Disney ponders online video subscription service

LOS ANGELES, USA: Walt Disney Co was considering moves like creating a subscription-based online video club to capture online consumers as well as revenue that is being lost to piracy, Chief Executive Robert Iger said on Tuesday.

Iger told analysts at a Deutsche Bank conference that media companies are under pressure to find ways to compete in a Web-based entertainment arena that is changing their business, possibly for good.

"We've also seen a pretty dramatic shift in how people consume entertainment" with computers and mobile devices becoming more important to most viewers than television, Iger said.

"The computer is a very important place to entertain people, and if we don't occupy space on those devices, others will," he said.

To that end, Disney was considering options that might include a subscription-based online rental club, in which users could access content from Disney's massive film and TV library by mail or online delivery, Iger said.

While moves to put more content online have been criticized as margin destroying, Iger said critics "aren't realizing is the business that we are used to may be over."

"When it comes to piracy, are we better off moving content faster and cheaper than if they steal it and we get nothing?" he said.

The comments come about a month after Disney reported double-digit drops in profit, and Iger warned investors of "secular changes" in DVD and advertising sales.

He also said on Tuesday that while advertising is under pressure and may change forms, "advertising is not going away at all."

He defended costly sports broadcast rights deals at ESPN, saying the deals are "all part of a strategic play to strengthen the competitive advantage" and will not hinder the sports network from growing "nicely" in coming years.

Iger said theme park attendance is holding "even" in the current quarter but added that discounting of tickets is cutting into per capita spending.

In general, Iger feels "more bullish" on the entertainment company's long-term growth prospect because the recession "is causing us to be more analytical and focus on value creation and changes in the marketplace."

"I believe we will emerge from this just fine," he said.