Looks like Disney got that the memo that kids 10 and under aren’t perusing their website looking for clips of their favorite animated films anymore. That’s very 1998, if you ask me. This new generation of kiddies are going straight to YouTube for their content and Disney is panicking.

In this year, Disney.com’s unique vistors totaled at 12.7 million in September, which was down from 17.9 million in June. Disney Interactive hasn’t been looking good either, losing over $300 million in the last four quarters. According to The New York Times, Disney has confessed that its own brand is no longer powerful enough in our digital age to draw kids in. Disney! Creator of the all-consuming princess culture and kid’s media is second-guessing their own appeal to a demographic they have successfully cornered for decades.

According to some, Disney is simply going to where today’s kids are:

“It’s imperative to go where our audience is,” said James A. Pitaro, co-president of Disney Interactive. He added that the idea is to “bring Disney’s legacy of storytelling to a new generation of families and Disney enthusiasts on the platforms they prefer.”

Hence the company has now sought out a partnership with YouTube in which the pair will create an original video series. The segments will appear on a new co-branded channel on Disney.com and YouTube and, true to YouTube’s reputation, will also include amateur video from the company’s original site. YouTube is also looking to appear more family-friendly, as although the company welcomes their younger viewers, the unregulated video content and racy comment threads are enough to make some parents squeamish. And although YouTube’s Terms of Service require that users be at least 13 years old, young kids access the site frequently.

Disney is also doing a complete redesign of their website which should be up and running by fall of 2012. But from the looks of it, a new generation of children may not even recognize the brand.

(photo: preschoolers.about.com)