By Lisa Richwine and Liana B. Baker
LOS ANGELES/NEW YORK (Reuters) - It's not surprising, perhaps, that a game based on a sewer-dwelling alligator named "Swampy" ranks as the top paid app for iPhones and iPads. What's surprising is that the game is a product of Walt Disney Co.
Swampy is the title character on a quest to stay clean in a low-cost, mobile video game called "Where's My Water?" that Disney hopes will lead to a turnaround of its struggling gaming business.
Within 24 hours of its release on September 22, "Where's My Water?" -- a 99-cent puzzle game where players try to help Swampy keep clean by digging paths to guide water to his subterranean bathtub -- rose to the top of Apple Inc's App Store and has stayed there since.
The game featuring Swampy, who is the first Disney character created specifically for a mobile game, currently ranks ahead of Rovio's wildly popular "Angry Birds" as the top paid app for iPhones and iPads, underscoring the threat that established, deep-pocketed companies like Disney and Electronic Arts pose for upstarts like Rovio and Zynga.
In an interview with Reuters, Bart Decrem, head of Disney's mobile gaming operations, declined to provide figures for downloads or other financial measures, saying only that the game "has been really well-received, doing really well in terms of downloads and chart positions around the world."
Though it is early days, Swampy has the potential to develop into the kind of hit Disney needs to help revive its interactive unit, which includes online, mobile and social games plus virtual worlds such as the Club Penguin website. The division is the company's smallest unit by revenue and is being revamped after several quarters of losses.
Disney last year bought social games maker Playdom for about $563 million. In the quarter that ended in July, the interactive unit lost $86 million despite a 27 percent increase in revenue from a year earlier to $251 million.
"Where's My Water?" could boost the unit's earnings if it grabs a big enough piece of the mobile games industry, which is expected to grow globally to $11.4 billion by 2014, according to research firm Gartner.
Last year, Disney Chief Executive Bob Iger charged two digital veterans -- James Pitaro and John Pleasants -- to turn around the division. The pair have said they plan to bring the division to profitability in 2013.
One way to accomplish that goal is for Disney to leverage Swampy and other gaming characters across its theme parks, movie studio and media networks much the same way it does its stable of mermaids, princesses and other characters, Decrem said. Right now, however, Swampy is still too green to become the next Mickey Mouse.
"First, Swampy needs to continue to prove himself," Decrem said, adding that it will take about three months to judge the character's staying power.
Mobile games for phones and tablets, one of the few bright spots in the beaten-down global video game business, are cheaper to make and purchase than games for consoles. As a result, they have started to eat in to the profits of companies such as Activision Blizzard Inc.
While Disney typically brings characters from movies to games, Swampy could go the other direction from game to television or movie screens, Decrem said.
Disney, which competes with Electronic Arts in mobile games, is looking at Google Inc's Android software and other platforms for the game, Decrem said. Disney shares closed trading Tuesday up almost 3 percent to $29.86.
(Reporting by Lisa Richwine and Liana B. Baker; editing by Peter Lauria and Matthew Lewis)