June 29--Walt Disney Co. is merging its interactive and consumer products divisions in response to "changing consumer preferences in a marketplace increasingly influenced by technology," the Burbank company said Monday.
The new unit, Disney Consumer Products and Interactive Media, will report financial results as a combined division starting in fiscal 2016, which begins in September.
It will be run by Leslie Ferraro, who last month was named president of Disney Consumer Products; and Jimmy Pitaro, who has led Disney Interactive since 2010. Ferraro and Pitaro will be co-chairs of the new division.
There are not expected to be any layoffs as a result of the realignment, a Disney representative said.
Disney Interactive, founded in 2008, struggled from the start, losing more than $200 million a year between 2008 and 2012. The unit also parted ways with co-President John Pleasants in November 2013.
However, the release of the video game "Disney Infinity" in summer 2013 jump-started the division. The game, which cost Disney Interactive about $100 million to develop, has been a major hit and was followed up by a second edition that was released last year.
Disney Interactive was profitable in fiscal 2014, generating operating income of $116 million. It lost $87 million a year earlier.
Throughout its existence, Disney Interactive has been dwarfed by the company's four other units -- media networks, parks and resorts, studio entertainment and consumer products -- each of which produced more than $1 billion in profit in fiscal 2014.
Disney Infinity demonstrates how consumer products and interactive media are coalescing. The game, available on platforms such as Xbox One and PlayStation 4, incorporates physical toys based on Disney characters into the on-screen action. It features characters from Disney films such as "Guardians of the Galaxy" and "Toy Story."
A forthcoming toy line from Disney Consumer Products similarly highlights how digital technology has infiltrated the playthings space. In October, Disney will release Playmation, a system of connected products featuring characters and stories from blockbuster film franchises, starting with "Avengers."
As part of the merger of the two units, Disney is creating a new technology lab, which will report to the co-chairs of the new division. Ferraro and Pitaro will continue to oversee the parts of the combined business that were previously in their respective portfolios.
Disney Publishing Worldwide, an interactive children's book publisher that has been part of the consumer products division, will be incorporated into the new unit and will report to Ferraro and Pitaro jointly.
