Disney exec says piracy part of 'consumer coup'

Jeff Smith, Rocky Mountain News

Tuesday, August 22, 2006

ASPEN - Disney-ABC Television Group President Anne Sweeney likens technology changes not to a digital revolution but a "consumer coup."

"We all thought we were in charge of the consumer experience," Sweeney said.

Today, "it's all about when a consumer wants it," what device they want it on and where they want to view it, Sweeney told attendees of the Aspen Summit on Monday.

The annual communications summit, sponsored by the Progress & Freedom Foundation, brings together more than 100 leaders from the telecommunications, Internet, and entertainment industries, as well as the federal government.

The change was driven home, Sweeney said, when Disney-ABC entertainment executives were congratulating themselves following the 2004-05 season, when hits such as Desperate Housewives and Lost had resulted in a "fantastic rebirth" of the network.

"It was a joyous moment," Sweeney recalled. Then an executive from the cable group popped in a DVD, and the group watched on the conference room's plasma TV the last episode of the season for Desperate Housewives.

The executive had downloaded the episode for free from an Internet site, just 15 minutes after the show had aired. The episode was crystal clear, and all the commercials had been taken out.

"Talk about taking the air out of the room," Sweeney said.

"Piracy is a pretty darn good business model when you think about it," she added. The product is free. In this case, it was available within 15 minutes with excellent quality. And distribution to consumers, over an Internet site, is easy.

That experience, she said, partly prompted Disney/ABC to do a deal last fall to carry some of its hit shows on Apple's iTunes, where they can be downloaded for 99 cents each.

In June, Sweeney's group started releasing full episodes of certain shows for free on the Disney Channel Web site, an Internet site that caters to 2- to 14-year-olds. To date, there's been some 37 million requests to watch the episodes, Sweeney said.

"We all know and recognize that kids are fearless when it comes to technology," Sweeney said. "These are our new customers. . . . We need to begin building businesses around these customers."

In May, Disney/ABC released several TV shows including Lost and Desperate Housewives on ABC. com for free. That experiment came despite some pushback from advertisers, Sweeney said.

Those shows have generated some 5.7 million viewer requests, a sizable number but much less than on the Disney Web site.

What the network has learned, she said, is that the Internet viewers haven't cannibalized the television audience or the network's iTunes partnership.

The ABC.com viewers also have proven to be a desirable demographic, averaging 29 years old with a high education and income. And not only did nearly 80 percent say they enjoyed the experience of watching a TV show on the Internet, but 87 percent recalled the advertising they saw. Sweeney said advertisers such as Oil of Olay used the opportunity to test various methods of advertising.

But while ABC/Disney believes it is developing a strategy that caters to the new consumer behavior, it knows that strategy is subject to change in this era of the "consumer coup," Sweeney said.

Earlier in her talk, Sweeney referred to a recent book written by Henry Jenkins on the Convergence Culture, which describes how the consumer is interacting with the new media in unpredictable ways.

And, Sweeney said, "None of this works if the content doesn't work."