Robert A. Iger
president & ceo, the walt disney company
Iger: Firms Must Accept Changes
Walt Disney Co.’s chief executive, Robert A. Iger, ripped the recorded music industry yesterday, saying it has lost billions in revenue by trying to fight portable music players and Internet music downloads, instead of embracing change.
“They completely missed the market opportunity,” Iger said during an address at the Boston College Chief Executives Club. He vowed t hat Disney won’t make the same mistake. The company has begun offering Internet downloads of its hit TV shows.
“The consumer is now king,” said Iger, who took the helm at Disney in October. “Today, consumers have far more control over where, when, and how they consume media.”
The major recording companies, taken aback by the popularity of digital music, have used lawsuits against consumers and technology companies to maintain control over their products.
“By focusing on protective legislation rather than marketplace dynamics,” Iger said, “the music industry lost billions during the period of 2002 to 2003.”
The music industry’s efforts haven’t stopped people from swapping digital music, he said, because “there’s been a great authority shift” from copyright holders to consumers: Technology lets consumers easily get whatever music they want, and listen to it wherever they please.
Iger also said that Disney has no plans for major acquisitions in the near future, having finally closed its merger deal with Pixar.
“We don’t have a burning need to acquire something for our strategy, with Pixar having been the exception,” Iger said.
The Disney chief said his company is embracing the changes brought on by technology by offering shows from Disney’s ABC television network through Apple Computer Inc.’s iTunes Internet download service. Viewers can watch episodes of “Lost,” “Desperate Housewives,” “Alias,” and “Commander in Chief” on their home computers or Apple iPod portable video players, at no charge. “We’ve actually had three million programs streamed in the last four weeks,” he said.
But the success of online distribution of television shows could take a toll on local TV stations that carry ABC programs. A certain number of the ads shown during the shows are sold by the local stations; such ads bring in millions of dollars a year, especially when run during hit shows like “Lost.” Local affiliates worry that as more viewers watch online, fewer will watch their channel, thus reducing their advertising revenue. Ads sold by ABC remain in the Internet versions of the shows, so the network preserves its ad revenue.
A spokesman for Hearst-Argyle Television Inc., which owns several ABC affiliates, including Boston’s WCVB, said the company was testing a plan to let local stations link their websites directly to ABC’s Internet shows. Affiliates will encourage local TV viewers to watch the shows through their websites, where they’ll see online advertisements. Disney and Hearst-Argyle hope the locally generated Internet ads will help compensate the local stations for lost TV ad revenues.
Iger acknowledged Disney’s traditional business partners could be hurt by his new policy.
“They’re facing a threat from some of these channels that in some ways we’re aiding and abetting,” he said. But Iger said Disney has no choice.
"No single business or industry can stand in the way of technology," he said.
Article by Hiawatha Bray
Friday, May 18, 2006