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Disney Sells 125,000 Movies on iTunes in First Week

19 Sep, 2006 By: Erik Gruenwedel

Characterizing the $1 million generated in less than a week of offering Disney movies for download on Apple's iTunes as “incremental revenue,” Bob Iger, CEO of The Walt Disney Co., told analysts the distribution model is part of a strategy designed to be “very bullish on the consumption of electronically delivered media.”

“This is just the beginning,” said Iger at the Goldman Sachs Communacopia XV Conference in New York. “We feel we could generate about $50 million in incremental revenue in the first year at no marketing expense to us.

“Clearly, customers are saying to us they want content in multiple ways. We believe the more often you make content available to buy and the more places you make content available to consume the bigger the market will be.”

Goldman Sachs, in a recent report, said Disney generates outside of its theme parks more revenue from e-commerce, advertising and digital distribution than any other major media company.

Iger said development of platform-agnostic distribution is imperative since the customer is migrating to the Internet. He said expanded distribution channels for Disney films and TV programming allows for greater leveraging of costs and would drive growth.

Disney said it would re-launch Disney.com in the first quarter of 2007.

“Why feed [our content] to other content generators?” Iger said. “Why not be there ourselves.”

He said he continues to believe that Hollywood produces too many movies and said Disney will stick to previously announced plans to generate 10 live-action releases annually.

Iger said the company fell into the trap of making movies simply to amortize the cost of its global distribution infrastructure. He said Disney this year has about $100 million in existing distribution infrastructure.

“The movies were being made for the wrong reasons,” he said. “You should make the movies because you believe in the concept, the creative auspices behind it and believe it has a chance to work.”

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