The Walt Disney Company DIS has decided to merge two of its units to effectively cater to the tech-savvy consumer preferences these days.
The Consumer Products and Interactive divisions will be fused together to form Disney Consumer Products and Interactive Media (DCPI) division. The company will report under the new structure from fiscal 2016.
DCPI will be jointly controlled by Leslie Ferraro, president, Disney Consumer Products, and Jimmy Pitaro, president, Disney Interactive. No layoffs are expected.
Also, Disney Publishing Worldwide will be incorporated into the DCPI unit. A fresh team called the DCPI Labs will be created to develop newer products by using latest technologies.
Introduction of a line of new high-tech toys called Playmation earlier this month by the Consumer Products unit reflects the fading demarcation between the businesses of these two segments.
While the Consumer Products is consistently making high tech toys, the Interactive division’s Disney Infinity video game’s has some physical components. As businesses of both the units become more and more similar, it was an ideal move to merge the units to obtain cost effectiveness.
COO Tom Staggs stated that “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”.
Disney combined its mobile, videogame and online businesses to form the Interactive segment in 2008. However, the unit remained troubled as most of its initial projects faltered until it found great success with the launch of Disney Infinity in 2013.
In fiscal 2014, Interactive with $1,299 million contributed 22% and Consumer Products with $3,985 million contributed 12% to total revenues.
At present, Disney carries a Zacks Rank #2 (Buy). Other media stocks worth considering include AMC Networks Inc. AMCX, Pearson plc PSO, sporting a Zacks Rank #1 (Strong Buy) and The New York Times Company NYT with the same rank as Disney.
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