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Disney Beats, With Interactive Still the Runt but Growing Fast

Finally, the Mouse has a game people are buying.

Screengrab via Disney Interactive

Disney beat analyst expectations in Q1 of its 2014 fiscal year, with earnings per share at $1.04 and $12.31 billion in revenue, versus an expected $0.92 EPS and $12.25 billion revenue.

In the quarter ending Dec. 28, the big breadwinners were the usual suspects: Media networks ($5.2 billion), parks and resorts ($3.5 billion) and studio entertainment ($1.9 billion). But the company’s historically smallest division, Disney Interactive, is growing the fastest, up 38 percent year over year to $403 million last quarter, “driven by the success of Disney Infinity.”

The Wall Street Journal reported earlier this week that the Interactive unit would see hundreds of layoffs, primarily from the less successful social gaming division Playdom, which Disney acquired in 2010 for $563.2 million. However, there was no mention of staff reductions in the company’s quarterly SEC filing.

Update: On a call with investors, CEO Bob Iger did not formally confirm the WSJ report, but said the Interactive division is cutting costs by “moving off of some of the traditional platforms,” including social gaming, with a focus on Infinity and mobile/casual games.

Despite a few small hits like Marvel: Avengers Alliance and a series of hidden-object games, the Playdom acquisition never bore much fruit, and many of its games have since been shut down. Indeed, until Infinity came along, the Interactive division as a whole has had a mixed track record.

It’s the second consecutive quarter of profitability for Interactive, and only the third in the unit’s history since Disney began breaking it out separately in earnings reports. Despite a series of past forays into mobile, social and console games, Interactive finally seems to have found something that clicked in the fusing of gaming with physical character toys, a la Activision’s Skylanders, in Disney Infinity.

Iger also asserted on the call that the company’s theme park smart-wristbands, MyMagic+, have been “successful.” The wristbands, which the company debuted last year at the D11 conference, have helped the Magic Kingdom park in Florida accommodate 3,000 more attendees per day, he said.

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