The Mouse That Roared Online

The online biz is big business at Walt Disney Co., where the Burbank-based entertainment giant is positioning itself for the day when computers and TV sets become one.

How important is the Internet to Disney? Steve Wadsworth, the new 36-year-old president of Buena Vista Internet Group--Disney’s cyberspace division--reports directly to Disney Chairman and Chief Executive Michael Eisner. And Eisner doesn’t concern himself with trifling matters.

“As one of the largest media companies, we decided early on that we would have to ensure a position as one of the top players on the Internet,” Wadsworth says. “And, for a major media corporation, I think we’ve been pretty nimble.”

The company’s online division, led by its flagship Disney.com, is headquartered in a North Hollywood high-rise. The expanding empire includes the ABCNews and ESPN Sports Zone sites, plus the portal site Disney launched last year, GO.com, now ranked fifth among search and directory sites (Yahoo! and AOL still lead the pack).

It’s a fast-growing business, building from a mere 10 employees rambling around a Glendale office four years ago, to hundreds of workers reporting to Buena Vista’s digs at Lankershim and Magnolia boulevards, in addition to offices in New York City and Bristol, Conn.

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Similarly, Disney, in partnership with Infoseek, administers GO.com, ESPN and ABCNews sites out of Infoseek offices in Seattle and Sunnyvale.

To enhance the GO brand, Disney has linked all of its sites to GO.com so that Web surfers can link back and forth among its various properties.

The Buena Vista Internet Group is unique within the Disney corporate structure, company executives say, because it is the only unit that has access to all the company’s media holdings. The effort to bring these properties together cohesively has not been without problems.

“They’ve done a pretty decent job promoting Disney.com,” says Seema Williams, an analyst with Forrester Research, “but they do have a lot of disparate properties that they’re having trouble running together with GO. They haven’t done a great job highlighting the core properties under GO.”

Disney officials say that, like most things Internet, it is a work in progress.

The money-making areas that Disney has targeted with its online presence have included marketing and promotion of its media brands, subscriptions, e-commerce and advertising, with the latter two showing the greatest growth.

“Our online sites have become a much more effective vehicle for e-commerce,” Wadsworth says. “The newer technology has enabled us to engage people in a much richer way. What we’ve found is that when people are online, they then want to take home a piece of the experience.”

Online subscriptions are also hitting projections for Disney’s Club Blast, launched in 1997, with an estimated 190,000 subscribers so far. The site offers games, monitored chats with Disney characters, stories and other activities that aren’t freely available, in addition to such perks as discounts at The Disney Store.

“The idea behind the subscription service was to target people who are so into what we’re doing that they help fund the group that builds the cutting-edge stuff,” Wadsworth says.

“For a site that targets kids, Blast is the largest,” notes Anya Sacharow, an analyst with Jupiter Communications. “There’s no question that Disney has all the advantages for cross-media marketing because of its name.”

The online enterprises are also beginning to attract mainstream advertisers who are looking to target niche markets like kids and families (or, in ESPN’s case, sports fans).

“We had very few advertisers, even three years ago,” Wadsworth admits. “They were mostly technology companies. That’s all changing.”

And Disney remains on the move. On the heels of the announcement last week that the chairman of its Buena Vista Internet Group, Jake Winebaum, was leaving (to form a new Web company in which Disney has a significant stake), the company opened negotiations with Infoseek with an eye to expand its Internet holdings.

Disney bought a 43% share in Infoseek a year ago when the two partnered to launch GO.com.

The GO portal was created so Disney would have a brand network on the World Wide Web, an umbrella under which all of Disney’s fairly dissimilar properties could be found. Yet many analysts believe that GO still has a long way to go to be a top portal location.

“I know they’re going to be aggressively announcing new products for the portal,” Sacharow says, “and the amount Disney has put into marketing can’t be underestimated. But they’re still playing catch-up to the other big search and directory sites, namely Yahoo! and AOL.”

Yet their core properties, like Disney.com and ESPN.com, are both ranked No. 1 in their targeted areas. But there’s work to be done.

Wadsworth is the first to admit that both GO.com and the ABCNews site need to improve their rankings (ABCNews ranks fourth on news sites), and analysts agree.

“You don’t want to see the GO brand overtake Disney’s other brands, but without more aggressive marketing of it, the portal will remain middle-tiered, which isn’t good,” analyst Williams says. Wadsworth, not surprisingly, is confident that with Disney’s myriad resources, the online enterprises will succeed.

“The most senior management of this company all understand the Internet’s potential,” he says. “And we’re trying to move in Internet time.”