Interactive Media revenues increased 47%, or $229 million, to
$719 million primarily due to increases of $160 million at Disney
Interactive Studios and $71 million at Disney Online.
The increase at Disney Interactive Studios was primarily due to the
performance of new High School Musical, Hannah Montana and Turok
self-published video games in fiscal 2008 compared to Pirates of the
Caribbean, Spectrobes and Meet the Robinsons games in fiscal 2007. The
increase at Disney Online reflected higher virtual world subscription
revenue due to a full period of Club Penguin, which was acquired in the
fourth quarter of fiscal 2007.
Costs and expenses, which consist primarily of video game and
internet content development costs, product costs, distribution and
marketing expenses, general and administrative costs, and technology
infrastructure costs, increased 25%, or $193 million, to $974 million
driven by increases at Disney Interactive Studios and Disney Online,
partially offset by lower costs related to mobile phone services as a
result of the shut down of the domestic business in the first quarter
of fiscal 2008. The increase at Disney Interactive Studios reflected
higher product, distribution and marketing costs associated with volume
growth and increased investment in video game development. At Disney
Online the increase was driven by higher development and marketing
costs related to the Disney.com website and virtual worlds, including
the impact of a full year of Club Penguin, and the Family.com website.
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