10.28.2003 12:00 PM
Disney sees need to scare pirates and strip net privacy

In its creator’s era, the scariest thing about the Walt Disney Company was Disneyland’s thrill rides and the Haunted Mansion. However, a new generation of media executives feel the need to “scare the heck” out of would-be pirates who misuse digital video recorders and technologies such as video-on-demand.

Disney chairman Michael Eisner has long been one of the industry’s staunchest hardliners on the unauthorized use of his content on new media platforms, especially the Internet. But Disney executives unflinchingly upped the ante on their new digital family values in an unusual setting, the inauguration of a new thrill ride—Mission: Space—at Walt Disney World in Orlando, Fla.

Entertainment producers need to provide consumers with new ways to buy what they want, and the studios must find digital locks on that content to bar people who don’t pay, said Disney COO Bob Iger at the event. Those locks, he said, need to consist of standardized digital rights management to keep control of movies, educate consumers on the illegality of copyright infringement, and strip anonymity from Internet file sharing.

“I realize that there are a lot of concerns regarding privacy in this regard, invading people’s homes and their home PCs,” Iger said, “but at some point we’ve got to somehow...scare the heck out of these people that they could get caught.”

Disney is concerned about the emergence of the digital video recorder (DVRs), which is challenging advertising-based business models, and video-on-demand (VOD), which lets viewers watch a program whenever they like. The company recently launched MovieBeam, a new VOD service that offers home viewers a self-updating cache of 100 movies for rental.

As for digital video recorders, Iger said Disney executives are talking amongst themselves and approaching advertising agencies about how to deal with DVRs that store programs on a computer hard drive and let viewers speed through or skip commercials.

“We are going to try a lot of new technologies—and not just make the product available in one window (of time) in one form,” Iger said of Disney’s digital strategy.

If it can maintain content control, the Disney company is betting that added digital distribution can boost its profits in a rapidly changing media landscape.

“The value of the content you are putting out there is likely increased by technology and a greater ability to reach consumers,” said Tom Staggs, Disney’s chief financial officer. “It doesn't mean that the business models are going to stay the same, and there are challenges to adapting those business models to take into account how you reap the value of that programming.”

For more information visit www.disney.com.

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