Summary:

More than 125,000 Disney downloads were sold in the first few days following the addition of movies to the Apple’s iTunes, bringing in about…

More than 125,000 Disney downloads were sold in the first few days following the addition of movies to the Apple’s iTunes, bringing in about $1 million in incremental revenue, CEO Bob Iger told analysts and investors today. “[We] believe that this is just the beginning,” Iger said; “We’re extremely confident that we’ll easily be able to generate about $50 million in incremental revenue in the first year putting movies on this platform — at no marketing expense to us and very limited additional expense at all, the cost really of encoding the film.” (This from a man who said repeatedly during the session that he wouldn’t give guidance.) Iger attributed the limited launch with only 75 titles from four Disney studios to rights clearance issues, among other factors.
As for the effects of iTunes downloads on DVD sales, Iger said the second-season DVD of Lost is doing better than last year’s despite — perhaps due to — being the most downloaded show on iTunes. “If anything, maybe it kept the show more top of mind, more relevant because it touches more people.”
Disney got a big promo boost as the only iTunes movie provider at launch — as was the case last fall with TV — but Iger stressed that “the deal with Apple is not exclusive under any circumstances … and certainly Steve Jobs understands that as a major shareholder of Disney.”
(Later, Iger raved a bit about how wonderful it is to have Jobs on the Disney board and as an adviser.)
So why hasn’t Disney signed on with others? Iger: “We are choosy in terms of the partners that we pick because we have to have a pretty good digital rights management solution, we have to believe the platform is going to work, we really believe that our content should be on a platform that we have confidence in and that means it’s user-friendly, well-marketed, well financed and it’s well organized. And we also believe it has to provide us with enough compelling other reasons to put it on — meaning it’s going to generate not just usage but some form of incremental revenue … There will be more places where Disney appears digitally.”
.Com Plans: But Disney is also building out its own digital platforms to become the “networks of the future for our company. … We probably are most evolved at ESPN; we have a lot of work to do with the others. … The customer’s going to be there anyway — why cede it to, in effect, other content generators? Why not be there ourselves?” Disney has collected 58 million names of people with recent consumer relationships with the company. Disney.com, when it relaunches in early ’07, will create a customized point of entry so the experience matches the age and interests from pre-school up. Development is already underway for the same content in Europe and Asia.
ABC no longer just TV: “We don’t view ABC as just a television network today, we view it as a platform that will sit side by side with other platforms that will be used to essentially generate revenues to invest in great creative content and than to move that content rather seamlessly across platforms to reach as many people as possible and generate as much revenue.” ESPN appears to be the corporate multi-platform template.
iTV: Iger suggested the upcoming device from Apple may be an opportunity to charge people for a DVR experience — miss the scheduled show, download it for $1.99 and watch via iTV. He describes the device as “a small box, the size of a novel, not War and Peace.”
Online ads: Disney believes over next five years display has chance to grow at much more aggressive rate than search and could be in parity by 2010. Iger: “What we’re focused on is building out the technical capability, creating the culture and essentially creating the content to move aggresively…”

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