Peter Kafka

Recent Posts by Peter Kafka

Disney CEO Bob Iger on Apple, Social Networks and the Cloud

Disney sells some very analog forms of entertainment, like movies, broadcast and cable TV, and theme parks.

But Bob Iger’s company has also been willing to experiment with digital outlets: The president and CEO of the Walt Disney Company has been a consistent supporter of Disney shareholder Steve Jobs’ iTunes and iPad efforts, and he’s also bet on Hulu.

So what’s next? Time to find out.

8:03 am: Good morning!

I am sad to report that D9 attendees are being serenaded by the sounds of Huey Lewis and the News.

Since you’re not here, you have other options. I’d suggest this one.

8:05 am: Also, because we have a couple minutes before Iger takes the stage, here’s an excellent 2010 profile of Jill Abramson, who has just been named executive editor of the New York Times. She’ll replace Bill Keller, who will become an op/ed writer at the paper. (Many of you are making Twitter jokes at this very moment.)

8:08 am: Need more coffee. BRB.

Here’s a view of Abramson’s coronation from within the NYT.

And in other media news, here’s a good contrarian take on Web ad spending, via Digiday, which has become a part of the conversation nearly overnight. Nice going, Brian Morrissey.

8:14 am: Current soundtrack, btw: Steely Dan.

8:15 am: And here’s Walt and Kara. (Cue Van Halen!)

8:15 am: Walt and Kara promote AsiaD, coming up in October in Hong Kong. Get your tickets now!

8:17 am: Walt leaves, Bob Iger enters.

8:18 am: Kara notes that Iger was at D2, seven years ago. What’s changed between now and then?

Iger: We’re at an extraordinary time. More change than I would have thought possible seven years ago. Mobile, social, and cloud storage will be “very real, very soon.”

8:20 am: Kara: What’s the mood in Hollywood? And we’ll talk about iCloud, because I suspect you know everything.

Iger: No.

8:20 am: Kara: Well, for now let’s talk about Netflix, then.

Iger: All of these new platforms, all of this disruption represents huge opportunities for companies like Disney. We make things for people to consume all over the world. Ability to distribute that stuff in more ways, with more flexibility, that’s a positive.

There are definitely challenges to old business models, but they weren’t going to stay the same, anyway.

If I look back seven years ago, we were in businesses that were relatively low-growth, and hadn’t changed in a long time. For instance, in movies, not much had happened since VHS, then DVD. Same with TV. But suddenly we were looking at the video iPod. And the lightbulb went off in my head: This could be what VHS was to our business, the same kind of potential. “An entirely new opportunity to monetize our capital investment in content.”

8:23 am: Kara: Is this stuff an add- on? Or does it move to the center of your business?

Iger: Well, VHS was considered an add-on, but it became hugely important. I think all of these new digital platforms will become that for movies and TV.

There’s going to be some displacement, but that was going to happen anyway. All of this is going to be incremental revenue.

And remember that this is not just in the U.S. 450 million smartphones will be sold this year–those are all digital media players. And consider that in markets like India, smartphones and tablets are either primary entertainment devices in the home, or the second one.

8:25 am: Kara. All right, let’s talk about Netflix, and the Starz deal that gives them your content.

Iger: Netflix is a good thing for us. “It’s a platform that is rich in terms of our ability to monetize our content.”

8:27 am: What about Hulu?

We like it for a number of reasons. Good user interface, good user experience. “It’s important in terms of our dynamic with distributors.” It’s good to have multiple distributors. “I’m not in the camp that believes that Netflix is going to take over the world…technology makes it impossible to have a monopoly.”

8:28 am: Talk to us about Hulu and Jason Kilar.

I won’t talk about Hulu details, but I’ll talk about Jason. “He did a great job.”

“Did?”

I mean he’s still doing it, last I heard.

8:29 am: Iger now talking about Disney.com, which can become a “destination to learn about all things Disney, and consume our content directly.” Will have a subscription service available, and advertising, and pay-per-view content, and content available on a micropayment basis as well.

Talking about earlier efforts, like Go.com. Since then, they have morphed Disney.com into a better site but it’s not there yet.

8:31 am: When will Disney.com relaunch?

Not going to pin ourselves down to a timeline, but you’ll see elements of the relaunch within a year.

8:32 am: Kara: A lot of companies have digital officers, but lots of people think that’s outmoded, and this stuff shouldn’t be separate anymore. What do you think?

Iger: Depends. At ESPN, digital is integrated, and it’s seamless. At Disney, we have lots of different products, and “having digital departments in each one of those businesses would have created too many silos…and what we didn’t want to do was expose our customers to our org chart online.” So it made more sense to have digital as a separate division.

8:34 am: Kara: Are you part of the Apple iCloud launch next Monday?

Iger: No. But on lockers and clouds in general:

Ability to have your content online, accessible all in one place, that’s a better user experience. Believe that impediments to people buying things include storage: You don’t have room on your hard drive to store all this stuff, and you don’t want to throw it out.

8:35 am: Kara: Will you favor one cloud idea in particular?

Iger: No. iTunes has been great, and we were first there, because the user experience was great. We turned down other platforms because the user experience was not very good, and thought we’d be tagged negatively for associating ourselves on that.

