The Walt Disney Company Reports First Quarter Earnings For Fiscal 2015 (Page 4 of 14) in pdf

Studio Entertainment

Studio Entertainment revenues for the quarter decreased 2% to $1.9 billion and segment operating

income increased 33% to $544 million. Higher operating income was due to an increase in home

entertainment results, higher revenue share with the Consumer Products segment due to the performance

of Frozen merchandise and higher TV/SVOD distribution results driven by more titles available

internationally. These increases were partially offset by lower theatrical distribution results.

The increase in home entertainment results was driven by higher unit sales and lower per unit costs.

Unit sales growth was driven by Marvel's Guardians of the Galaxy, Frozen and Maleficent in the current

quarter compared to Monsters University and The Lone Ranger in the prior-year quarter, which did not

include the release of a Marvel title. The decrease in unit costs reflected distribution cost savings and

lower production cost amortization reflecting a higher amortization rate on The Lone Ranger in the prior-

year quarter.

Lower theatrical distribution results reflected the performance of Big Hero 6 in the current quarter

compared to Frozen in the prior-year quarter. In addition, the current quarter included the continuing

performance of Marvel's Guardians of the Galaxy, which was released in the fourth quarter of fiscal 2014

whereas the prior-year quarter included the release of Marvel's Thor: The Dark World.

Consumer Products

Consumer Products revenues for the quarter increased 22% to $1.4 billion and segment operating

income increased 46% to $626 million. Higher operating income was due to increases at our Merchandise

Licensing and Retail businesses.

The increase in operating income at Merchandise Licensing was due to the performance of

merchandise based on Frozen and, to a lesser extent, Disney Channel properties, Mickey and Minnie,

Spider-Man and Avengers.

At our Retail business, higher operating income for the quarter was due to comparable store sales

growth and higher online sales in all regions driven by sales of Frozen merchandise.

Interactive

Interactive revenues for the quarter decreased by $19 million to $384 million and segment operating

income increased by $20 million to $75 million. Improved operating results were due to an increase at

our mobile games business driven by the success of Tsum Tsum and Frozen Free Fall as well as lower

product development costs due to fewer titles in development. This increase was partially offset by lower

results at our console games business reflecting higher per unit costs driven by the mix of Disney Infinity

products sold, lower unit sales and higher marketing costs. The decrease in unit sales was driven by lower

sales of Infinity accessories and catalog titles, partially offset by higher sales of Infinity starter packs.

The Walt Disney Company Reports First Quarter Earnings For Fiscal 2015 Page 4