Bob Iger wasn’t on stage for the iPad launch last month, but the Disney CEO just gave a demo spiel Steve Jobs, the company’s largest shareholder, would applaud about a “really compelling” device that could be a game changer. Volunteering and replying to analyst questions about how Disney plans to use the new Apple (NSDQ: AAPL) tablet, Iger reeled off a series of iPad uses that are either likely or already in progress: a companion to ABC’s Lost, an ABC News app, a digital books app for Disney, an enhanced version of the popular ESPN Sports Center app, and apps for Marvel (NYSE: DIS).
Some might be adapted for iPad, some created. Iger said the iPad platform will “enable us to really start distributing product that is different than the product you typically see.” For instance, Disney was working on a version of its still-nascent Disney Digital Books for iTunes and iTouch. “Suddenly this device comes along,” offering an “even more robust platform” for possibilities like read-a-longs, simple animation, music come to life.
“We think it could be a game changer in terms of enabling us to create essentially new forms of content. And obviously it will be a great device to play games on and to watch videos, because of the quality of the screen, but the interactivity that it will allow on a portable device with such a high-quality screen is going to enable us to really start developing product that is different than the product that you typically see on an internet-connected computer or on a television set.” Disney’s decentralized philosophy when it comes to apps — each unit handles its own — should give that creativity some room.
Even if it takes off like a Buzz Lightyear rocket, the iPad would still be a very small part of Disney’s digital revenue. Iger noted during the call that Disney exceeded “nicely” about $2 billion in digital revenues across the company in 2009. (That works out to about 5.8 percent of Disney’s $36 billion 2009 revenue.) That’s all in — commerce, games, video, everything — with theme parks alone making up about half. But, he reminded later, “We think digital media, while clearly it’s significant, it’s still evolving. I’m fond of saying it’s still the beginning of the beginning and that’s how we look at it.”
Changing game theory: Disney’s overall gaming strategy also is evolving. Instead of creating video game titles to span devices and consoles, the company has learned that some programming does best on the more common devices and is adjusting accordingly. Disney-branded games do better on the Nintendo Wii and DS, not on high-end consoles, Iger explained. The higher-end games are more expensive to make and face Disney faces more competition then when it started its original game development.
Explained Iger, “While we’re going to continue to make games for the high end, we’ll be very, very judicious in how many and which ones we choose.” The ratio will continue to run about 80 percent Disney branded. But Disney may also have some more opportunities; Iger sees recently acquired Marvel as “a brand that we think would do extremely well on the higher-end consoles.” At the same time, Disney is stepping up casual gaming.