Why Movies Will Soon Become Disney's Least Profitable Segment

Disney is well-known for its movies, both its classic cartoons and newer animated films such as Frozen , as well as its franchises including Marvel and Star Wars. However, few might realize that the segment that makes Disney movies, what Disney calls Studio Entertainment, is dwarfed by the media-networks and theme-parks segments in terms of operating income and could soon be passed by the consumer-products division. Here's how studio entertainment will soon be the least lucrative of all of Disney's segments, and why this matters for investors.

Source: Disney.

Still, interactive is only a sliver compared with these other two, and even with it rolled into consumer products, the combined segment's operating income will still be slightly shy of that of studio entertainment. Yet with the growth consumer products has shown recently, that's likely to change sometime in 2016. While studio entertainment's 27% income growth is impressive, it's still not the fastest-growing segment. During the fiscal year, consumer products' operating income jumped 29% year over year.

Why this matters

So why does it matter that the segment responsible for making Disney movies will soon be the company's smallest? It matters because the segment is performing incredibly well, and still it will soon be the smallest of the four segments the company reports on, showing just how incredible the company as a whole is performing, not only in movies but also with products, theme parks, and a diverse array of network programming.

Total net income in the recently reported fiscal 2015 was 12% higher than 2014 because as all the segments were performing well together. As the studio-entertainment segment continues to produce blockbuster hits that create the characters and stories that fuel the rise in these other segments, segments that themselves make more income than the movies, we can expect Disney's total income to continue rising nicely.

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The article Why Movies Will Soon Become Disney's Least Profitable Segment originally appeared on

Bradley Seth McNew owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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