The time has come for Disney (NYSE:DIS) to stake its online claim -- with a much-needed and long-awaited revamp of its flagship website.
Disney has been a powerhouse in cyberspace since it acquired a 43% stake in Infoseek in 1998, before swallowing it whole a year later. But long after the dot-com bubble popped and the family-entertainment giant's tracking stock -- remember Disney Internet Group? -- was reabsorbed, Disney still managed to matter online. ESPN.com rivals Sportsline.com as the definitive athletic site in the country, while ABC.com has been a pioneer in the digital delivery of primetime video.
However, little has been done to cash in on the two properties that seemed the most vital to the company's Internet strategy: Go.com and Disney.com. Go.com has become the domain backbone of many of Disney's offerings, yet the site itself is now a forgotten search engine, handing off its search duties to Yahoo! (NASDAQ:YHOO). Disney.com, on the other hand, is about to make a serious push to become a stickier online destination.
Mickey Mouse's dot-com march
An article in yesterday Wall Street Journal details the family-friendly social networking offerings that Disney hopes will woo consumers when it reintroduces the site later this month.
The makeover at Disney.com itself isn't necessarily news. "I think it's going to be a more robust service," CFO Tom Staggs explained during last month's presentation at the UBS 34th Annual Global Media Conference. "It will involve more personalization, more community-based aspects, and I think it will also better capture the broad depth of content that Disney has to offer."
The investment in making over Disney.com is substantial. Without it, Disney.com would be a profitable entity. "As it is, we'll use that profit to invest in the future" Staggs explained. "I would think that for the next couple of years, anyway, I'm very happy to be in an investment mode for those [Internet] businesses."
It won't be easy. Most of the media conglomerates have already come to terms with the futility of trying to expand their Web presence from within. Despite owning MTV.com and Nick.com, Viacom (NYSE:VIA) has acquired Atom, Xfire, iFilm, and NeoPets. Everyone knows how Fox parent News Corp. (NYSE:NWS) became an overnight giant when it snapped up MySpace.com. According to comScore Networks, 98% of the 39.6 billion page views generated by Fox Interactive for the month of November came from MySpace.
Disney has kept its bidding card close to its vest. Maybe it's waiting for a sale. Maybe it's afraid to get burned. Maybe it just feels as if it has enough organically to give it a go --which is apparently different than giving something a Go.com. The company is standing on some fertile ground in terms of appealing to the young teen market it covets. Disney Channel's Hannah Montana is a big hit. Its made-for-TV High School Musical flick has spawned an international revolution. And Pirates of the Caribbean 2 was last year's top box-office draw.
In short, Disney is cool again. However, flavors of the week can be fleeting. Who knows how consumers will feel about Disney's hip appeal after the third installment of Pirates rolls out this summer, and its current slate of Disney Channel stars wear out their welcome? And more importantly, since the Disney.com makeover is a near-term profit inhibitor, we still don't know whether the public will take to the new site.
The walled-community challenge
Disney's approach is a logical one. How do you keep an online environment clean? You limit the freedom to color outside the lines. Just as Disney's Virtual Magic Kingdom online experience won't let chatty avatars type out certain words, the new Disney.com will keep chat options in check. Advanced users will be able to personalize their pages with Disney-provided templates and multimedia -- and that's about it.
Can a social networking site work if it won't let users embed video clips from Google's (NASDAQ:GOOG) YouTube, snapshots from CNET's (NASDAQ:CNET) Webshots, or songs streamed from Snocap? Parents will surely love the controlled environment but will their kids stick to a site with a limited easel? That's the big challenge. Wal-Mart (NYSE:WMT) tried to make a restricted social-networking site take off this summer, but shuttered it by the second month.
Marketing a service that's good for kids but even better for parents isn't foreign to Disney. That principle is the basis of the Disney Mobile initiative, whose ads have kids fawning over a fellow child with a new Disney-branded cellular phone, while parents are even more impressed with its security features. But competing against fuddy-duddy wireless carriers is a breeze compared to the level playing field of cyberspace.
Maybe Disney has more in its arsenal than we think. Can it tap ESPN Classics to serve up home-team glitz? Can it dig into the deep archives of America's Funniest Videos -- the original YouTube, really -- and deliver the breadth of personalized guffaws that will make users oblivious to the walls around them? Disney's got a vault. Let's hope that it's not afraid to use it.
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Longtime Fool contributor Rick Munarriz enjoys taking his family to amusement parks of all sizes, all over the country -- including Disney World several times a year. In fact, that's where he'll be later today. He owns shares in Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
