Digital divide at Disney ends

Internet, videogame units merged into IMG

By BEN FRITZ

Wadsworth

Disney is merging its videogame and Internet operations into what it's hoping will be a digital powerhouse.

New unit Disney Interactive Media Group will merge the Disney Internet Group with videogame publisher Disney Interactive Studios.

DIG prexy Steve Wadsworth will head up Disney Interactive Media Group. Graham Hopper, exec veep in charge of Disney Interactive Studios, will report to Wadsworth and likely stay in charge of videogame publishing, though his exact role and title in the new group hasn't been determined.

Some form of merger between the two divisions had long been expected by Mouse watchers as their products have increasingly crossed over. Disney Interactive makes games for consoles and PCs, while Disney Internet Group produces downloadable, mobile and Web games. The former, for instance, produced "Pirates of the Caribbean" games for consoles, while the latter made "Pirates of the Caribbean Online."

As more and more vidgames have online components, however, the divisions between DIG and DIS have blurred. The two recently worked together on an initiative called D Gamer that lets kids playing Disney games on the Nintendo DS chat with friends they met on Disney.com.

"As console and handheld games become more connected to the Internet, and as Internet and mobile become increasingly robust destinations for games and a range of interactive entertainment, we are taking this opportunity to integrate these activities," Disney CEO Bob Iger said in a memo that was posted on the weblog PaidContent.org.

Merger should make it easier for Disney to sell its digital efforts to Wall Street as all of the related revenue will be reported together. Previously, Disney Interactive Studios was part of the conglom's consumer products group.

"Digital media is a high priority for our company, and focusing all of our Disney-branded interactive digital media efforts in one group will ensure we are best positioned to maximize this emerging and dynamic opportunity," Iger added in his memo.

Both units have grown fast in recent years and have been a focus of Mouse House investment. Disney Internet Group has revamped the company's website as a multimedia family portal and spent heavily on virtual worlds, buying Club Penguin for up to $700 million and creating its own based on properties like its Fairies line and "Cars."

Disney Interactive Studios has acquired or established six development studios and expanded beyond licensed kids games to publish more mature games and original properties.