With this morning’s announcement of an estimated $1 billion streaming movie deal between Netflix (NSDQ: NFLX) and Epix in the minds of analysts on the Disney (NYSE: DIS) Q2 earnings call, CEO Bob Iger says that he is looking to find a model for offering premium DVD rentals, while taking an “aggressive” approach to release windows and pricing. He also held back on his feelings about the iPad — and the successful ABC primetime app — and whether it cannibalizes the TV ratings.
To begin with, yes, the DVD business is weak. Success for DVD sales is really “title by title,” Iger said. “Collectability is not as strong as it once was and it mainly benefits popular franchises,” added. “We have to be judicious about how many films we release. And we’re going to become aggressive on new windows. There are people who we believe would pay a premium to see the movies earlier.”
Pressed further for his thoughts on premium DVD, Iger declined to be pinned down on what he would like to charge users for a shorter new release rental window, which is currently 28 days for Netflix and Redbox. “When we were considering an extension of the Starz deal, we looked at some alternatives. One of the opportunities was Netflix. But at the time, we decided Starz was the best deal. Afterward, Starz made our films available for streaming through Netflix. So Netflix’s growth could actually benefit us.”
One analyst asked if there was any irony that Apple (NSDQ: AAPL) CEO Steve Jobs is Disney’s largest shareholder, yet creates products like the iPad that could encourage consumers to cut the cable cord and ultimately doom one of the most lucrative parts of the company. Iger, not surprisingly, waved off the concerns and laughed a little at the analyst’s wondering about what he and Jobs discuss.
“Steve and I talk about a lot of things as it relates to digital media, and we don’t agree on everything, but we do agree that the iPad is a game changer,” Iger said. “There’s probably more opportunity there than downside. This leads to the ‘TV Everywhere’ question and I might as well bring it up. We need to make ourselves more convenient to consumers, while protecting a business that has been able to grow our company through ESPN and the Disney Channel. We think it is possible for peaceful co-existence — well, I don’t know if it will be peaceful, but there can be coexistence among all these technologies that make it possible to watch what you want, when you want. The ABC iPad gives users a chance to view programs they missed or didn’t DVR it. Our gut is that cannibalization is negligible and that people still do most of their viewing on bigger screens.”
Lastly, Iger touched on the $763.2 million acquisition of social gamer Playdom. There’s a deal already between Marvel and Playdom for social gaming, especially with films like Thor coming out next year. Asked for his reasoning on buying the company, he said sometimes it just pays off to have expertise in a given area in house. That’s especially true in an area like social gaming which is taking off so rapidly and offers so many natural extensions to Disney’s entertainment.