On Disney’s Apple relationship: We don’t have a special relationship. “We’ve not said yes to everything that Apple’s wanted, and vice versa.”

Also working with Microsoft, “I know there’s engagement with Amazon” and others.

8:37 am: Has iTunes made money for you?

It’s been quite successful, but we’re only looking at the tip of the iceberg. Traditional media still makes much more money than any digital. “Pirates of the Caribbean 4″ is about to pass $700 million worldwide. Digital doesn’t do anything like that that quickly.

Tablet is going to revolutionize the filmed entertainment business. On the way here, I was reading ATD on the iPad, and watching the French Open via the ESPN app. A few years ago, you couldn’t do that.

8:39 am: Kara: OK, so how do you get to “Pirates of the Caribbean” dollars via digital?

Iger: Look at all the smartphones being sold worldwide. That’s going to give us an opportunity to do this in a way we can’t do today, via smartphones and tablets.

8:40 am: Kara: How has the movie business changed?

Iger: “It’s become a less forgiving business. There’s no room anymore for mediocrity, and failure is more evident than it ever was.” Home video has changed a lot–you only buy something unless you really like it, because you have a lot more competition for your time. We’re different because kids watch our movies 50, 60 times, and that’s fine with parents, because it occupies their time [So, so, so true: On viewing #200 of "Cars"].

8:42 am: Kara: Will you stop doing everything in 3-D? It’s super annoying.

Iger: “It’s way too early to write 3-D’s epitaph.” That said, we need to use it smartly. The Web as a recommendation engine is huge, and when you go to a movie opening weekend and pay a premium for 3-D, and it’s not worth it, “you can’t hide that.”

8:43 am: Kara: So lots more 3-D.

Well, sort of. We’ll do “Lion King” in 3-D. Not for a long run, but “it’s more than a gimmick”. [This causes Kara to break out into song for a beat. ]

8:44 am: Talk about the Shanghai theme park.

Iger: 300 million people live within hours of Shanghai. It’s going to be huge for us. Investing in tech to make theme parks more compelling. Will create “personalized experiences” in Orlando. Ability to customize stuff in advance–you’ll be able to reserve ride time. Shanghai will reflect changes we’re making in our existing parks, too.

8:47 am: Weird digression. I’m confused.

8:47 am: And we’re back! Kara: Gaming: You spent a lot on Playdom. How’s that going?

Iger: Games are growth business. We’ve made some mistakes, which we’ve acknowledged. Some on the creative front, some on strategy. Spent too much on consoles, now trying to catch up on social games, a la Zynga. We’ll do new stuff that won’t be based on existing Disney brands. We took a break because things weren’t good enough, but have since started releasing new stuff. Gardens of Time is a top-10 game, very addictive.

8:49 am: Kara: What about social? Sheryl Sandberg is on your board.

8:50 am: Iger: We’re already tremendously successful on Facebook.

“I don’t think we will create our own social network,” but there is an opportunity for child or family-safe environment. Club Penguin is sort of that, and we’re talking about going beyond that. I wouldn’t say it’s in highly advanced stages, but we’re doing a lot of thinking about it.

Q&A

Q: Akamai’s David Kenny wants to know about hiring talent.

A: We’ve been rethinking some of our HR practices. We’ve also intentionally kept Playdom and that group up in Palo Alto, because we need a presence in Silicon Valley.

Q: (From Wired’s Steven Levy): Cloud makes more sense if you can move your stuff to different platforms, and different devices. Are you demanding that?

A: We haven’t made any deals yet. But we’re definitely focused on interoperability. We need to demand that.

Q: You bought Togetherville. How’s that going?

A: It’s either going to become a component of Disney.com, or we might build something that’s discrete. But I think we’re going to enable our social stuff through Disney.com.

Q: Also, lots of kids are on Facebook. Can Disney address pent-up demand for preteens for a social network?

A: We have to be very very careful with our brand. “Until we are certain that we can live up to our brand attributes within that space,” we’re not going to do anything there. “I think we’re getting a little far ahead of where we are on this…I don’t want the audience to come away from this thinking we’re going to launch a Disney-branded social network for kids. We might do that,” but not anytime soon.

Q: Last year I told Steve Jobs that I’d bought “Up” on iTunes but I couldn’t play it on my HD projector. What’s up with that?

A: Not really sure.

Q: If I’d stolen it, I wouldn’t have had this problem.

A: But you wouldn’t feel good about it.

I happen to believe that the single most potent weapon to fighting piracy is to make this stuff available widely and in a timely way. That’s one of the reasons we’re getting into digital in the first place.

Q: Another interoperability question. Lots of platforms already, and more coming. How do you future-proof stuff so things you buy now can still be used 20, 30 years from now?

A: Hard to look out that far into the future. Cloud is going to help address this. “But we’re not really making that many decisions today that are based on what the world is going to look like in 20, 30 years.” It’s hard enough for us to figure out what the world looks like in five years.

But! The reason we spend so much on branded entertainment is that we think it’s always going to be in demand, regardless of platform, technology, etc. And while being able to access stuff you bought a long time ago is good, “we benefit from rebuying.” We have a big opportunity to expose people to content made decades ago, and “the reason we can do that is because it’s good.”


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