CEO Bob Iger: Disney Movies Don’t Apply to 28-Day Window

21 Sep, 2010 By: Erik Gruenwedel

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In the divide that separates studios delaying new-release movies to Redbox from those receiving millions of dollars from the kiosk vendor to distribute them on street date, sits Walt Disney Studios Home Entertainment.

Speaking Sept. 21 to a financial group Walt Disney Co. CEO Bob Iger said that singular approach wasn’t about to change anytime soon. He said Disney’s blend of family and live-action films, coupled with subsidiaries Pixar Animation and soon Marvel brand films underscores a product offering largely predicated on sellthrough with little cannibalization seen from $1 DVD rental kiosks.

“Disney is different [from other studios in] the type of movies we typically make,” Iger said. “While the sellthough business has certainly faced some challenges these last few years … we haven’t seen as much of an effect as some of the other studios.”

The CEO said the studio has seen no cannibalization from the low-priced kiosk rental business model when compared to sellthrough.

“When we do the math and consider a 28-day window, which would require us to sell to Redbox discs at substantially reduced prices, it just doesn’t [make economic] sense for us,” Iger said. “The loss of revenue in the sale of the discs would not likely be made up in the incremental revenue we would make — if we would at all — in the sellthrough business.”

Disney, which has seen a theatrical resurgence in 2010, befuddled some analysts when it released then-No. 1 box office title Alice in Wonderland to kiosks on street date — a strategy it will replicate Nov. 2 with current No. 1 Toy Story 3.

The CEO said that with a home entertainment market inundated with consumer options, Disney plans to focus on the Pixar/Marvel/Disney brands.

“For the most part, when you make a quality Pixar, Marvel, Disney title, people want to own it,” Iger said. “Either because it is economically right to do that due the multiple times children want to watch it, [or] the titles tend to be the type people like to collect.”

He said Disney would continue to embrace ongoing technological changes in home entertainment distribution, including transactional video-on-demand (VOD), streaming and connected televisions.

“We made the decision five years ago [with the release of ABC TV content on iTunes] that we would be much better off aligning with technology companies than fighting them,” Iger said. “You can’t will technology away. It will continue to change consumer behavior. And it has created both challenges and numerous opportunities.”

Indeed, Disney last year bought an equity stake in online TV program aggregator Hulu.com.

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