Transcript Offsite Key Findings (05.08) DRAFT

Corporate/Business Development Off-Site Findings
May 2008
CONFIDENTIAL
Executive Summary
• At the recent Corporate & Business Development offsite, participants identified key challenges facing
SPE and each of our divisions, including:
–
Changing consumer preferences
–
Maturation of our traditional business and a slow transition to digital
–
Increasing competition from new players and product offerings
–
Piracy
–
Challenges unique to SPE given its current portfolio of businesses and ownership by Sony
• A review of competitor growth avenues highlighted potential opportunities for SPE
–
Content: targeting demographic segments, building and exploiting successful brands/franchises, investing in
the production of new forms of content for digital platforms
–
Distribution: increasing exposure to domestic & international cable networks, launching and/or aggressively
exploiting digital services
• A number of specific growth initiatives were identified to be further explored and prioritized in the
context of SPE’s current economics and strategic objectives
–
Diversification of SPE’s revenue streams
–
Maximizing the value from our existing content (especially by leveraging Sony United relationships)
–
Improving its economics to provide flexibility in the event of a downturn
• SPE’s challenges are raising the importance of investment as well as collaboration across SPE’s
business units and across Sony
page 1
SPE Challenges
• Overall Challenges
• Division-Specific Challenges
CONFIDENTIAL
SPE is at a material disadvantage relative to its peers in pursuing a growth
strategy
•
Lack of U.S. networks business hampers ability to grow digital services and family
entertainment initiatives, and provides less exposure to the advertising market
•
Ownership by an electronics company and Wall Street’s focus on this part of Sony’s
portfolio may mean a a reduced appetite for media investment on a scale equivalent to
SPE’s competition (average competitor investments over last 3 years in media and
new media businesses has been in excess of $1.5 billion)
•
SPE economics are widely reported to lag the competition by a significant margin,
potentially due to the reduced scale of our TV business (vs WB), the lack of an
integrated family business (vs Disney) and what is generally perceived to be a less
bottom line focused approach to product development and distribution (vs Fox), in turn
providing less internally generated cash flow to reinvest
•
An evaluation of competitor growth demonstrates that film studios generally are not the
recipients of parent company investment capital, and that most growth occurs in
networks and other businesses
page 3
One major difference between SPE and its competitors is its lack of a sizable
domestic networks business, which has contributed to an overall margin gap
Film Margins
45%
45%
40%
40%
35%
35%
30%
30%
25%
25%
%
%
Network Margins
20%
20%
15%
15%
10%
10%
5%
5%
0%
2004
2005
2006
Viacom
News Corp/Fox
2007
2008E
0%
2004
2005
NBCU
Viacom
Disney
News Corp/Fox
(1)
TW / WB
2006
Average
TW / WB
2007
2008E
NBCU
(1)
Disney
Average
Network businesses typically carry a higher EBITDA multiple and thus are considered as a larger
contributor to overall media conglomerate value than the filmed entertainment businesses
(1) Data not published by analysts for 2004
Source: Analyst estimates and research
page 4
Cable network ownership continues to consolidate, improving network
leverage and making entry for SPE more challenging
Media Conglomerate
Broadcast Network
(50%)
(50%)
Note:
Source:
Cable Network Assets
• Adult Swim
• Cartoon Network
• Cinemax
• Court TV
• CNN
• HBO
• Headline News
• TBS
• TNT
•
•
•
•
•
BET
CMT
Comedy Central
MTV
MTV2
•
•
•
•
•
Nick@Nite
Nickelodeon
Nicktoons
Noggin/The N
SpikeTV
•
•
•
•
•
TVLand
VH1
VH1 Classic
The Movie Channel (1)
Showtime (1)
•
•
•
•
ABC Family
Disney Channel
SoapNet
Toon Disney
•
•
•
•
•
•
ESPN (80%)
ESPN2 (80%)
ESPN Classic (80%)
ESPNEWS (80%)
Lifetime (50%)
Lifetime Movie (50%)
•
•
•
•
•
•
E! (40%)
Style Network (40%)
A&E (38%)
Biography (38%)
History Channel (38%)
History Int’l (38%)
• Fox News
• FX
• Speed Channel
• Turner South
• National Geographic
(80%)
•
•
•
•
• MSNBC (82%)
• A&E (25%)
• Biography (25%)
• History Channel (25%)
• History Int’l (25%)
(1) Represents CBS ownership.
