Disney is merging its interactive and consumer products units

Walt Disney Co. is merging its interactive and consumer products divisions, highlighting new technology's ability to erase boundaries between once distinct businesses.

The Burbank entertainment giant already offers products that combine traditional playthings and digital media, among them the video game franchise "Disney Infinity." And the company's new line of wearable toys, called Playmation, will debut this fall. Now, the development and production of such offerings will be handled by a single business unit.

The new division, Disney Consumer Products and Interactive Media, will report financial results as a combined entity 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.

No layoffs are expected 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.

However, the release of "Disney Infinity" in summer 2013 jump-started the division.

The action-adventure game, which incorporates physical toys based on Disney characters into the on-screen action, cost Disney Interactive about $100 million to develop. The game, which features heroes from Disney movies such as "Toy Story" and "Pirates of the Caribbean," was a hit, selling more than 3 million copies by May 2014.

A second edition of "Disney Infinity," which is available on platforms such as Xbox One and PlayStation 4, was released in September.

Disney Interactive was profitable in fiscal 2014, generating operating income of $116 million. It lost $87 million a year earlier.

Throughout its existence, the division has been dwarfed by Disney'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.

In October, Disney will release Playmation, a system of connected products featuring characters from the company's film franchises, starting with "The Avengers." A starter pack comes with an Iron Man "repulsor" glove worn by players and four other smart toys. Users will be guided on missions that allow them to jump, duck, dive and run around. A free app will track competitors' progress.

As part of the merger of the two units, Disney is creating a new technology lab that will report to Ferraro and Pitaro.

The executives 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.

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Copyright © 2016, Los Angeles Times

Updated July 1st, 10:25 a.m.

10:25 a.m.--This article has been updated throughout, including additional background on “Disney Infinity” and Playmation.