Michael Eisner Presentations
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In addition, Michael made a presentation to Deutsche Banc Alex Brown's Entertainment Day Conference on June 4th, 2003. The presentation started with the following note: If you invested in The Walt Disney Company in 1984 when Michael Eisner came on board you would have had 16% compounded annual revenue growth, 12% compounded annual operating income growth, and 17% share price appreciation every year. Disney is also the top pick for Deutsche Banc in the entertainment sector.
Michael talked about franchise building and the digital decade at The Walt Disney Company. This is a form of the model Disney uses for growth which is developing new properties while finding new ways to distribute the properties. Disney is known for using films as a way to develop franchises. The problem is that the shelf life of films is short and if a there is a failure there is a major gap in the earnings of the company. This is why Disney is refocusing its efforts on developing properties on the Disney Channel. An example would be the Lizzie McGuire franchise. The Lizze McGuire franchise is repeatable with other television properties like KimPossible which was the first animated series developed for the Disney Channel. KimPossible is being supported by a range of merchandise available at Wal-Mart and even a live-action feature film. Another Disney Channel success is That’s So Raven. The greatest retail franchise is the princess line featuring princesses like Snow White, Cinderella, and Ariel. The traditional franchise engine of films churned out successes with Lilo and Stitch and Finding Nemo. The Finding Nemo franchise will be supported with plans for a sequel, TV show, consumer products, and a theme park attraction, an update of the Living Seas at Epcot, which will offer a flow of operating income.
The opportunities of the digital transformation of the entertainment industry will be driving growth. Traditionally, Disney’s growth is driven by seizing innovations in entertainment technologies. Disney content is appearing in innovative ways on cell phones, ABC is the only broadcast network broadcasting shows in full HDTV, ABC news is the only interactive video news website, and ESPN is broadcasting ESPN HD and ESPN Motion. ESPN Motion allows broadband users to see television quality video segments without download using proprietary software. Revenue is generated from traditional commercials placed in the middle of the exclusive sports segments. In 15 weeks, ESPN Motion is already being accessed by 750,000 people a day.
Another broadband initiative is Toontown Online. It is a subscription based service that is the first kid-friendly multi-player online environment. Movie Beam will be launched in three cities this fall and will allow guests to view over 100 movies anytime they wish with all the fast forward and rewind capabilities of a video. Movie Beam uses data casting which take a portion of the broadcast spectrum where they are downloaded to a set-top box. Viewer will pay a rental fee for the box and a fee to view the movies. Viewers will not have to worry about driving to the video rental store to return the videos or worry about late fees. Approximately 10 movies will be added each week and will feature movies from most Hollywood studios. Another similar innovation is the disappearing DVD called EZD. Coming later is the new Movies.com, which will allow the download of encrypted feature films which would hopefully be a legitimate alternative to downloading pirated product.
CRM(Customer Relations Model) is a way to better establish a two-way relationship between the guests and Disney. For example, if when visiting Walt Disney World Disney learns that a child has a love for a particular character, Disney would be able to follow up with information about additional character items. Another initiative that is being rolled out at the parks is Pal Mickey who can be rented or purchased at locations around the resort. He then acts as a tour guide using a wireless infrastructure installed at all four parks at Walt Disney World. Computer Animation is also part of Disney’s feature including the opening of Philarmagic at the Magic Kingdom which will feature the classic Disney characters being seen in a brand new way.
Michael summed up his remarks by saying, “digitally or otherwise, you can count on Disney�?. Michael’s remarks echo his vision since the acquisition of Infoseek. He wishes to use the broadband digital era as a way to distribute and develop properties that will drive growth for The Walt Disney Company.
Discuss It!
-- Posted June 6, 2003
-- Story by Benji Breitbart