Kagan Research, company filings, website and equity research reports.
Bravo
CNBC
SCI-FI Channel
USA
15 of the 20 top-rated
U.S. cable networks
owned by the 5 major
media conglomerates
page 5
Ownership by electronics company has contributed to a lower valuation of SPE
Comparative Studio Performance (2)
Comparative Implied Enterprise Value ($ in MM)
SPE Valuation Range
Sony Pictures
Revenue
EBITDA
EBITDA Margin
$6,210 $10,520
Equity Research (1)
(sum-of-the-parts analysis of
Sony Corp.)
$3,795
Warner Bros.
$5,910
Revenue
EBITDA
EBITDA Margin
Fox
Media Conglomerate Studio
Comparables
(studio film production: Warner
Bros., Fox, Paramount, Disney)
Revenue
EBITDA
EBITDA Margin
- Revenue (1.1x-2.1x)
$8,265
- EBITDA (10.3x-12.3x)
$6,210
$15,780
$7,415
Buena Vista
Revenue
EBITDA
EBITDA Margin
Paramount
Revenue
EBITDA
EBITDA Margin
Public Studio Comparables
(Lions Gate)
- Revenue (1.2x-1.4x)
$9,020
$10,615
$-
$5,000
CY2007E
$7,598
626
8.2%
CY2008E
$7,515
603
8.0%
CY2006
$10,642
1,161
10.9%
CY2007E
$11,497
1,235
10.7%
CY2008E
$11,985
1,291
10.8%
CY2006
$6,199
1,177
19.0%
CY2007E
$6,174
1,127
18.2%
CY2008E
$6,489
1,174
18.1%
CY2006
$7,529
759
10.1%
CY2007E
$8,260
899
10.9%
CY2008E
$8,516
951
11.2%
CY2006
$3,977
234
5.9%
CY2007E
$4,192
255
6.1%
CY2008E
$4,359
281
6.4%
CY2006
$951
21
2.2%
CY2007E
$992
47
4.7%
CY2008E
$1,103
65
5.9%
$10,520
Lions Gate
- EBITDA (17.6x-28.3x)
CY2006
$7,843
450
5.7%
$10,000
$17,065
$15,000
Revenue
EBITDA
EBITDA Margin
$20,000
(1) Equity Research values reflect sum-of-the-parts valuation conducted by: Credit Suisse, January 22, 2007; UBS, January 30, 2007; Morgan Stanley, February 23, 2007;
and Merrill Lynch, February 23, 2007 -- values do not include interest in MGM valued at approximately $250MM. Valuation range rounded to nearest $5MM.
(2) Competitive studio performance conducted by Bernstein Research, January 2007.
page 6
SPE margins appear to trail most of our competitors
Studio EBITDA Margins
EBITDA
’99-’06
CAGR**
20%
29.8%
18%
16%
14%
12%
10%
3.8%
18.9%
8%
1.5%
6%
(4.8%)
4%
2%
0%
1999
2000
Fox
2001
Warner Bros.
2002
Buena Vista
2003
Paramount
2004
2005
2006
SPE
Sources: Bernstein Research (December 2006, Adjusted for calendarization by SPE Corp Dev), MRP & Budget presentations, SPE Finance
**Paramount CAGR for 2001-2006
Notes: (1) Calendarization does not reflect actual results and is based on formula (i.e. CY 2005 = .75*FY2008 +.25*FY2007)
(2) SPE CY 06 EBITDA margin of 7.1% represents: $499M EBITDA = 25% FY 06 EBIT ($277M) + 75% FY 07E EBIT ($400M) + D&A ($110M)
$7B Revenue = 25% FY 06 Revenue ($6.6B) + 75% FY 07E Revenue ($8B)
page 7
For large media enterprises, growth at the studio level is generally not driven by M&A
activity – most of competitor investment funded outside of studio divisions
In the last 20 years there have only been a handful of major studio-driven M&A deals
Paramount acquisition
of Dreamworks
Warner
Communications
acquisition of Lorimar
Telepictures
Sony Pictures
acquisition of
2waytraffic3
$1.6B
$1.2B1
LIBRARY SOLD
IMMEDIATELY FOR $900M
$225M
1989
2006
2008
2005
2007
Sony Corp of America
acquisition of MGM
Warner Bros.
