PREDICTION: STREAMING MEDIA WILL BE BIG

By: Chris Marlowe Disney/ABC Exec Sees Success Coming


(The Hollywood Reporter) Streaming media companies were once seen as the
darling of investors but are now perceived as being no more
valuable than flea-bitten mutts, Walt Disney Internet Group and
ABC Inc. executive vice president interactive media Dick Glover
said.

Both extremes were unfair, he told an audience Wednesday as
keynote speaker at the Streaming Media West 2001 conference in
Long Beach, Calif. Expectations were much too high on one hand,
while on the other, "there were plenty of bad ideas that never
should have seen the light of day," he said.

Glover likened the current situation to the early days of the
cable industry, when "healthy Darwinism" culled the ranks and
left only the strong.

One of the most important lessons learned from those days was the
desirability of building businesses that include tiered
subscription programming. "The goal is to extract as much value
as possible from a single piece of content," Glover said. "If you
want to have any chance of success, you have to drive down the
costs of content and build up or rent 'leveragable'
infrastructure."

As an example, he announced the launch of Toontown Online, which
will be part of Disney's subscriber-based online service Blast.
Glover called it "a virtual theme park" with games, chat areas,
and other activities, including the ability to "play a role in a
constantly unfolding Disney epic" by creating one's own
character, who can then participate.

This new undertaking was in addition to existing Blast offerings
and ESPN's Fantasy Games, with Fantasy Games having hundreds of
thousands of people each paying as much as $29.95 monthly.

Disney also plans to continue its enhanced television activities,
which Glover referred to as "companion viewing" and "the online
complement" to traditional television. The successes he listed
include "Who Wants to Be a Millionaire," ESPN's "2-Minute Drill,"
and coverage of the National Football League and the 73rd Annual
Academy Awards.

His overall tone was optimistic. "Industries don't fail;
companies do," Glover said. "The only thing the industry has
failed to do is to meet ridiculous expectations."

Glover spoke of another "phenomenal new communications industry"
that had significant failure rates -- cable television. He talked
of his own experiences with Group W (now owned by Viacom), a
company he said would be a world leader in the industry if it had
kept the courage of its convictions. Its CBS Cable ended up
losing at least $30 million, the Entertainment Channel lost $35
million, and Satellite News Channel lost $40 million before
giving up.

"That was 17 years ago," Glover said. "Doesn't it all sound
familiar?"

If it had kept to its business plan, he said, Group W would now
be part of ESPN, TNN, ABC Sports, and other success stories.

He also recalled the history of Qube, a test project from Warner
AMEX Cable Communications (now Time Warner) that supplied homes
in Columbus, Ohio, with 10 channels of broadcast television, 10
channels of original content, and 10 channels of interactive
content. Qube was shut down in 1985 after its parent company
decided the economics were not viable.

The basics of its music service eventually became MTV, and its
children's channel turned into Nickelodeon.

Glover used a three-legged stool analogy to illustrate what was
required for streaming media success, specifying the legs as
multiple revenue streams, strong brands with unparalleled
content, and an offline presence.

"This tortured metaphor stands on a leveragable and scalable
architecture," Glover said, admitting the "staggering" cost of
digitizing existing content.

Having all three legs creates a "virtuous circle" in which
consumers are "enhancing and growing their experience" with each
step.

Additionally, companies must not forget that a compelling
consumer experience is essential instead of letting themselves
get caught up in "the art of the deal instead of the art of the
art."

Disney is an excellent example of a company with multiple revenue
streams and strong brands, all built upon a "leveragable" and
scalable infrastructure.

It was the first to use "big impression" online advertising,
Glover said, adding that streaming media ads will be coming soon.
Other revenue streams include e-commerce, auctions, cross-
promotional activities, and subscriptions.

He also said that "there are tremendous opportunities away from
the PC," including game consoles, cell phones, personal digital
assistants, CD-ROMs, and other platforms.

"It's not just the technology per se," Glover said. "It's what
enables people to do in their everyday lives."

The secret to this, he said, is to focus on the point "where the
technology interacts with demographics." In Japan, Disney has
four channels of content that are available solely to users of
the DoCoMo cell phone service.

More than 1 million people pay for this, Glover said. ESPN
activities were available to Palm platform and wireless
application protocol-enabled devices, for example.

No business could succeed without copyright control, however.
"Anybody who thinks technology can be stopped by lawsuits or
legislation is wrong," Glover said. He underscored Disney's
commitment to protecting intellectual property, which received a
laugh from an audience well aware of Disney's reputation for
staunchly defending its property at all times and in all venues.
Glover suggested that devices could be required to recognize
digital rights management software as an alternative.

He ended by reminding the audience that Henry Ford bought out his
investors rather than heed their advice that the only way to make
money from automobiles was to market them to the rich. "If you
believe in your model and you have a product that meets
consumers' needs, don't bail out," Glover said. "Don't give up on
your vision."



Copyright 2001, Editor & Publisher.