August 25, 1999 5:55 AM PDT

Disney plays the Net toy sales game

Walt Disney joined the rough-and-tumble online toy retail business by taking a controlling interest in Toysmart.com.

Disney's Buena Vista Internet Group did not disclose the size of its investment in the Waltham, Massachusetts-based toyseller which focuses on high-quality, educational toys. However, a spokeswoman for Toysmart said the financial investment was between $40 million and $50 million.

Disney joins an already crowded and hyper-competitive space dominated by online retailer eToys, with Toysrus.com, Consolidated Stores' KB Toys, and Amazon.com also gearing up for the holiday season and the exploding demand for toys over the Internet.

"Toysmart.com and [Disney] believe that high quality, educational toys represent an exciting business opportunity in a fast-growing market segment," said Buena Vista's president of e-commerce Chuck Davis. "Our investment in Toysmart.com strengthens our commitment to serving the online commerce needs of families."

Under the agreement, Disney will hold three of five seats on the Toysmart.com board of directors and also will provide marketing support to help build the Toysmart.com brand and provide distribution across Disney's various online properties, including Family.com, part of the Go Network.

Disney also plans to aggressively promote the toy seller on Family.com, which is part of its Internet portal, the Go Network.

"We are spending over $25 million in marketing in the fourth quarter to basically build [the Toysmart] brand," said Kelly McGovern, Toysmart's chief marketing officer.

The promotion will include plugging the toyseller across Disney's vast entertainment empire, ranging from television advertising airtime, trailers before movies, to Toysmart day at Mighty Ducks' ice hockey games, said Beth Collin, general manager of Family.com.

Although most of Disney's own toys based on its animated characters will be available on the Toysmart site, the company plans to exclude some items that don't fit its mix of non-aggressive toys.

"We focus on good toys--high-quality, high-play value toys that are hard to find in mass market retailers," said McGovern.

Toysmart sells puzzles, building blocks, arts and crafts, and other products that try to encourage children to learn and be creative while having fun, the company said.

"By aligning with [Disney], Toysmart.com will be able to aggressively develop this emerging online toy segment," said Toysmart chief executive David Lord. "It will help us fulfill our mission of becoming the online champion of increased learning through play with better toys."

 

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