Case Study #27: Walt Disney Co. May Find Significant Treasure in their Keychest

During one of the worst downturns since the Great Depression, one company enters the very competitive portable PC segment and acquires a major entertainment brand. Walt Disney Co is supplementing its inorganic growth strategies with an organic growth strategy. Today, Disney announces that it will enable entertainment companies to adapt their business models to a new reality in which consumers increasingly rely on computers and cell phones in place of DVD players and TVs. The technology, code-named Keychest, could contribute to a shift in what it means for a consumer to own a movie or a TV show, by redefining ownership as access rights, not physical possession (Smith, Ethan. “Disney Touts a Way to Ditch the DVD”. Wall Street Journal, October 21, 2009).

How does the Keychest work? The article says that consumers would pay a single price for permanent access to a movie or TV show across multiple digital platforms and devices—from the Web, to mobile gadgets like iPhones and cable services that allow on-demand viewing. It could also facilitate other services such as online movie subscriptions. Keychest uses the same "cloud computing" logic that underlies Web-based applications, such as Google Docs, permitting users to store files and photographs on remote Internet servers and access them from anywhere, rather than keeping them on their own computers (Smith).

This is a very bold, yet sustainable strategy that can be appealing to various Disney and non-Disney segments.

It is evident that Disney is evolving its brand into technology and entertainment sub-verticals as a way to offset losses from declines in amusement park ticket and consumer product purchases. Most importantly, Disney not only generates an additional revenue stream through Keychest subscribers, but also potential cost sharing among participating distributors, studios and brands. The data generated through subscription will be very valuable for marketing and agency specialists. Most importantly, the Keychest strategy is fundamentally based on market-driving factors such as the mobility of mediums, accessibility of wireless hubspots, affordability of hardware and the overall desire to exert control over the customer experience.

Right now, Sunday night is perceived as a great night for television. But, that doesn’t have to be the case anymore. Once you have your key from Keychest, any night (even Saturday night) can be a great night for television as that is in YOUR control.