When Robert Iger was installed as CEO of the Walt Disney Co. (NYSE: DIS) he immediately and aggressively pursued the online space, developing a large number of revenue streams connected to their more popular franchises.
At the Bear Stearns' 21st Annual Media Conference, Iger stated that Internet revenue has risen significantly above the fiscal 2007 estimates, which had stood at $700 million. The Disney fiscal year ended in September.
Iger said the company expects to take in around $1 billion in this fiscal year online, which would account for about 3 percent of overall company revenue. Last year Disney had overall profits of $4.7 billion on $35.5 billion in revenue.
One important part of Disney's online success so far has been how it has leveraged its franchises across multiple media revenue generators; creating web properties that are subscription based, ad supported, downloadable and sell merchandise. All of these contributed to the bottom line.
What I like about Disney and a few other traditional media companies, is they didn't sit there worrying about the meaningless idea that this revenue won't make up for the loss of other revenue. Rather, they simply started putting up web properties that would interest their fans, and let the numbers take care of themselves.
That's in contrast to the music industry that's still fighting the battle of how they are going to make up for lost revenue from CD sales, with the downloadable aspect of the Internet. Rather than try all sorts of things like Disney and News Corp. (NYSE: NWS-A) have, they've sat their paralyzed for years worrying over that, rather then aggressively attacking it and trying a bunch of new things.
Like Disney, they should just start doing a bunch of stuff online and see what works for them. Forget about keeping the CD sales up and find new sources of revenue on the Internet. The success of future growth can't be tied to what worked in the past. That will lead to certain business entropy, and possibly death.
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