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Summary:

He didn’t exactly say “if you can’t beat ‘em, join ‘em” but that was the gist of *Disney* CEO Bob Iger’s explanation for joining the Hulu jo…

imageHe didn’t exactly say “if you can’t beat ‘em, join ‘em” but that was the gist of *Disney* CEO Bob Iger’s explanation for joining the Hulu joint venture and for other online initiatives. In recent quarters, digital media barely has been mentioned during the company’s earnings calls. That changed for today’s earnings call, less than a week after the announcement that Disney (NYSE: DIS) was taking an equity stake in the News Corp-NBC Universal (NYSE: GE) joint venture.

Iger told analysts: “We believe that broader distribution of our content makes sense given the growth in online viewing,” adding, “New media isn’t going away. … We absolutely must be where our consumers are going.” One reason: if Disney and others don’t make programming available on a well-timed, well-priced basis, consumers will find it anyway. Iger said going with a service like Hulu helps fight piracy by offering better alternatives.

But avoiding piracy isn’t the only rationale. Iger wants to be where the audience is and, so far, the demographics for Hulu are younger than those for broadcast television. Just as he has with iTunes sales and ABC.com VOD, Iger stressed that cannibalization isn’t a concern. Instead, Disney sees a way to expand its reach to views. The short-form deal with YouTube signed a few weeks before Hulu was confirmed is part of that promotional outreach.

Why not long-form on YouTube?: Iger: “We had a really health debate at the company about whether to make or content available to another aggregrator. … When it came to Hulu versus YouTube, there were things about both that were attractive.” Iger admitted traffic to YouTube is greater but said it is all built around short-form, while Hulu is already long-form. But Disney was attracted by the equity opportunity. “We decided we would go where we could own a piece of it and really participate in what could be real growth of an aggregator.”

Iger added: “The possibility of our long-form content ending up on the YouTube platform still exists.” (Iger didn’t elaborate but Hulu could make a deal with YouTube on behalf of its distributors. Not sure how this would fit in, if at all, but Disney has an existing relationship with YouTube and Hulu’s owners are allowed to manage those relationships independently.)

Movie subscription product in works: Iger said Disney is developing a broadband subscription product for Disney-branded programming, one of several ways it sees to make money online. He tried to down it down a bit later — “I mentioned that we one day might have a Disney-branded subscription service” — but said it would be compatible with anything Disney does in the pay window. “We think that Disney’s brand is unique when it comes to films and we’d like to take advantage of that unique quality and create an online destination for Disney-branded movies.” (That was as far as Disney officials are going for now but it looks plans are in progress.)

Paid downloads vs. streaming: Iger: “We believe there are people who will want to buy through an iTunes store, download commercial free to a hard drive and take it with them and there will be people who are online and just want to watch the show — don’t want to put it on a hard drive, don

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  1. Sam@dogseizures.net Wednesday, May 6, 2009

    There's absolutely no reason why they will drop the new media. Currently, this makes them maintain their online market. Very much true that the only way to prevent piracy is to establish a tie up with other online providers.

  2. That's some great news about Disney. I think this is a big step forward for them.

  3. Elias Moubayed Wednesday, May 6, 2009

    So what is the digital download equivalent of all the trailers on a purchased DVD that can't be skipped. Or 30 minutes of ads and trailers in a cinema before the main event.

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