Disney is merging its interactive and consumer products units

30 Jun 2015 | Author: | No comments yet »

Disney Merges Its Consumer Products and Interactive Divisions.

LOS ANGELES — Disney is merging its consumer product and interactive divisions, a move that acknowledges the shared goals of important product lines like the Disney Infinity video game franchise and the upcoming line of wearable toys called Playmation.Walt Disney Co. is combining two businesses with increasing overlap, consumer products and interactive units, into a single operation to be led jointly by the current heads of the two divisions.

The media giant is merging Disney Interactive, which produces video games and online content, with Disney Consumer Products, which licenses and develops toys and other products based on the company’s intellectual property. The change is “in response to changing consumer preferences in a marketplace increasingly influenced by technology,” the Burbank, California, company said Monday. The unit will be run jointly by co-chairs Leslie Ferraro, who was recently promoted to head of consumer products at the entertainment giant, and Jimmy Pitaro, the chief of interactive for the company. The company created a laboratory within the new division to develop high-tech toys. “As technology and digital entertainment continue to evolve, a shared innovation strategy will enable this new segment to create unique and engaging products and experiences that exceed consumers’ expectations,” Thomas Staggs, Disney’s chief operating officer, said in the statement. The change ends a rocky reporting period for the Interactive division, which posted years of big losses upon having its results broken out in late 2008.

The unit reported a $116 million operating profit last year, from a $308 million loss as recently as 2011, helped by new products like Infinity as well as staff cuts. The Playmation system features characters and stories from Disney franchises, with consumers able to use the portable toys to engage in a series of adventures, either inside or outside the home.

The improved performance of the interactive unit and the increasing convergence of technology and traditional toys made this a good time to combine it with the larger consumer products operation, according David Miller, an analyst with Topeka Capital, who issued a report June 1 saying the move was being considered. Disney Interactive long struggled to keep up with trends in the Internet and video-game businesses, losing a total of nearly $1.5 billion between 2008 and 2013.

The first of the Playmation products, arriving in October, will be “Avengers” themed and include an Iron Man glove that will have players following a narrator’s instructions as they complete various missions. The division finally became consistently profitable starting in the quarter through September 2013, lifted by the launch of Disney Infinity, a video game series that links real-world toys with on-screen virtual worlds and spans characters from Disney, Pixar and in the future, Marvel and Star Wars. Still, Interactive accounted for just 2% of Walt Disney Co.’s revenue in the first half of the current fiscal year and even less of its operating income.

The company said the innovation unit “will focus on using cutting edge technologies to create new immersive products.” The announcement said that Disney Publishing Worldwide, also continuing to increase its use of technology in storytelling, would report to co-chairs Ferraro and Pitaro.

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