Disney CFO: Movie Windows Will Change 'Dramatically'9 Mar, 2011 By: Erik Gruenwedel
Citing a need to quench the consumer’s demand for “instant gratification” during a time of rapidly evolving technology, Jay Rasulo, CFO with The Walt Disney Co., said the media giant would continue to experiment with tweaking release windows and distribution agreements in order to maximize incremental revenue opportunities.
Speaking March 9 at the Deutsche Bank Securities Media and Telecom Conference in Palm Beach, Fla., Rasulo said evolving distribution windows were not the result of changing technologies but rather advancing consumer appetites for entertainment consumption.
The CFO said Disney has both followed the industry trends and diverged out on its own, depending on the product and medium. The studio was the first to pull a major blockbuster movie (Alice in Wonderland in 2010) early from theaters in order to expedite its retail potential. Last month Bob Chapek, president of distribution, announced the studio would offer rental kiosks and Netflix discounted content six weeks — not 28 days — after street date.
Rasulo said the trick is to re-work release windows to generate incremental revenue without cannibalizing existing revenue streams and upsetting distribution partners. He said that regardless of what Disney does, release windows for movies will dramatically change over time. The executive added the studio was also considering premium video-on-demand.
“One size does not fit all,” Rasulo said. “Consumers are fundamentally wired for instant gratification. Some people will pay a lot for immediacy, and others never will.”
He said the company remained on schedule this year to launch Disney All Access, an ambitious venture 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.
“It is extremely obvious from the consumer side; execution is less obvious,” Rasulo said.
When asked if Disney had tapped its content pipeline to Netflix, Rasulo said the deal (reportedly worth $150 million to $200 million) announced in December for ABC TV programming was short-term (one year) and could be expanded or not depending on market conditions.
The executive agreed Disney would likely revisit its agreement with Starz Entertainment and the aggregator’s seven-year exclusivity for pay-TV movie license rights when the deal expires in 2015.
“It’s not crystal clear where all these trends are heading,” Rasulo said.