@ Mipcom: Piracy Is A Business Model, Says Disney Co-Chair Anne Sweeney

Mipcom Cannes Oct 2006So this is the first day’s keynote by Anne Sweeney, co-chair of Disney Media Networks and president of Disney-ABC Television Group. Ultra-slick corporate stuff, but some good next-step observations about the industry.
A couple of announcements: Disney is launching its latest mobile content deal In France with Orange’s 24 million wireless customers, and introducing video diaries from Lost characters for mobile. The size and type of the screen will always be secondary to what’s on it, says Sweeney. This time two years ago, Disney were congratulating themselves at the end of a season that saw Lost and Desperate Housewives make it big. But at the end of the meeting, the head of operations and engineering presented a high-quality, ad-free version of DH that had been put online less than 15 minutes after the program aired. That was a defining moment for the business, said Sweeney. “We understand now that piracy is a business model,” said Sweeney. “It exists to serve a need in the market for consumers who want TV content on demand. Pirates compete the same way we do – through quality, price and availability. We don’t like the model but we realize it’s competitive enough to make it a major competitor going forward.” That’s an incentive for Disney to make its content available easily and legally – and the iTunes movie deal is the first part of that. In the year since the deal was first done with Apple, Disney has sold 12.8 million episodes via iTunes and 51 of the 272 TV series available on the service are Disney products.
Sweeney talked about the “watershed” signing of the deal with Apple just over a year ago. Leading up to that, Disney CEO Bob Iger had asked her to call Steve Jobs. Jobs introduced her to the beta iTunes 7 and the still-under-wraps video iPod which, she said, answered both her key concerns about offering something that viewers would embrace and that would be good for Disney’s content.
Another critical point, she said, is that, after research, Disney can’t find any evidence that putting programs online on the broadband player cannibalizes the broadcast audience, or even the iTunes audience. Quite the opposite in fact – “it may actually drive viewers to on-air programming. There are different ways to serve viewers that do not overlap. Some want to own the content and can’t wait to get it on DVD. Others missed it on TV but have to get it quickly – for that ‘water cooler’ moment.” That’s backed up by the data on when shows are watched online – the bulk of viewings are in the 24 hours immediately after a show has aired. Making the content available in those 24 hours also makes the service highly competitive with content pirates. “Content drives everything,” said Sweeney. “As more platforms are created, the demand for content increases.”
More Sweeney-isms:
– Eighty-four percent of those that used the on-demand service said that it was a “good deal” to get a free episode in return for watching an ad and, significantly for advertisers, 87 percent of those could recall the advertiser that sponsored the program.
– Sweeney outlined Disney’s strategy as: being primarily about content because it drives everything else; being about maximising new platforms for both content and advertisers; and sharpening its brands, because consumers choose brands they know and trust.
– Partnership, she said, is critical because Disney needs “compatible brands” to focus on its core aims of: a quality user experience; growth on delivering consumer value; content valuation and protection; and a commitment to market products and services.
– “The digital revolution has unleashed a consumer coup. We have to not only make in-demand content but make it on-demand. This power shift changes the way we think about our business, industry and our viewers. We have to build our businesses around their behavior and their interests.”
– “The most powerful creativity comes in response to a challenge – as long as you know who you are and where you want to go.”
– “All of us have to continually renew our business in order to renew our brands because audiences have upper hand and show no sign of giving it back.”

This article originally appeared in MediaGuardian.