Reading between the earnings: For entertainment giants, gaming is a key battleground for the future

“Research has shown that Gen Z and Gen Alpha prefer gaming to any other form of entertainment,” Zaslav said during the call. “More than social media, more than watching television or listening to music, more than going to the movie theater.”

Notably, video games were not a major point of discussion during Disney’s Q4 2023 earnings call on Wednesday — but that doesn’t mean gaming isn’t critical to that entertainment company’s future, too. Disney executives are reportedly urging CEO Bob Iger to transform the company into a gaming giant, and Disney’s earnings call was chock-full of breadcrumbs indicating why.

For one thing, the role of sports content, and particularly ESPN, as a major revenue driver for Disney was a repeated refrain throughout the Wednesday call. “These results give us confidence in our belief that sports has the power to drive value for the company even in the face of challenging industry headwinds,” Iger said.

Disney’s focus on sports content dovetails with recent rumors, reported last month by Bloomberg, that an acquisition of Electronic Arts has been discussed within Disney’s boardroom. One of EA’s greatest differentiating strengths as a game developer is its wealth of sports gaming content and relationships with traditional sports leagues, and plugging into ESPN’s gaming IP could help supercharge that ecosystem.

“I think it makes a lot of sense, with the sports crossover with ESPN,” said Joe McMahon, associate director of gaming and esports for the agency Wavemaker. “They’d acquire some really good gaming IP, like Apex Legends and Mass Effect, but with the Hollywood studio power of Disney to be able to create new movie and TV IP.”

Gaming and entertainment giants are starting to team up in new ways, too. Nintendo’s stock price jumped on Wednesday after the game developer announced that it was partnering with Sony to produce a live action “Legend of Zelda” movie. As entertainment companies continue to snap up top gaming properties for television and film adaptation, their race to more effectively monetize their own homegrown intellectual properties through gaming is heating up.

Gaming is an inherently immersive and interactive form of entertainment, and if Disney does decide to spin up an internal gaming group, it might look to its theme park division for the proper talent, much as it did for its metaverse strategy last year. The growth of Disney’s parks business was another focus during Wednesday’s call, and Iger acknowledged that Disney’s experiential business was a source of considerable returns for the company.

“One of the things I’ve always appreciated about Disney is that when you’re in a park, in an experience, they control everything, right? It’s what you smell; it’s the temperature in the air; it’s all of those things that make it the richest experience that you can have,” said Fred Schank, svp of brand experience for creative agency The Marketing Arm. “It’s really hard to get that in a gaming experience, because there’s only sight and sound to play with — but if anyone’s going to take it to that level, Disney is the brand.”