New selling strategy unveiled

After limiting the sell-through windows of its animated titles on homevid for years, Disney said Wednesday it plans to make 26 of its classic feature animated titles available year round on DVD and VHS over the next two years.

The release pattern would do away with Disney’s previous tradition of making titles available for sell-through for limited periods of time.

Walt Disney Studios chairman Joe Roth released the studio’s revamped homevid strategy Wednesday as execs from across the company met with hundreds of financial analysts and investors in Burbank.

The studio is hoping that making its animated titles available year-round will help boost sluggish sales of its videos worldwide.

Disney will also create what it calls the Disney Platinum Collection, which will include another 10 classic feature animation titles from its library. Those titles will be released one per year, beginning in 2001 with “Snow White.”

Besides “Snow White,” titles in that selection include “Beauty and the Beast,” “Aladdin,” “The Lion King,” “Bambi,” “The Jungle Book,” “Cinderella,” “The Little Mermaid,” “Lady and the Tramp” and “101 Dalmatians.”

Disney will release all future titles on DVD and VHS simultaneously, a release pattern that several studios have adopted.

The hope is that the four million people with DVD players and the projected 10 million owners of DVD-equipped personal computers by Christmas, will begin to replace their VHS libraries with the same pics on digital video disc.

“We believe that DVD represents a huge opportunity for our company,” Roth said. “Just as with the VHS format, which saw incredible growth of video unit sales as VCR penetration rose, DVD demand will surge as penetration levels hit critical mass. As people change over to DVD, they will augment their existing video libraries with discs in the new format.”

Disney said it will release one title from the Platinum Collection on DVD and VHS each fall, to be cross-promoted through the studio’s various media wings, including theme parks, ABC, the Disney Channel, Radio Disney, and Internet portal Go.com, as well as promotional partner McDonald’s.

“This new cycle will allow us to maximize each film’s performance by reaching an entirely new generation every 10 years,” Roth said. “We will treat each Platinum Collection release as a company-wide — and worldwide — event each fall. And as we’ve seen in the past, major campaigns such as this have a ‘halo effect’ that stimulates demand for all Disney products.”

Disney has already said it will release nine of its classic animated titles on DVD in the United States for a limited time as part of the company’s millennium efforts, starting with “Pinocchio” last month.

The day-long fest of Disney presentations and Q&A followed a lengthy conference call with Disney chairman-CEO Michael Eisner and chief financial officer Tom Staggs.

That was just after the Mouse House posted disappointing 1999 earnings, and said a turnaround will take some time.

As of midday Los Angeles time, Eisner and Staggs as well as Bob Eiger, chairman of the ABC Group and prexy of Disney Intl.; Steven Bornstein, chairman of Buena Vista Internet Group; chief strategic officer Peter Murphy; and Roth had all given presentations.

Of interest, one analyst said, was the company’s commitment to link management compensation more tightly with return on invested capital.

Eisner reiterated that Disney’s focus going forward will be on leveraging the assets the Mouse has built over the past 10 years. Fiscal 2000 will be a transition year he said, with flat earnings. But things should pick up after that, if the company is successful in its cost savings and other initiatives.

Roth said the $500 million in cost savings realized by the film division will continue, in a quest to make the film studio, one of Disney’s best performing businesses, more profitable.

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