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Iger: HD DVD-Exclusive Studios Taking 'Easy Money'

19 Sep, 2007 By: Erik Gruenwedel

Walt Disney Co. president and CEO Bob Iger

It's about quality, not money, in the high-def disc arena, according to Walt Disney Co. president and CEO Bob Iger.

Disney steadfastly supports next-generation optical media format Blu-ray Disc for technological reasons — not financial incentives, Iger said, criticizing recent studio defections to HD DVD.

While not naming Paramount Pictures and DreamWorks by name — or addressing reports the studios received $150 million to join Universal Studios Home Entertainment exclusively distributing content in HD DVD — Iger voiced his displeasure at the move.

“I think those studios were largely taking easy money and probably costing themselves part of the future,” Iger told analysts as keynote speaker at the Goldman Sachs 2007 Communacopia Conference in New York. “We are formally behind Blu-ray and haven't taken any money to do that.”

The executive said he was disappointed the industry hasn't presented a united front to consumers about high-def packaged media. He said the industry should back Blu-ray for its greater storage capacity, interactivity and connectivity, and move it to market as fast as possible.

Iger said Blu-ray is outselling HD DVD 2-1, with national retailers Target and Blockbuster favoring the format over HD DVD.

“I think the recent announcements by certain entities were unfortunate because I think it is a foregone conclusion which format will win,” Iger said. “It is good for the consumer and it is good for business. We feel it is a no brainer.”

When asked what he thought the impact on television advertising would be with the digital video recorder (DVR) market reaching 32% household penetration in 2008, Iger said the potential 2%-3% decline in commercial viewing would not affect Disney.

Goldman Sachs has reported that 25% of viewers with a DVR skip the commercials.

While admitting DVR usage would have an impact on ad viewing, Iger said Disney generates just 23% of its total revenues from advertising. He said the Disney-owned cable sports channel, ESPN, is “virtually DVR proof” due to its predominant live programming.

He said ABC.com has fielded 130 million TV episode streams in the last year, which are ad-supported.

“I think DVR use is actually increasing consumption of TV, which is a good thing,” Iger said. “Diversifying how we reach the consumer.”

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