The people have spoken - and Disney Listened! The NEW Disney.com
Disney Plans to Introduce a Sleek Makeover of Disney.com Site
By LAURA M. HOLSON
The New York Times
When the Walt Disney Company's chief executive, Robert A. Iger, takes the stage at the Consumer Electronics Show in Las Vegas on Jan. 8, he is expected to introduce the new Disney.com Web site that has taken more than a year to redesign.
For years Disney's Web sites, which include the popular ESPN.com, ABC.com and Disney.com, have been among the Internet's most visited. In November, the company overall ranked No. 9 among sites visited at home and work, according to Nielsen Netratings, which tracks online traffic.
But critics of the Disney.com, the homepage for a lot of the company's online offerings, say it looks amateurish and is hard to navigate. Disney recently showed off the revamped Web site at a company meeting at Walt Disney World in Orlando, Fla.
Some executives who saw it said it was much improved, with video and interactive features, and was much sleeker than its clumsy predecessor.
Revamping Disney.com has been a No. 1 priority for Mr. Iger, who has sought to extend the Disney brand by embracing new digital media. But behind the revamping, analysts and others say there is an equally pressing issue facing Mr. Iger, one that many entertainment conglomerates may face in the coming years: Who should be running the company's Internet properties?
In the past, Disney executives have bristled at the influence Disney's Internet Group, which oversees most of the company's online ventures, exerted over film, television and theme park Internet operations. Executives wanted more authority over their own online creative ventures.
It is not the first time Mr. Iger has grappled with how much autonomy executives should have. In 2005, he disbanded the company's unpopular strategic planning unit, giving more power to the company's individual units.
"It's inevitable that each division will be in the Internet space," said Harold L. Vogel, a media analyst. "I don't detect that Disney has resolved this. Someone is going to have to coordinate and, at the same time, not quash the creative side. I'm sure there will be political fights over this constantly. It will happen at every media company."
At Disney, the Internet Group is run by a company veteran, Steve Wadsworth. Currently, division executives are expected to work closely with Mr. Wadsworth and his team in developing new ideas for their division's online ventures, including those for theme parks, ABC.com and ESPN.com. Mr. Wadsworth first joined Disney Online in 1995, having spent two years in the consumer products division.
Christopher Dixon, managing director at the investment firm GGCP. who has followed Disney for years, suggested a "structural overhaul" of the group, giving the division heads greater control. "The Internet Group needs to set technical standards, be a facilitator," said Mr. Dixon. "One person can't do it all."
A spokesman for Mr. Wadsworth said neither he nor the executive overseeing Disney.com's revamping, Paul Yanover, were available to comment because they were on vacation. Mr. Yanover is a Disney veteran who was hired last May from Walt Disney Parks and Resorts Online, which he headed and helped develop e-commerce business for the company's theme parks. The spokesman said Mr. Iger was unavailable.
Since 1999, Mr. Wadsworth has had direct oversight of several online sites including Disney.com, FamilyFun.com and Movies.com, as well as Disney's mobile phone ventures. Mr. Iger told investors at a conference recently that it could take three to five years for the company's recent investments in Internet video and mobile devices to show significant profit, despite its promise.
Disney Online, which Mr. Wadsworth oversees, was founded in 1995 and includes a cadre of games like the highly successful Toontown Online and Pirates of the Caribbean Online, which will be released in 2007. In 2005 it introduced Disney's Game Café for adults.
In addition to its own operations, the Internet Group is expected to consult with the divisions on major strategic initiatives. And that has caused tension as executives seek to more seamlessly integrate the Internet into their traditional businesses, said Disney executives who asked not to be named because of their relationship with the Internet Group. ESPN.com was created in 1995, the same year as Disney.com. Many within Disney consider ESPN.com to be a far superior Web site because of strong oversight from ESPN's management team. As a result, said one of the executives, ESPN.com seeks to operate with little interference.
