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[Marketing] NYTimes: Disney and YouTube Make a Video Deal

Released on 2013-11-15 00:00 GMT

Email-ID 1344646 Date 2011-11-07 16:46:21 From brian.genchur@stratfor.com To marketing@stratfor.com, multimedia@stratfor.com

[Marketing] NYTimes: Disney and YouTube Make a Video Deal





Disney and YouTube Make a Video Deal



Disney Interactive



Disney and YouTube will base a Web video series on the popular app

a**Where's My Water?a**



By BROOKS BARNES



Published: November 6, 2011



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LOS ANGELES a** Two powerful media companies, the Walt Disney

Company and YouTube, are betting that a new partnership will help them

surmount separate but equally worrisome hurdles as they each strive for

greater Web dominance.



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The deal, set to be announced on Monday, is small on its surface: Disney

Interactive Media and YouTube, a division of Google, will spend a combined

$10 million to $15 million on original video series; those shorts will be

produced by Disney and distributed on a co-branded channel

on Disney.com and YouTube. The channel will also include amateur video

culled from the torrent uploaded to YouTube daily.



But the alliance is striking because of what it tacitly acknowledges about

each companya**s weaknesses.



Disney, currently working on yet another overhaul of its Web site, is

conceding that its own brand is not a powerful enough draw among children

looking for video online; YouTube is viewed as being cooler.



So in a reversal of a go-it-alone Web strategy, Disney will go fishing for

youngsters on YouTube in addition to making YouTube a prominent part of

its own site a** something that the company hopes will coax children to

stay longer.



a**Ita**s imperative to go where our audience is,a** said James A. Pitaro,

co-president of Disney Interactive. He added that the idea is to a**bring

Disneya**s legacy of storytelling to a new generation of families and

Disney enthusiasts on the platforms they prefer.a**



Disney Interactive has been losing money a** over $300 million in the last

four quarters a** and Mr. Pitaro, part of a new leadership team at the

division, is under pressure to create Web videos that can be monetized

quickly. Disney.coma**s traffic has also been dropping at an alarming

rate. Unique visitors totaled 12.7 million in September, down from 17.9

million in June, according to the measurement company comScore.

Seasonality does affect traffic to some degree.



YouTube hopes to gain something from the Disney brand as well, namely

credibility among parents, many of whom arena**t thrilled at setting their

younger children loose on a site where the videos can be ragged and

provocative and the comments even more so. The company wants to compete

with cable television for ad dollars by adding more professional videos.



Teaming with a Hollywood heavyweight significantly advances that goal.

Studios have been reticent to provide Google with free Web material.



a**Ita**s an acknowledgment that we want to work with the best brands and,

yes, we expect this partnership to attract new advertisers,a** said Robert

Kyncl, YouTubea**s global head for content partnerships.



Disney is an important ally for YouTube, which walks a careful line when

it comes to attracting children; there is no age requirement to access the

site but you are supposed to be at least 13 to register for an account.

YouTube also needs Disney because it remains locked in a legal battle with

Viacom, which owns the other major player in this arena, Nickelodeon, and

keeps its videos (aside from some promotional material) off YouTube.



The Disney-YouTube partnership follows YouTubea**s announcement late last

month that it planned to create dozens of channels featuring comedians,

sports stars, musicians and other entertainers. It is also offering cash

advances to prospective producers that totaled more than $100 million,

according to people with knowledge of the plan but who were not authorized

to speak publicly. The investments in the channels reflect Googlea**s

belief that the Internet is the third phase of the television business,

after network TV (with a few channels) and cable TV (with hundreds).



Mr. Kyncl emphasized that YouTube intended to remain a neutral distributor

and that its alliance with Disney should not be construed as an effort to

move into the production business. Under the terms of the deal, Disney

will produce the Web series, the first of which will be based on its

popular puzzle app a**Wherea**s My Water?a** which features a grinning

alligator named Swampy. The goal is to have eight original series in

production at any given time, Mr. Pitaro said.



Disney will sell the advertising inventory and split part of the revenue

with YouTube. Aside from producing the new shorts, Disney will also select

amateur video to include on the channel. (Disney said it does not expect

to hire any additional staff to handle these duties, relying instead on

existing resources.) Video from Disney television shows will also be

featured on the channel, although the company must be careful here to

avoid angering cable partners by giving too much away at no charge.



Mr. Pitaro, who joined Disney last October after a stint running Yahooa**s

media properties, pressed for the deal. He said the redesign

of Disney.com a** a site criticized as slow, poorly organized and too

promotional a** should be completed by fall 2012. The YouTube partnership,

he said, a**is a very nice first step. It shows that wea**re not thinking

small.a**



Claire Cain Miller contributed reporting.



--

Brian Genchur

Director, Multimedia

STRATFOR

221 W. 6th Street, Suite 400

Austin, TX 78701

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