Disney’s Albert Cheng

April 2007

The landmark deal in October 2005 between The Walt Disney Company and Apple’s iTunes Store that made television shows available for online purchase and download was a clear sign that television had changed forever. Disney has remained front and center on digital initiatives, with ABC being the first network to launch an ad-supported online video player, delivering hit shows on its website, for free. As the executive VP of digital media at Disney-ABC Television Group, Albert Cheng is leading the company’s new-media strategies across ABC, Disney Channel, ABC Family and SOAPnet.

By Mansha Daswani

WS: How did the Disney-iTunes deal come about?

CHENG: I can recap to you the folklore that has developed in the company about how that happened. Conversations between Bob Iger and Steve Jobs about distributing content through iTunes had begun some time in early ’05. Closer to the summer, Anne Sweeney had talked to Steve Jobs about putting tele�vision on there. Then a small group of people under very tight nondisclosure agreements—which is why I was not involved in that process—came down to 72 hours of negotiating a deal to get our top shows from Disney Channel and ABC onto the iTunes Store.

WS: What led to the decision to launch the online video player?

CHENG: That evolved as an initiative of our digital-media team. After the iTunes deal was done, the question was, what’s next? We felt very strongly that we should. . . look at free to the consumer, but ad-supported. In about 60 days, my team built a broadband player to deliver our shows.

WS: What have you learned about the usage patterns on ABC.com?

CHENG: We’ve learned that the consumers use the online experience to catch up and to watch shows they missed recording. It’s helped us gain viewership.

What we did differently from our competitors is that we created a very different ad experience. Advertisers that have fully optimized the platform have given us interactive ads. [We have approximately] 87-percent unaided sponsor recall, which is tremendous. We know that the average age of our user is 28. It skews female, but that’s because of the nature of our shows. It is college educated, in a high income bracket, tech savvy. And [users] watch shows primarily within 24 hours of their original network broadcast. One of the biggest times of watching on the player is on Fridays, because you have [Thursday night’s] Grey’s Anatomy, Ugly Betty and Men in Trees all available.

WS: Will you be making your content available on other platforms?

CHENG: We have a set of criteria to evaluate every opportunity. [We ask], is it easy to buy [content]? Is it easy to navigate? Does our content look good in that environment?

The second piece is brand association. Does associating with this product enhance the value of the content? If you look at the iTunes deal, they had already been in the marketplace with music, and they had a great image. Then it’s digital rights management, does it protect our content? The fourth is, what’s the financial benefit to us as a company? The last thing is, how much of a marketing commitment is this company willing to make? You’ll find that when you ask start-up companies how much money they are spending to advertise in media, a lot of them will say, nothing! At the end of the day, they’re using our content to grow their business and potentially have an exit strategy when their founders get rich. They need to come up with a plan to showcase and drive awareness of our content.

WS: Are you finding that your digital services for Disney Channel are more successful than those for ABC?

CHENG: I would say so. We’ve had more than 80 million episode starts on DisneyChannel.com [ABC.com recorded more than 56 million from September till March]. For Disney Channel, multiplatform has been in their DNA since 2000. Disney Channel has been very successful in telling their viewers how to follow them on different visual services. What’s so amazing is that even though we have full episodes online, our viewership on the cable network has never been higher.

WS: What’s the key to succeeding in this new-media landscape?

CHENG: It’s important to stay focused on the consumer, and always ask the question, what is the value proposition? We’ve been very focused. We haven’t done everything. There’s only so much time we have in a day, only so many resources. You can do a lot of deals but get absolutely zero consumption because no one is speaking to the consumer in a precise and focused way.

This is an experimental time. We need to be aggressive in finding opportunities and be willing to experiment. From a company standpoint, we are being very proactive in coming up with services and goods that we feel that we can monetize.