Walt Disney Co.'s plans to transform the toy business are headed in a direction similar to "Poké mon Go" after a disappointing first year for its Playmation products.

Launched with fanfare last year, Playmation was meant to usher Disney into a new era of internet-connected, wearable toys that communicate with each other and can be updated from the cloud.

The first wave of Playmation products, launched last October, were based on Disney's Marvel superheroes such as Iron Man and Hulk. Unlike many of its toys produced completely via licenses, Disney developed much of the technology behind Playmation itself. Hasbro Inc. handled manufacturing and distribution.

Sales of Marvel Playmation products have fallen short of internal targets, according to a person who worked on the project. They are now being heavily discounted. A "starter pack," originally priced at $120, is now $23 on Amazon.com. On Disney's retail website, Playmation character toys that originally cost $15 are on sale for $4.

Ratings on retailers such as Amazon are high, however, indicating that many people who used Playmation liked it.

A Disney spokeswoman said the company remains "bullish on the blending of physical and digital to create new kinds of connected play experiences."

The struggles of Playmation underscore how difficult it is to launch a costly and complex new toy "platform," including a core product and add-ons, in an environment where children have so many digital options. Interactive is one of the few entertainment businesses in which Disney has struggled recently, as evidenced by the shutdown this past spring of its "Infinity" videogame franchise.

Last year, Disney said it was planning to launch "Star Wars" Playmation toys this fall and ones based on "Frozen" in 2017. However those plans were put on hold after poor sales for the Marvel products, according to people familiar with the matter.

Marvel Playmation toys will continue to be sold this holiday season, the Disney spokeswoman said.

This past spring, several dozen people who worked on Playmation were laid off, said the knowledgeable people.

Remaining designers have been looking at using augmented reality, or AR, technology that integrates virtual objects into the real world, for new "Star Wars" toys, the people said. AR is at the core of the hugely popular "Poké mon Go" videogame.

Disney is "working closely with outside partners and testing new technologies to bring an even more advanced active play product to market," the spokeswoman said.

"Star Wars" toys that use AR are still in early stages of development, and it isn't clear whether and when Disney will debut them. It's also not clear whether they will still use the Playmation brand name.

Write to Ben Fritz at ben.fritz@wsj.com

 

(END) Dow Jones Newswires

August 04, 2016 18:05 ET (22:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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