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Disney Bows ‘Studio All Access’ Digital Initiative

17 Feb, 2011 By: Erik Gruenwedel

The Walt Disney Co. Feb. 17 announced the launch of a combined digital initiative it says will help consumers better navigate ongoing technological changes in the distribution of entertainment.

In a day-long investor conference, Bob Chapek, president of distribution, unveiled Disney Studio All Access, a platform that combines Disney Movie Rewards, Disney Movies Online, DisneyFile Digital Copy and Disney Key Chest – the latter being the studio’s proprietary cloud-based digital locker initiative.

Chapek said the new digital-to-consumer (D2C) platform would enable consumers with easier access to the studio’s vaunted vault of classic content from one source and playable across multiple devices.

Without providing further details, Chapek said Disney Studio All Access currently affords consumers access to more than 5 million digital entities.

Disney CEO Bob Iger said the media giant would continue to embrace technology and not view it as a threat. He said technological innovation has changed the “culture” of Disney, and increased investment in it will make the company’s product better and allow closer interaction with the consumer.

“Status quo is not an option,” Iger said.

Separately, Chapek used the studio’s recent consolidation of theatrical, pay-TV and packaged media marketing efforts as an analogy to ongoing efforts to expand so-called “Blu-ray Superset” combo packs (DVD/Blu-ray/Digital Copy) with 3D and premium video-on-demand (VOD) in the future.

In addition, Chapek disclosed Disney is upping rental unit prices to kiosks and Netflix to full wholesale price on street date and $10 following a six-week (not 28-day) delay. He said current price discounts offered by other studios after 28 days are too steep.

“In today’s media landscape … consumers are bombarded by low-margin rental, free substitutes, a soft economy and piracy,” Chapek said. “The recession has accelerated these secular changes.”

The executive said that at the retail level, standalone Blu-ray, VOD and electronic sellthrough have not been enough to offset declines in DVD sales, which he said have dropped 21% since 2005.

Chapek said last year’s Beauty and the Beast Blu-ray combo pak generated 60% of the title's revenue, compared with 20% for a typical standalone Blu-ray.

He said a $5 to $10 increase in margin per title is “very material to us.”

Chapek didn’t disclose when the studio’s first premium VOD would occur or what the title would be, saying only that marketing would target stay-at-home families with young children. In addition, premium VOD titles would be offered in a so-called "rent-to-own" Blu-ray bundle.

He said any early VOD offering would be designed to have the least impact on a title's theatrical distribution.

“We have to recognize that theatrical exhibition is a wave maker,” Chapek said.

Disney last year caused a stir among theater operators when it put then No.1 box office film Alice in Wonderland into the retail channel two weeks early.

Meanwhile, CFO Jay Rasulo used Alice and Toy Story 3 – the top two box office titles in 2010 – to showcase Disney’s forward strategy aimed at promoting franchise over non-franchise films.

Rasulo said the studio would focus 80% of resources on franchise properties, which include Pixar, Marvel, and Disney-branded titles, which double the resources allocated in 2010.

The CFO said that while Alice could generate another $400 million in global home entertainment revenue, driving total revenue above $1.6 billion, Toy Story 3 will generate nearly $10 billion when factoring in consumer products, video games and other third-party licensing.

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