Last year, the Disney-ABC Television Group appointed Albert Cheng to head a newly formed digital media team and charged him with creating new business ventures for ABC's online unit. He reports to Anne Sweeney, co-chairman of Disney Media Networks, who negotiated with Apple Computer to sell popular ABC television shows like "Desperate Housewives" on iTunes.
That venture has proved most successful. Not only did other networks follow suit, but ABC has expanded the number of shows available on iTunes while offering ad-supported Disney shows for free on ABC's Web site.
In November, Walt Disney Studios hired a new technology officer to help it, among other things, deliver Disney movies online. Studio executives are hoping for more oversight of movie properties, including online movie distribution at home which has the potential for big profits.
"That is the holy grail," said Mr. Dixon, particularly given Apple's interest in in-home entertainment. Steven P. Jobs, Apple's chief executive, is now Disney's largest investor after Disney's $7.4 billion acquisition of Pixar Animation Studios, formerly owned by Apple.
Earlier this year, Mr. Iger considered combining all of Disney's online games and video game operations — some of which are overseen by the Internet group — within Disney's consumer products division. The consumer products team has been aggressive in expanding its video game operations and has sought to bring the company's expertise under one roof. Games are a priority for Mr. Iger; Disney has acquired small game makers to create Disney-branded content, instead of simply licensing popular titles.
Mr. Iger decided to allow the online game business developed by the Internet Group to remain there, instead of combining it in the consumer products division. Mr. Vogel, the media analyst, said there was a case for keeping it separate, although in the long run it might be better if they were a single unit. For Mr. Dixon, of GGCP, it is not whether Disney can best exploit the Disney franchises through Disney.com, but when and how it will actually happen.
"The irony is they have all the pieces," he said. "They now just have to figure out the next phase."
UPDATED info with PICS from the WSJ
Updated Disney.com Offers
Networking for Kids
Web Site's Strategic Revamp
Encourages More Interaction --
But Parents Will Be in Charge
By MERISSA MARR
January 2, 2007; Page B1
Like many 10-year-old girls, LuLu Shamberg is a big fan of new Disney Channel shows like "Hannah Montana." When her parents gave her an iPod for Christmas, one of the first things she did was download the show's album.
But when she sits down in front of her computer in Santa Monica, Calif., it's not Disney.com she usually turns to. Instead, she logs on to an online game called Club Penguin, where she has her own character, chats with friends and plays games in a virtual world. "You can do much more there," she says.
That view, and others like it, have cut to the heart of Walt Disney Co., impelling the company to address the shortcomings of its Internet offerings. Later this month, it is launching a revamped version of Disney.com, offering a labyrinth of chat rooms, games and personalized pages that will target kids and their parents.
The new Disney.com, which Disney Chief Executive Bob Iger plans to unveil at the Consumer Electronics Show in Las Vegas next Monday, is Disney's take on social networking for mainstream America. In it, kids can chat while watching video clips, listening to music and playing a game, all at the same time. Parents, meanwhile, can control their kids' use of the site.
The new Disney.com Web site aims to create a 'wow factor' when users enter.
At risk of being left behind in the Internet world as kids swarm to everything from Club Penguin and Neopets to MySpace, Disney has spent much of the past year working feverishly on the new site. The company had a lot of work to do: The current version is clunky, outdated and has not fully capitalized on Disney's new sizzling shows and characters like "Hannah Montana" and "High School Musical."
Mr. Iger says the new Disney.com is "the single most important companywide strategy Disney is currently implementing." Disney's Internet chief Steve Wadsworth refers to it as the new "front door" to Disney's sprawling world of television shows, movies, toys, videogames and theme parks.
Having made his mark so far as Disney's CEO by pushing an aggressive vision for the digital world, Mr. Iger sees the new site as a central hub for Disney programming. While he won't go as far as to say that Disney.com will replace existing forms of distribution such as cable television and DVDs, it is clear the site is heading in that direction. In the meantime, it will offer "great opportunities for advertising, direct sales and commerce," he says.