acquisition of Travelers’
Tales
$250M for 20%2
$210M
Notes: 1. Equal to $2.1B in today’s dollars with 3% annual inflation
2. Total transaction value of $5B
3. Offer launched; closing pending regulatory approvals
page 8
Divisional Challenges: Motion Pictures
• Motion pictures are facing increased competition in the marketplace:
– At home vs. theatrical consumption: shrinking windows / improvements in home
theater technology make the theatrical experience less differentiated
– Piracy
– Alternative content
– Overseas productions
• At the same time, the underlying economics of motion pictures have become more
challenging:
– Escalating production and marketing costs
– Less attractive production financing terms
– Impact of flat DVD market on film ultimates
– Sales of motion picture product to broadcast networks is increasingly difficult
– Currency risk has increased
page 9
Divisional Challenges: SPHE & Acquisitions
•
Inflection point of significant transition to next format, whether Blu-ray or IP
Distribution, is at least 3-5 years out
•
SKU proliferation and competition from video games driving competition for shelf
space and pressuring price and marketing costs
•
Competition for 3rd party acquisition product is increasing
•
Rebates from manufacturers are declining as the market softens and drives down
footage—manufacturers are compensating by reducing rebates
•
Overall margins are shrinking as marketing and distribution costs increase to support
mining of catalog titles and react to overall adverse market conditions
•
Demand for deep catalog is flattening as consumer libraries become built-out
•
Piracy threatens demand for home entertainment product
•
An economic recession could reduce home entertainment spending
page 10
Divisional Challenges: SPT
•
Advertising revenues have limited growth due to DVRs and increasing shift of spend to
online and mobile platforms
•
Clarify (Amy is expanding with 3rd parties; upside on Crackle; Mobile)
•
Television catalog distributed via DVD market is nearly tapped out—reducing a
lucrative revenue stream
•
•
No near term syndication opportunities
Clarify 2 yrs isn’t long
•
Need to kee
page 11
Divisional Challenges: SPTI
•
Audiences are migrating from TV to mobile and new forms of entertainment
•
As a result, advertising spend is shifting from TV networks to new media
•
Our content faces competing entertainment sources (e.g., user generated content)
•
Our competitors are growing their investment in international markets - SPE will need
to increase investment levels to remain competitive
page 12
Divisional Challenges: Digital Production
•
The CG- animated film market has become more competitive in recent years, with an
increased number of releases and declining average performance at the box office
•
The digital effects business faces increased competition from overseas players with
tax incentives and lower labor costs
– Foreign markets offer significant tax incentives, attracting work offshore (UK,
Canada, New Zealand) – U.S. states have also begun to put more aggressive
postproduction tax incentives in place (NM, NY)
– Digital effects studios are setting up operations or partnerships in India,
Singapore, China, etc., to take advantage of low-cost labor – the quality of
overseas work is increasing (TMNT, Alvin & the Chipmunks)
– Increase in number of digital effects shots per film has resulted in large number of
second, tier competitors who can compete very aggressively on price – projects
are sometimes sold at cost to boost utilization of facilities
page 13
Competitor Avenues for Growth
CONFIDENTIAL
Analysis of competitors’ growth reveals several basic strategies
TARGET
DEMOGRAPHIC
• Many media conglomerates have focused overtly on specific demographic segments: Disney
with kids/family, NBCU with women, Viacom with tweens & teens
• All offer a variety of general entertainment as well
INTERNATIONAL
EXPANSION
• A combination of organic initiatives, acquisitions and JVs with local players in the territory
• Mechanism for extending strong brands overseas as well as producing local content
• Occurring in both mature and emerging territories
BRANDS,
FRANCHISES &
CHARACTERS
• Mix of original brand/character development and acquisitions of established franchises
• Ability to leverage properties across various businesses is key differentiator
CABLE
NETWORKS
• Have been a strong source of EBIT growth across all the conglomerates
• Attractive because of dual revenue streams: advertising & license fees
• Scale driven: portfolios of channels are more likely to get carriage and maximize ad revenues
NEW MEDIA
• All comgloms aggressively pursuing new media – games is one common focus area
• While some competitors are focused on owning new distribution channels for their content,
others are pursuing a syndication strategy
STUDIO VS.
MEDIA
CONGLOMERATE
• Other than SPE, all other major studios sit within a larger media conglomerate
• Most major growth initiatives (acquisitions and launches) are taking place at the parent level
page 15
Our competitors’ growth strategies raise significant questions for SPE
TARGET
DEMOGRAPHIC
• Does Sony/SPE have a target demographic? Should we?
