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Disney Rethinks Role Of Keychest In Film Distribution

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Disney (NYSE: DIS) has changed the locks on Keychest, the digital-rights-locker strategy that began drawing attention a year ago as a potential rival to the Digital Entertainment Content Ecosystem, or DECE. Bob Chapek, president of distribution at Walt Disney Studios, confirmed in an interview Friday with paidContent that Keychest has been subsumed by a bigger plan that will allow consumers to fill a virtual vault of Disney programming from a range of devices.

As CEO Bob Iger indicated on Disney’s fourth-quarter earnings call Thursday, the company has given up on its stated plan to get dozens of retailers and device makers to sign on to Keychest. “We didn’t get much buy-in from the industry on it,” said Iger, who indicated then he didn’t want to get into specifics.

The specifics have been determined by Chapek, who confirmed Keychest has already been active for much of the year. But the technology has been relegated to serving as a cloud-based interoperability tool uniting a trio of digital touchpoints Disney that are already collecting movie-purchasing information from consumers. “Keychest is the engine for us to harness the power of multiple Disney utilities into one ecosystem,” said Chapek.

Hyped by Disney at the Consumer Electronics Show last year as the centerpiece of its strategy, Keychest is now taking a back seat to a new brand that will get a big marketing push in 2011: Disney Studio All Access. Think of it as the Trinity combining DisneyFile Digital Copy, the protocol for pulling digital versions of films that get bundled with DVDs; Disney Movies Online, a Web-based repository of streamed films that hasn’t even been marketed yet, and Disney Rewards, a point-based system that the company has operated for years to reinforce purchasing its products.

All will come together backed by a marketing campaign aimed at consumers whether they are the diehard DVD users who studios are starting to see decline in number in recent years, or more savvy digital types. “Users start to build your own economy in this Disney environment, and it all gets tracked in the cloud,” said Chapek.

The first beneficiary of the new Disney strategy is the DVD release of “Toy Story 3,” which comes in a special “multipack” version complete with DVD, Blu-ray, streaming and download copies only via Wal-mart and its proprietary streaming service, Vudu. Nothing else is planned this year, according to Chapek.

While Wal-mart’s dominance in the DVD market makes it a natural place to start, expectations were high ever since Keychest was announced that Apple (NSDQ: AAPL) would be a charter partner for any digital initiatives given Disney’s close ties to its largest shareholder, Steve Jobs.

Neither Disney nor Apple have signed onto DECE’s UltraViolet, a new format that has brought together a broad consortium including Comcast (NSDQ: CMCSA), Microsoft (NSDQ: MSFT), LG (SEO: 066570) and Best Buy hoping to make digital distribution as easy as purchasing a DVD. That abstention had only fueled speculation that Keychest would spark a “format war,” as Iger referred to it Thursday, but Chapek said Keychest was always intended to be interoperable with DECE.

As for efforts to get rival studios to sign on for Keychest, Disney learned it was much easier said than done, according to Chapek. “When you go into the industry groups it’s like a bill in Congress,” he said. “Everyone tries to attach something to it and it becomes something it’s not intended to be.”

Disney Studio All Access is also a reflection of the restructuring Chapek recently unveiled to his own distribution unit, which removed traditional medium-based silos in order to achieve a more integrated sales effort.