Iger: Disney Implementing 28-Day Delays; Taking ‘Wait and See’ Approach Toward UltraViolet7 Feb, 2012 By: Erik Gruenwedel
Walt Disney Studios plans to impose a 28-day rental delay on new-release disc titles, CEO Bob Iger said. He did not elaborate on timing but a rental source said Disney would embargo War Horse, which streets April 3..
During a Feb. 7 fiscal call with analysts, Iger said Disney remains on the fence regarding the rollout of the industry-wide initiative UltraViolet, the cloud-based digital locker aimed at jumpstarting sellthrough of both physical and digital content.
Without naming specific rental channels, such as Redbox, Netflix or Blockbuster, Iger said Disney would only sell directly to rental channels that agreed to adhere to the delays.
“This advantages the non-[rental] subscriber,” Iger said.
When asked why Disney has waited nearly three years to impose the new-release embargoes compared with delays imposed by other studios, such as Warner Home Video, Universal Studios Home Entertainment and 20th Century Fox Home Entertainment, among others, Iger said the studio had worried there was nothing to be gained by the delays and would actually hurt sellthrough.
“[We] have taken a hard look at the business overall,” he said. “I’d say the industry continues to suffer on the sellthrough side and the sale of goods digitally, or the rental side, have not made up enough of that fall off.”
The CEO admitted the rollout of KeyChest — Disney’s proprietary digital locker platform — remained behind schedule but that the studio was in discussions with a number of entites with nothing further to report. Iger said the studio continues to take a “wait and see” approach to UltraViolet. He said Disney is not opposed to joining UltraViolet, but that initial industry efforts to introduce UV haven’t been “as robust” as he’d expected or as “consumer friendly as we had hoped.”
“We still feel it would be a smart thing to offer consumers a greater interoperability for the obvious reason because it would increase the price-to-value relationship that they’d be getting when they bought either a physical goods or digital goods,” Iger said.
Meanwhile, sales of higher-margin Blu-ray Disc titles helped Walt Disney Studios report first-quarter (ended Dec. 31) operating income of $413 million — up 10% from operating income of $375 million during the previous-year period.
Studio revenue, which included Walt Disney Studios Home Entertainment, declined 16% to $1.6 billion from $1.9 billion due to fewer Disney theatrical releases (and marketing and distribution costs) along with an adverse impact from the timing of title availabilities in television markets and lower DVD volumes.
The decrease in unit disc sales reflected the strength of Toy Story 3, Beauty and the Beast: Diamond Edition, A Christmas Carol and The Sorcerer’s Apprentice in the prior year’s quarter, compared with disc releases of Cars 2, The Lion King: Diamond Edition, Pirates of the Caribbean: On Stranger Tides and The Help in the current quarter, as well as lower sales of catalog titles.
Disney said the decrease in global home entertainment revenue primarily was due to a decline in unit DVD sales, partially offset by improved net effective pricing driven by a higher Blu-ray sales mix.