Iger: Computer Replacing TV as Primary Entertainment Source

Disney President and CEO: Social Media Not a Fad, Broadband 'Will Be the Primary Source of Entertainment'
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Disney president and CEO Bob Iger expressed a very bullish take on new media at the McGraw-Hill Media Summit Wednesday morning in New York, chastising media executives for their skittish view of the multiple-platform approach to delivering content. “Brand managers look at technology with a deep-rooted aversion,” he said. “People take a protectionist view of it, but we’re projecting the brand versus protecting the brand.”

Speaking at McGraw-Hill headquarters, Iger spoke of using technology to “completely change the perception” of the Disney brand when he took over in 2005. He forecasted $1 billion in digital revenue for Disney this year, up from $750 million in 2007.

Iger also mentioned revamping Disney’s Web presence overseas, in markets such as China and Australia, and beefing up social media, such as Disney’s kids-friendly Club Penguin virtual world and an upcoming interactive platform centered around hit film Cars. He said Disney may again venture into the branded-cell-phone arena after missteps with ESPN and Disney phones. “It’s about embracing the consumer and using technology to do so,” he added.

Iger stressed how social media was far from a Gen X or Gen Y fad, but in fact a part of everyday life for children. He said the computer will soon supplant the television as children’s screen of choice. “In the years ahead, broadband on the computer will be the primary source of entertainment for kids,” he said. “It’s just as important to them as the TV set now.”

The Disney boss gave himself middling marks for his own performance in social media: He lamented having but two Facebook “friends” but said his Club Penguin igloo -- which sees participants accumulate gear based on game performance -- was outfitted with a wide-screen TV, a fireplace and even a basketball hoop. “I’ve never been to an igloo with a basketball hoop,” Iger deadpanned to interviewer John Byrne of Business Week.

Iger expressed satisfaction with Disney’s iTunes sales -- he said the company has sold around 4 million movies and 40 million-50 million TV episodes through iTunes during their 18-month partnership and the sales had not cannibalized Disney’s traditional media revenues.

Iger also plugged the traditional media model that has made home runs out of Disney fare like Hannah Montana and High School Musical. “It’s still a very powerful medium,” he said. “We denigrate it by calling it ‘old.’”

He lamented the effect the writers' strike had not only on the entertainment business, but its support businesses in Southern California, and was optimistic about working out an agreement with the actors’ unions. “I hope the actors see fit to agree to terms that are similar to the writers’ and directors’ terms,” he said.

Iger, who said Disney was not interested in acquiring AOL if it’s made available, believes Disney’s favorable balance sheet and cash flow position it for acquisitions. “We have the wherewithal to buy something if there’s shareholder value or strategic value in it,” he said, “but we don’t feel the necessity [to make an acquisition].”

In closing, Iger credited his mentors -- including Tom Murphy, Roone Arledge and Michael Eisner -- for shaping his management strategy. He cited Murphy for his ethics, Arledge for his perfectionism and Eisner for marrying “creative genius” with a CEO’s head for business. “I’ve been a lucky guy,” Iger said with a smile.