INTERNATIONAL
EXPANSION
• In which territories should we be investing in more aggressively?
BRANDS,
FRANCHISES &
CHARACTERS
• Should we take a more proactive approach to building/acquiring new franchises?
• Do we have the necessary capabilities to make the most of our brands?
CABLE
NETWORKS
• Is it too late for SPE to establish a strong domestic networks position?
• How aggressively should we pursue building new international and digital networks?
NEW MEDIA
• What role(s) should SPE play in Sony Corp.’s new media initiatives (content producer,
aggregator, service provider)?
• How can we turn Sony’s strengths in games and devices into an advantage for SPE?
STUDIO VS.
MEDIA
CONGLOMERATE
• How can we work more closely with our sister divisions within Sony to drive growth?
page 16
Growth Opportunities for SPE
CONFIDENTIAL
Growth Opportunities: Content
•
•
•
Build on SPEs male 18-34 demographic strength, and its fit with Sony’s PS3 division. Consider
investments and company initiatives in the context of a demographic focus
–
Skew development activities towards 18-34 demo
–
Critically evaluate family genre activities, and either go in, potentially if a necessity for Walmart
position for the broader line, or discontinue, given the inherent competitive disadvantages of
SPE in this space
Amend approach to development to focus on controlling all rights in brand and franchise content,
even if at an incremental cost
–
Differentially motivate content acquisition process to skew towards early identification of
emerging brands
–
Evaluate partnering with or acquiring an independent publisher as a source
–
Adapt acquisition process to require all rights at initial signing
Ensure that SPE is as relevant a content supplier to new distributors (eg – Google, MySpace) as its
existing one, to stay with consumer time and traffic
–
Shift content production capabilities and focus from linear story telling to interactive story
telling
–
Assess and identify how to coordinate with PlayStation for games category
page 18
Growth Opportunities: Distribution
•
•
Develop a US network strategy, not necessarily via acquisition
–
Virtually all competitor growth has been from network businesses (will this be true going
forward, or is it shifting?)
–
Partner with or acquire an unaffiliated network group driven by content that fits with SPE/Sony
strength? (eg – technology driven shows) Consider acquiring a programming block?
Consider acquisitions of Rainbow Media, Starz/Liberty?
–
Develop and push an integrated, Sony-wide network strategy as an investment priority for
SCA, and in partnership with SMSS and Playstation
Invest in digital services
–
Identify those areas where SPE can compete on the internet without a companion cable
channel
–
Develop and launch an internet offer, with sufficient marketing, that meets a consumer need
as made possible by interactive capabilities. Potential services could be:
• Light entertainment and games (this is GSN)
• Virtual worlds (eg – Gaia)
• Shorts and mobile content, as derivatives of branded content (eg –minisodes)
• Movie services with unique positioning (eg – Lionsgate/MGM digital subscription network
plans)
–
Develop approach to encourage divisional risk taking where appropriate
page 19
Growth Opportunities: Distribution (cont’d)
•
•
Launch new business models early (eg – early window products)
–
Captures incremental value from our content and get us in front of high risk piracy areas
–
Develop action plan around VOD day-and-date – Do we believe Bewkes statement that WB
will sustainable capture a disproportionate share of VOD and not cannibalize retail sell thru by
being day-and-date?
Identify opportunities to leverage SEL and PS3 as unique assets available to SPE
–
Form a cross-divisional team with PS3 and SEL to identify potential opportunities to leverage
SPE content and SEL/PS3 footprint
–
Systematically evaluate game-driven PS IP for new creative ideas
–
Develop a business plan for Sony Ericsson leveraging PIX channel
–
More product bundling with game console sales
–
Gain a position in SMSS in exchange for content?
page 20
Growth Opportunities: Other
•
Significantly increase investment profile internationally, by establishing divisional
targets and an aspiration for future mix of business??
