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Disneys no Go

Move allows Disney Internet Group to focus on core assets 2/04/2001 07:00:00 PM Eastern

Two years ago, it seemed like a logical move for broadcast networks: As a known commodity with access to eyeballs, why not start an Internet portal? The Internet economy seemed like easy pickings for those who could drive traffic to their sites.

Much has happened since those glory days-so much, in fact, that the decision by the Walt Disney Internet Group (DIG) to pull the plug on Go.com is anything but a surprise.

"Even 10 months ago, the market dynamics were very different than they are today, and the overall ad market was very robust," says Steve Wadsworth, president of the Walt Disney Internet Group. "So the opportunity for us in the portal area looked pretty good, although we knew it would be a long-term effort. Now, with a significant change in the market environment, suddenly the effort required to make it through that stretch became a much more difficult proposition."

In the face of that changing environment, Wadsworth says it was only recently that the decision was made to shut down Go.com and even that was after considering alternatives like scaling back the effort. But the shrinking economy, coupled with a desire to not distract from established brands like Disney, ESPN and ABC, drove the decision to shut down Go.com, a move that will reduce the DIG head count by approximately 400 people.

Of the main components of DIG-Go.com, Disney.com, ESPN.com, ABC.com and ABCNews.com-analysts considered Go.com the weak link, primarily because its brand recognition had to be built from scratch. In addition, the battle to be a leading portal has been thought to be already decided, with Yahoo and AOL leading the way.

"The whole decision to go for a visible networking strategy and try to compete in the general portal space with the likes of AOL and Yahoo was very misguided," explains Arem Sinnreich, Jupiter Media Metrix senior analyst. "In the face of ever diminishing advertising revenues, I think it was very smart of them to pull the plug rather than spend another year marketing for this dead horse."

The challenges facing Go upon its launch were fairly daunting, especially compared with its brethren. The first was trying to build a brand in a new medium vs. trying to build an online brand for brands with an off-line presence.

"There's a significant investment in building a brand that we don't have to do with the other properties," adds Wadsworth. "We also have an inherent big ad-sales team at those properties to build relationships. We also have the marketing muscle to promote it and tie it in with on-air content. We didn't have that with Go."

Another, more fundamental challenge for Go was that success in the portal game has hinged on the ability of the portal itself to be neutral. When visitors to the site do a search, they want to feel comfortable that they aren't being pushed to certain sites.

"For example, the Go.com portal could never be a successful distribution partner for CBS Sportsline, so there was a serious conflict of interest there that doesn't exist with an AOL or a Yahoo," explains Sinnreich. "But that has changed since the AOL-Time Warner merger, which really leaves Yahoo as the last Switzerland standing."

 

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