Disney’s Digital Tryouts

Jun 12, 2006  •  Post A Comment

In an example of the experimental nature of new media strategies-which can vary widely by cable network and, as in this case, even within the same parent company-The Walt Disney Co. is trying two approaches to online distribution of shows for its SoapNet and Disney Channel networks.

To build demand for its recently launched broadband channel, SoapNet last week began offering full-length episodes of the third season of its signature original series “I Wanna Be a Soapstar” on SoapNetic following the June 8 premiere on the cable network. The catch is that SoapNetic is what’s known as a “gated” broadband channel, which means consumers can access the service and the episodes only via a high-speed provider that has struck a deal to offer the channel to its broadband customers. Since its April launch SoapNetic has been available only to Verizon’s high-speed customers.

Keeping more than one iron in the fire, Disney at the same time is kicking the tires of another online tactic-offering complete episodes of shows on its networks’ Web sites. Under that approach, the programs are available to anyone with Internet access. Programming includes ABC’s prime-time shows, which have been housed on ABC.com since early May, and full-length episodes of Disney Channel shows that premiered June 2 on Disneychannel.com.

Two-Pronged Approach

A market exists for both a gated broadband strategy and an open one, said Ben Pyne, president of affiliate sales and marketing for Disney and ESPN Media Networks. This two-pronged approach allows a media company to pursue a dual revenue stream, through licensing fees via the gated broadband channels and through advertising via the broader online sites.

Indeed, Disney’s simultaneous experimentation with new media approaches underscores that there is no clear winner yet when it comes to online distribution of TV shows, said Michael Goodman, senior analyst with Yankee Group. “It’s not really about pros and cons at this point,” he said. “It’s about identifying what the pros and cons are.” Within a year or two networks will have amassed reliable data about consumer preferences and can implement the long-term online strategies that will generate the most dollars, he said.

The SoapNet approach with “I Wanna Be a Soapstar” serves other purposes. Episodes will also be available on iTunes for a fee, but consumers can watch the show for free online only through SoapNetic. That allows SoapNet to build demand for SoapNetic and possibly entice other operators to carry the service. “Will it drive demand? It could certainly do that,” Mr. Pyne said.

SoapNet’s approach is also a strategic move that sends the message to cable operators that Disney is playing ball with the emerging telco competition. “The programmers want the telcos to succeed because it’s another channel to generate revenue from and it serves as a counterweight to [multiple system operators],” Mr. Goodman said.

Though Disney is experimenting with various online models, many experts believe that gated broadband channels are only short-term plays. AOL, after all, relied on such a members-only approach for several years and revamped that tactic about a year ago to open its content to everyone.

“In the long term, our consumer research tells us that most content wants to be ‘free,'” said Kaan Yigit, an analyst with Solutions Research Group. “We will see a ‘back to the future’ on this issue, where in a few years sponsored [or] ad-supported content will emerge as the dominant form of online entertainment delivery.”

By the Numbers

In fact, Disney is already amassing data to bolster that point. During the weekend immediately after Disneychannel.com introduced full-length ad-supported shows, the Web site generated more than 11.4 million streams for Disney Channel shows, 3.7 million unique visitors and 78.7 million page views. That’s about the same number of streams ABC.com generated in the first month of offering online episodes of its shows, but the Disney Channel site includes more programs and is targeting a younger demo more likely to be comfortable watching TV online.

What’s more, Disney Channel contends the availability of online episodes of its show “The Suite Life of Zack & Cody” helped drive the cable network’s ratings. On June 2 the network premiered an episode on the Web site in the afternoon prior to the evening linear debut. That episode generated more than 1.2 million streams on the Web site that day and averaged 4.3 million viewers on the cable network. That made it the top-ranked basic cable show for kids 6 to 11 that day, Disney said.

SoapNet’s strategy to seed its signature original series on multiple platforms is an expansion of last season’s strategy, when the reality show was made available online on AOL and was one of the first TV shows to be offered online in its entirety. The network is in 49 million homes now, up from 43 million last year. Because it’s not fully penetrated, SoapNet, in an attempt to reach more soap fans, has been among the vanguard of networks offering shows online.

This year episodes will go live on SoapNetic the Friday after each Thursday night premiere. SoapNetic will include exclusive material such as extended contestant bios.

Starting June 13 iTunes will carry all of “Soapstar’s” second season and the first episode of season three, with subsequent episodes to go live the day after they premiere on-air. On its Web site at Soapnet.com, the network will feature profiles on contestants and judges, video interviews with ousted contestants and polls and discussion boards. In addition, fans can vote via text messaging each week on who should get the boot. The voting results won’t factor into judges’ decisions but will be used in promotional spots.