•
Initiate a significant margin improvement program designed to bring SPE in line with its
studio peers
– Make more hits, or fewer misses
– Cost reductions
•
Initiate a significant anti-piracy program, to monitor, influence and mitigate the pending
risk from internet piracy
page 21
Next Steps
•
Identify risks of failure to act and implications for SPE’s overall strategy
•
Agree on which content categories we should/must extend to (e.g., linear, event,
games, news, sports…)
•
Gain alignment on priority initiatives
•
Develop divisional objectives and incentives
page 22
Appendix: Key Competitor Profiles
CONFIDENTIAL
CONFIDENTIAL
Warner Bros, arguably the most similar studio to SPE, has focused on
franchises and new media
Key Characteristics
All-Encompassing
Media Holding
Company Parent
Monetizes
Franchises
Independent
of Synergies
Fast-Mover
in New Media
Description
 Time Warner plays in a nearly all segments of the media value
chain
 However, Time Warner is run as a holding company with limited
cross-divisional interaction and opportunistic approach to
synergies
 Warner Bros. aggressively leverages its owned or licensed IP
to develop franchise brands
 Approaches each brand as an individual asset to be monetized
through the most advantageous distribution opportunities,
without favoring other Time Warner businesses
 Emphasizes making movies available to as wide and varied an
online audience as possible through multiple partners
 Highly active internationally – over 70% of digital download
deals signed have been abroad (other studios average 4050%)
 Other early new media initiatives include WBs’ Studio 2.0
(TMZ.com) and Turner’s online game network, GameTap
page 25
Within Time Warner’s content divisions, TV production and Networks have been
the key drivers of revenue and margin growth
TWX Filmed Entertainment & Networks –
Revenue & Operating Income Growth
(2004-2007)
2004-2007 Performance Drivers
15%
FILMED ENTERTAINMENT
’04-’07 Operating Income CAGR
10%
 Market-leading TV production player
 Recent franchise hits in final windows
5%
 Larger film slate with higher production
costs
TV
Production
0%
-15%
-5%
-10%
-5%
0%
10%
NETWORKS
 Incumbent position in high-growth market
Theatrical
Film/TV
Distribution
-10%
-15%
5%
Home
Entertainment
’04-’07 Revenue CAGR
= Overall Filmed Entertainment
Note: All data excludes inter-company eliminations and corporate allocations
Source: Morgan Stanley; Lazard; Bear Stearns; Bernstein Research; Secondary research
 Innovation in new media: HD channels,
interactive programming, online games
 Lack of new channel launches despite
TWC
Going forward, WB and Turner are focused on new content development, cost
containment and exploiting new platforms
Focus Areas
Examples
Networks Investing in Original Programming
Rigorous
Cost Containment
Digital Rental to the
Living Room
Exploit Franchises Through Games & Virtual Worlds
page 27
CONFIDENTIAL
News Corp has centrally made significant digital investments and focused on
select demographics and costs
Strong Centralized
Ownership
• Consolidated ownership (the recent repurchase of shares
through the DTV sale to Liberty Media now gives the
Murdoch family ~40% voting control)
• Strong balance sheet with little debt and excellent margins
• Long history of embracing new media opportunities
Willingness to Invest
in New Areas
Ability to Take a
Long-Term
Perspective
Studio Focused on
Cost Controls
• Has spent at least $1.5 BN for acquisitions within the
Internet media space since 2005 (Scout, IGN,
Intermix/MySpace and Strategic Data Corp)
• Has also shown to be patient, allowing businesses to grow;
investments in 1998 (such as Star TV, Fox News and Sky
Italia) just beginning to show growth and profit
• Willing to make investments that are not positively
supported by Wall Street analysts at the time
• Considered to be one of the most aggressive studios in
controlling production costs – much less “talent friendly”
• Beginning to demonstrate potential to build franchises (XMen, Ice Age)
page 29
Cable Networks and Film have been key drivers of Fox’s operating income
since 2004
Cable Networks
Operating Income by Segment (2004 –2009E) in US Bn
• Recently launched a new channel – FOX Business
Network
• Cable businesses and Sky contribute 30% of EBIT
$5.3
$ 5 .9
$4.4
$3.6
$ 4 .1
$2.9
Film Business
• Recent success with superhero and animated films
(X-men, Fantastic Four, Ice Age) has driven growth
in international markets
• Strict cost control practiced across entire slate as film
productions maintain industry-leading EBIT
margins of ~18%
$1.1
$ 1.4
$0.9
$ 0 .5
$1.0
( $ 0 .5 )
Source:
$1.0
$1.2
$1.0
$1.1
$1.0
‘04-’09
CAGR
$0.17
$0.53
206.3%
213.6%
$1.4
22.9%
$1.2
5.2%
$1.2
5.5%
$1.6
10.3%
$1.2
$1.1
$0.9
$0.5
$1.0
$ 2 .3
$0.21
$0.04
$0.7
$ 3 .2
$0.19
$0.37
$3.9
$ 5 .0
$6.1
$1.0
$1.1
$1.2
$1.2
$1.1
$1.3
($0.15) ($0.19)
($0.28) ($0.17)
($0.13) ($0.18)
2004
2005
2006 2007E 2008E 2009E
Newspapers, M agazines & P ublishing
Film
B ro adcast TV Netwo rks
Cable Netwo rks
P ay-TV P latfo rms (B SkyB )
Internet and Other Investments
Credit Suisse equity research report, 9/18/07.
