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Tuesday, January 10, 2006

Worthy reads: Studio report cards and Bob Iger profile

- Patrick Goldstein of the LA Times hands out report cards for all the major movie studios, grading them on box office performance and film quality. Warner Bros. and Fox come out on top. But everyone's still struggling for relevance, Goldstein writes:

    Box office may be down, but sales of iPods, Xboxes, cellphones, MP3 players, TiVos and plasma screen TVs are going up. Make that … skyrocketing. People are spending more time every year with entertainment — nearly every new consumer electronics gadget exists to provide it. But with today's entertainment coming in all sorts of shapes and sizes, two-hour movies are simply no longer the first-choice package.

    We live in a world where time has become a commodity, just as valuable as the money in our pockets. And when there are a multitude of other easily accessible leisure options, people aren't going to spend two hours in a theater, subjected to ridiculously expensive popcorn and endless commercials, not to mention that rude cellphone-toting guy in the next row, unless they believe that there's something irresistible on the screen.

- Marc Gunther of Fortune has a great piece on Disney CEO Bob Iger, which focuses on the company's experimentation with new forms of distribution. The subhead of the piece is, "The Disney CEO's embrace of digital technologies means big change." Gunther writes:

    ...TV on an iPod is just the start. New channels of distribution, including broadband Internet, wireless phone networks and video-on-demand are all growing rapidly. New electronic devices, including the TV-enabled cellphone, videogame players, digital video recorders and the iPod, are proliferating even faster.

    "The changes I'm talking about will affect the entire media landscape,whether you are in television, radio, music, movies -- the whole thing," said Iger, 54, who has moved, along with his Hewlett-Packard xw8200 computer and 30-inch Apple Cinema monitor, into the corner office he inherited from Michael Eisner when he took over as CEO Sept. 30. "It's not down the road. It's here. It's real. It's long-lasting."

    Iger intends to be an early adopter as he guides the $31-billion-a-year Disney into the digital world. "Bob has Disney in the lead right now," says Lowell Singer, an analyst with S.G. Cowen & Co. "He's doing the most out-of-the-box thinking in the media sector." Disney's rivals have quickly followed -- NBC has put Law & Order and Late Night With Conan O'Brien on iTunes, CBS has licensed Survivor to Comcast for video-on-demand, and Sprint Nextel has formed a joint venture with four big cable operators that will deliver streaming cable channels to your cellphone. Hollywood is once again abuzz about broadband entertainment, multiplatform plays, the "third screen" (meaning the cellphone) and that old standby, convergence.

    "Technology is in the process of completely rearranging the way people consume video," says Nicholas Donatiello, CEO of Odyssey, a market research company in San Francisco. "The most important thing for big media companies to understand is that they need to be on this train or under it."

A sign that Disney intends to be on the train: Iger says that by reducing bureaucracy, Disney's Anne Sweeney was able to negotiate the iPod deal in three days.

Gunther hones in on the challenge of wringing the most out of existing distribution models while developing new ones:

    It is far too soon to tell, of course, what the revenue streams from digital distribution will look like. Right now they are incremental: In the first two months they were available, episodes of Disney shows were downloaded about 800,000 times at $1.99 each. Disney isn't saying how much of that $1.6 million total it keeps, but by way of comparison, a single recent episode of Desperate Housewives generated $9.9 million in ad revenue, according to Nielsen Monitor-Plus.

Later, he focuses on DVDs:
    Then there's the DVD, which has been a boon to Disney. A seven-disk boxed set of the first season of Lost has sold about 1.2 million units, with a list price of $59.99. If people can easily download and store TV shows and movies, will they buy as many DVDs? Wal-Mart, which sells more DVDs than anyone, has let Iger know that it is unhappy.