But as it moves into the world of social networking, it's doing so with limitations that in some ways conflict with the self-expressive nature of such online communities. At least initially, for example, users will be more or less trapped in Disney's online world, unable to import non-Disney music or video clips to fill out their online profiles.
Making Disney relevant to Web-crawling kids is one of the tougher tasks Mr. Iger has faced since taking over as chief executive just over a year ago. Facing increasingly fierce competition from MySpace, video-sharing site YouTube and other whiz-bang rivals, the new site needed to be cool enough to lure an increasingly sophisticated audience, but not so cool that it threatened Disney's wholesome image. It also needed to integrate a broad range of businesses.
It's not the first time Disney had faced such a problem. In the late 1990s, it started shedding teens who saw the brand as boring and babyish. Disney's effort to win back that audience resulted in such properties as "Hannah Montana." But Disney.com got left behind in the makeover.
While entertainment rivals were busy snapping up hot Internet properties, Mr. Iger had another strategy in mind: to largely go it alone based on the strength of the Disney brand. "I don't feel it's necessary for us to do a deal to succeed on this platform," he says.
Disney executive Paul Yanover was put to work to come up with something new. Having previously worked on Disney's theme-park Web sites, he spent day after day researching how kids interact with the Internet and conducted multiple focus groups to see how they would respond to new features. Among the things he discovered: While almost all kids went to Disney's old site to play games, they want to multitask.
For the redesign, Mr. Yanover says his team wanted to create something that combined "iPod cool with Disney magic." They turned to sites like MySpace and Xbox Live Arcade games for inspiration. Just as Walt Disney did with the entrance to the theme parks, Mr. Iger says, they wanted to create a "wow factor" when users first enter the site.
Another focus-group finding: the importance of parental control. With kids being exposed to increasing risks online, Disney included a way for parents to control access to the site, including the chat rooms. At its most strict, that control includes chatting with preset phrases such as "cool" and "Cheetahlicious," and engaging only with preselected friends.
Disney Xtreme Digital, a broadband offering with sophisticated functions. gives kids opportunities to multitask and create their own pages.
Personalization was another big focus. By breaking down its audience, Disney felt it could better address the issue of being cool enough for all ages of would-be MySpacers as well as easier to navigate for parents. Mr. Yanover's team organized the home page by subject for adults and by character for kids. They also created six categories covering preschool; boys; girls; older kids and teens; families; and older Disney fans.
Clicking on the girls category, for instance, brings up a page populated with Disney Channel's "Kim Possible," "The Cheetah Girls" and "Hannah Montana" as well as images of Tinkerbell and a design-your-own fairy game.
A more advanced level of personalization was created with Disney Xtreme Digital (XD), a broadband offering with more sophisticated functions. XD gives kids more latitude to multitask, create their own pages and share them with others. They can do intricate things like mash-ups, taking clips from different Disney shows and snippets of Disney music and mixing them up. It also offers more challenging gaming.
In its first iteration, Disney.com will lock its audience inside the Disney world -- kids won't be able to bring in anything from outside the site. Mr. Iger accepts that the policy is restrictive and says, "we're looking at ways to change that" -- but only if contact outside the site can be policed. Mr. Yanover says the site is a "work in progress."
Of course, a closed universe has advantages beyond parental control. Mr. Yanover says there are many more advertising opportunities on the new site, including display ads, video ads and sponsorships. Disney will also charge for subscriptions to more advanced games and also plans to offer things like special powers in a game for a one-off charge. And it will sell DVDs, merchandise, travel packages and tickets to its parks directly to the public.
The question is whether Disney is too late. Rivals like Viacom Inc. have been moving aggressively into the kids and parents space for some time. Mr. Yanover argues the relaunch captures the sweet spot of trends like the adoption of broadband and an understanding of social networking. "We're right on time for mainstream America," he says.