Robert Iger on...Entertainment

ROBERT IGER took over last year as president and chief executive of Walt Disney Co., and moved quickly to embrace the newest in digital entertainment. He signed deals to put Disney-owned television shows on the Internet and Apple Computer Inc.'s iPod, and purchased the Pixar digital-animation studio. He talked with Kara Swisher about the deals, offering Disney content over the Internet and greenlighting "America's Funniest Home Videos."
KARA SWISHER: One of your first two moves was [to make your content available on digital devices]. So talk a little bit about, first, the iPod deal.
ROBERT IGER: It seemed rather obvious to us that the killer application is great creativity . . . married with a fair amount of intelligence about both technology and the consumer. We're investing significantly in creativity, and . . . confining it to just traditional platforms when the consumer is now consuming media on many nontraditional platforms seems silly to us. . . . Since you brought up [the] iPod, I was extremely impressed with the device. The iTunes software is fantastic in terms of creating a very simple, user-friendly experience, and then, of course, the beauty of the device itself, which is very well made, very well designed. . . .
It seemed obvious when we heard that [Apple] was developing a video player that we should move our video content onto the platform.
MS. SWISHER: How has that been?
MR. IGER: The downloading has been quite successful. It's still relatively small in the scheme of things. We've had about six to seven million downloads of Disney ABC shows since we launched in October.
MS. SWISHER: What's been the greatest one?
MR. IGER: "Lost" is first. "Desperate Housewives" is second. But we've had some interesting experiences. We put a movie on [iTunes] called "High School Musical," which was on the Disney Channel . . . and charge $9.99 for it, and it went to the top of the video charts on [iTunes].
We're multiplying the number of platforms that Disney, ABC, ESPN content will exist on. Because people are accessing media on so many more platforms, then why not occupy that space?
The consumer today has much more power over how and when they access media than ever before, and technology is the great empowering tool, and we have to pay attention to that.
MS. SWISHER: [About the same time you made shows available for purchase,] you made a move to stream "Desperate Housewives," and a bunch of shows, very popular shows, the biggest hits on ABC at this point, [free of charge but] with unskippable commercials. Your advertisers, who were paying a lot of money on your network, agreed to go along with it. Tell us about that experience.
MR. IGER: ABC decided to put four shows on ABC.com streamed. Two of them very popular shows, "Lost" and "Desperate Housewives." Two others [that are] not as popular, and in 29 days, they had 11 million streams. They sold advertising in all of them, one advertiser per show with a few 30-second spots within the body of the program that could not be skipped. The result has been pretty dramatic. Over 85% of the people who streamed remember the advertiser that was advertising [on] the program they streamed, which was incredible.
MS. SWISHER: Plus, they can't skip the ads.
MR. IGER: They can't skip them, but it's interesting. They're only 30 seconds long, so when you're watching streaming video on your computer, and you know that it's only a 30-second break instead of a break that's substantially longer, you're not as compelled to skip anyway. . . .
The other thing we discovered is that most of the people that are watching are watching because they missed the show. So we're enfranchising more people. We're giving them more opportunity to watch something instead of keeping it on one platform.
MS. SWISHER: So let's talk about the list of people that your move made mad: the affiliates, companies like Wal-Mart that are selling DVDs, cable companies who pay you a lot of money [for Disney's channels], writers, actors . . .
MR IGER: Well, I think there are a lot of people who are troubled by any traditional content company moving their content under new platforms.
MS. SWISHER: Let's start with affiliates.
MR. IGER: Well, affiliates actually may end up with an opportunity that they've never had before. We gave . . . about 10 ABC affiliates the opportunity to put an ABC button on each of their Web sites. So if you go to the ABC affiliate in Milwaukee, Wis., their home page has a button that says, "Watch ABC shows." You click it, and the player that plays the streaming video comes up, [but] the environment [on the affiliate's Web site] is still, in this case, WISN. We let them sell a commercial around [the streaming video]. . . .
