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Disney and Globalization

Posted on Monday, Apr 4th 2005

The Media and Entertainment Industry is already going through a huge overhaul, and will continue to do so over the next decade, as Broadband finally becomes mainstream and ubiquitous, and other disruptive technology forces like Video-on-Demand (VOD), Blogs, Online Advertising, etc. start to establish stronger foothold. In this section, I would like to discuss issues and opportunities that are relevant for the evolution of the industry.

Bob Iger has just been named the new CEO of Disney, replacing Michael Eisner. Iger will preside over the evolution of a new generation of children and parents – Disney’s key customers – who need a different way of consuming his products.

I like Fairy Tales, Folk Lore, Mythology, Epics – all those colorful, vibrant, dramatic stories that make up Disney’s legacy. Disney has, in the past, produced major films based on such stories from various cultures. From Hans Christian Andersen’s Little Mermaid to the Chinese little girl Mulan, Disney has encompassed an international spectrum.

However, with VOD, the opportunity opens up to become widely more pervasive, larger, and accessible. Where a large multi-million dollar investment in a feature film like Mulan required assumptions about expensive distribution and marketing budgets, with VOD, the entire collection of Hans Christian Andersen’s Fairy Tales can be built into a series of 30-45 minute films, distributed efficiently and affordably via Broadband download or streaming, and advertised on Yahoo or Google.

The economics of film-making can now change. For an animation studio such as Disney, it is feasible to use a very large-scale production unit in India to roll out collections of magical stories from Denmark, China, India, Greece, Japan … and add an enormous amount of color in the lives of children all over the world.

So, while Mr. Iger negotiates with Mr. Jobs to put the Pixar partnership back in gear, he should also not lose sight of the non-blockbuster market that will soon be within his reach, and one that does not follow the rules of the legacy film business. Perhaps, it is just as important for Mr. Iger to negotiate with Mr. Semel, to figure out how to market this sort of content through online advertising.

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