page 30
Going forward, Fox is investing in international TV, online ad platforms and
mobile/game content
Expanding International TV
Presence
• Investments in BSKyB, Sky
Italia and Star TV have
begun to show significant
growth and profit
• Recent purchase of stake in
Premiere AG of Germany
Acquiring Internet Platforms
for Advertising Monetization
• With Hulu JV, building its own
platform for premium television and
motion picture content
• MySpace targeting growth both
internationally and through new
music service
Aggregating Game and
Mobile Content
• Acquisition of 51% of
Jamba (mobile content)
• Acquisition of games and
sports content destination
sites – not developing
games today
• FIM’s new Audience Network
designed to maximizing advertising
revenue across online properties
• Recently announced launch of
Slingshot – a web business
incubator
Source: Credit Suisse equity research report, 9/18/07, Press Releases, News Articles.
page 31
CONFIDENTIAL
Disney’s integrated approach targets the youth demo with its leading category
brands, aiming primarily for brand leverage across its divisions
Global Brand Recognition
• Strong loyalty and recognition among children
and youth for family entertainment
• ESPN is a leader for sports programming
Franchise Monetization
• Demonstrated ability to monetize content across
all distribution channels, from theatrical to digital
(games, virtual worlds)
• Consistently consumer-facing and crosspromotes effectively
Owns the Youth Demo
• Recent acquisitions have provided opportunities
to build other youth oriented brands
• Successfully produced new franchises in-house,
courting younger, digitally savvy audiences
page 33
Successful franchises have fueled Disney’s growth in recent years
Studio Entertainment: Fewer Films Focused on Family Franchises
• Since FY05, reduced annual film slate to ~15 films
and shifted focus to franchises, Pixar films &
various family-friendly films
• Last few years’ major hits (Pirates, Narnia, Cars,
Ratatouille, Enchanted) drove significant EBIT
growth with a 141% CAGR despite flat revenues
FY05 – FY07 Studio EBIT
1,600
$1,201
1,200
$729
800
400
• Theatrical releases drive other business units’
performance (e.g., Cars franchise)
$207
0
FY05
FY06
FY07
Media Networks: ESPN, TV Production, and Online as Growth Drivers
• ESPN (34% of total co. EBIT) and ABC (9% of
total EBIT) drove EBIT growth over last few years
• Hit content (Hannah Montana, High School
Musical) originally developed for cable but
leveraged through all parts of Disney
• Recent digital investments include developing
online extensions of core brands, online interactive
games & virtual worlds / social networking sites
FY05 – FY07 Networks EBIT
3,000
$2,522
2,400
$2,112
$1,802
1,800
1,200
$956$892
$803
600
$700
$606
$464
0
ESPN
Chart data In $ millions
(1) Includes ABC network, stations, TV production, and online properties (ABC.com, Disney.com, Club Penguin)
Source: Press Releases, News Articles
Disney Channel
ABC (1)
page 34
Beyond investing in its core businesses, Disney’s future growth initiatives
focus on new media and games
Theme Parks &
Resorts
• Recently announced $1b over next 5 years to revamp California
Adventure
• Another $1b for two cruise ships that will double cruise capacity
• FY08 CapEx estimated to be $250-$350mm, mostly for digital
improvements at its studios & networks
New Media
Initiatives
• Continue acquiring / developing online community sites & VWs
targeting kids & tweens
• Demonstrated willingness to invest despite unsuccessful track
record (Mobile ESPN, MovieBeam)
Games
Development
• Committed to increasing game development spend from
$150mm in FY08 to $350mm by FY11
• Venturing into console-based video game market with Turok
(FPS) & developing a future Toy Story 3 game in-house
• Distributes content through flagship site, Disney.com
Digital Distribution
• Only current 3rd party digital distribution partner is iTunes (Steve
Jobs is Disney’s largest shareholder & board member)
Source: Press Releases, News Articles
page 35