There will be some entities that are alienated, but in the end, we may create opportunities. We're in conversations with Comcast, who would like very much to have the same show streamed on Comcast.net or in a [video on demand] environment.
MS. SWISHER: Do you see ESPN streaming all its content?
MR. IGER: I don't see ESPN streaming its entire service [because the] satellite and cable platforms pay us a huge amount of money [for the right to carry ESPN], but ESPN is already reaching its customers directly in many other forms on either ESPN.com or through other services. . . . I don't think you're going to see one media model in the future. It'll be many.
MS. SWISHER: Actors, writers, directors must be insane at this point about what they're going to get.
MR. IGER: Insane is, I think, too strong a word. There are a lot of mouths to feed, as has been the case in this business for a long time, and I think it will all get figured out, because . . . when you have an increase in media consumption, that's a good thing. We just have to figure out ways to track the consumption and ultimately to compensate all the entities that deserve compensation, and I believe we'll do that.
MS. SWISHER: What else do you see going up on Disney.com?
MR. IGER: Disney.com is going to become a network of the future. You can watch shows. You'll be able to listen to music, play games, buy things. We'll have a fairly robust online store. We have our own photo service called PhotoPass [for] countless millions of people who visit our theme parks [and want to upload photos from their trip].
MS. SWISHER: Do you see having a close relationship with the Yahoos and Googles of the world to get this content out there?
MR. IGER: We're willing to make our product available to anyone who's willing to pay the right amount of money for it or to create an environment that is, generally speaking from our perspective, positive. If you look at the Google video offering . . . you can find CBS shows. You can find NBA highlights. But you can also find a lot of user-generated content, and some of that content is not really an environment that we want to put ourselves [into]. If they offer us an environment that is a little bit more consistent with the environment that we . . . believe is fitting for the content that we create, there's no reason why we wouldn't do business with them. Again, if it's priced right and positioned well.
MS. SWISHER: Is there a difference between user-generated content and the fancy Disney stuff?
MR. IGER: I get a kick out of the fact that there's a lot of talk about user-generated content. In 1989, I was pitched a show . . . and in it there was a feature of people who sent their home videos in, and the host typically made fun of the videos that were sent in, and that became "America's Funniest Home Videos" . . . which is still on the air and . . . won its time period this year, which is pretty ridiculous or pretty amazing.
People are fascinated with user-generated content. I don't think it holds a candle to what I'll call professionally generated content. I don't think people will make a decision to watch somebody's birthday video instead of going to see "Pirates of the Caribbean" or "Cars," but they're obviously spending a fair amount of time on it. There's nothing wrong with it at all. We're actually empowering or facilitating some user-generated content, people who shoot videos when they go to our parks, for instance. [It's] not our primary business.
MS. SWISHER: Let's talk about the network. Last night, Bill Gates essentially said the networks are dead.
MR. IGER: In the history of media, there have been a lot of declarations made about genres or platforms or parts of the media business being dead. Consumption of media is going up, not down, and if you play a content game . . . then you have opportunities today unlike you've ever had before. If you keep that content on one platform only, a traditional platform, then in the end you're not going to get enough consumption to really support the continued creation of great content. So the goal . . . is to use multiple platforms, and the television network today is a great platform to generate a lot of consumption. . . .
I think you're going to see continued fragmentation. You'll see people consuming media in more places, more often, [on] more devices than ever before, not just on a television set.
MS. SWISHER: Do you see [Disney movies] being distributed immediately on DVD, cable and satellite, not just in the theaters?
MR. IGER: Not right away, no. . . . I think the movie experience, the big-screen, multiple-person experience is actually a pretty good experience. I think the whole industry should get behind improving that experience. . . . We create a lot of value with the initial big-screen release. So I like the notion of keeping that where it is. How long that lasts in some exclusive window, I don't know. It seems pretty obvious that the windows are going to compress.