pair of patents issued in recent weeks by the USPTO. A means for disguising certain elements of a ride so that a show element can move about a space in a natural manner is protected by U.S. Patent No. 9017178, entitled Canopy or Living Mat for Hiding Support Features on a Ride or Display Platform. The patent claims an assembly adapted for visually disguising drive or support features through the use of a canopy including camouflaging elements positioned between a slot in a platform and the supported object. Hiding these support features can improve the entertainment quality of both amusement rides and animatronic character movement. Marionette performances are again a focus of Disney R&D, as is evidenced by U.S. Patent No. 9011197, titled Robotic Marionettes on Magnetically-Supported and marionetteHighly Mobile Puppeteer Platforms. The patent discloses an apparatus for suspending and positioning marionette for a show which includes a puppeteer vehicle with magnetic wheels for free spinning and greater movement on a stage. The innovation is intended to make marionette shows more cost-effective by making the marionette show computer-operated, obviating the need for human operators which are expensive and prone to error.
A child’s toy with a sophisticated optical technology is at the center of U.S. Patent No. 8998671, entitled Interactive Toy with Embedded Vision System. This patent protects an interactive toy system that can output a sound asking a toy user to present it with an object and capturing image data to ensure that the proper object was presented. Embodiments of the invention envision applying the image capture technology of this toy for game play and education and the technology could be incorporated within a plush toy. Finally, we’ll check out an intriguing holographic technology invented by Disney and protected through the issue of U.S. Patent No. 8979281, titled System and Method for Imagination Park Tree Projections. This patent protects a method of projecting an image for multiple-sided viewing by generating computer aided drafting drawing data and projecting image data onto a three-dimensional object covered by a projection coating that allows viewing of the image data from in front of or behind the three-dimensional object. This technology is intended to enhance the customer experience in retail stores by providing a high quality video projection system.

The Author

Steve Brachmann

Steve Brachmann is a freelance journalist located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He writes about technology and innovation. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients and is available for research projects and freelance work.

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