The stakes could scarcely be bigger for Walt Disney Co. as it unveils a revamped flagship website today.
Reversing the company's past Internet stumbles is a top priority for Disney Chief Executive Robert Iger, whose reputation as a new-media leader in an old-media business could be tarnished if the site fails to attract more viewers.
Disney.com is already among the most popular sites with children, so company executives have tried to convey modest goals. They say Disney simply wants the current 25 million monthly visitors to stay longer, watch more ads and deepen their connections to Mickey, Pooh and mermaid Ariel.
But investors will be looking for more dramatic results.
"We've seen a lot of announcements out of Disney with respect to the Net. Now the expectations are higher," UBS analyst Aryeh Bourkoff said. "This year, the focus has to be on execution."
Since assuming the top Disney job from Michael Eisner 15 months ago, Iger has won praise for dropping Disney's previous antagonism toward Web innovations and striking such pioneering deals as being the first one to sell prime-time television shows and movies over Apple Computer Inc.'s iTunes store.
But for all of Iger's proclamations about finding new ways to reach consumers over the Internet, Disney's own website has changed little, and the zealous policing of itscreations has limited the Web environments that children can create using its characters.
At the Consumer Electronics Show in Las Vegas today, Iger will give a preview of the overhauled site that will be accessible to the public later this month.
"I believe we successfully strike the right balance between the huge strength of the existing business and the potential of new media," Steve Wadsworth, president of Walt Disney Internet Group, said in an interview.
More than any other big media company, family-oriented Disney must worry about navigating between the strict controls that appeal to parents and the increasing expectations of freedom held by their children.
Disney is aiming its site at preschoolers on their parents' laps to the 14- and 15-year-olds who populate MySpace, the enormously successful social-networking site News Corp. acquired in 2005.
The new Disney.com will present itself differently to various age groups, though all will get expanded video, games and other interaction. As on MySpace, visitors will be able to create their own websites, communicate with each other and mash together and share music and videos — as long as they're Disney music and videos.
Parents will have to use their credit cards to register their children as regular site visitors and will get detailed options for limiting what their kids can do and how they can do it.
Current and former Disney Web executives said the balancing act would be a tricky one to pull off, especially on the older end of the target audience.
"Children don't go to Disney.com. Parents go to Disney.com," one former executive said.
On their own, children as young as 10 go to MySpace after lying about their age to gain entry, said Fred Stutzman, a University of North Carolina graduate student and consultant who tracks social-networking sites. "Once the hormones start kicking in — at 11, 12, 13 — they're getting on these sites."
Disney will have a much better chance with those younger than that. The younger set probably won't be very interested in networking to find new friends, but would welcome the chance to chat about characters and shows they like, Forrester Research analyst Charlene Li said.
Eight- to 12-year-old girls, Li said, "will be interested in meeting up with other kids who like the same things, such as 'The Cheetah Girls,' and 'Hannah Montana,' " the Disney Channel shows that have spawned hit CDs and DVDs.
Several social-networking sites that emphasize privacy protection for children have emerged, and the competition is intense. Most do not have the content restrictions that Disney will impose, which could hurt the Burbank entertainment giant. Users elsewhere are generally allowed to post whatever they want, not just photos and clips from a pre-approved stockpile.
And even teenagers aren't going to register with more than two or three sites. "It's as hard to knock off MySpace or Facebook as it is to knock off Google," Stutzman said.
Yet too much emphasis on branding can backfire, as Wal-Mart Stores Inc. learned last year after it launched a teen-networking site that flogged the retailer's products so relentlessly that all credibility evaporated. Wal-Mart folded The Hub within months.
That's why it's encouraging to Wall Street analysts such as Bourkoff that although Iger has predicted a substantial gain in Disney's digital revenue in the current fiscal year, to $700 million before online ticket sales, he isn't predicting any meaningful increase in profit.
Disney's current Web revenue of more than $500 million comes in roughly equal parts from product sales, advertising and subscriptions to such premium services as the multiplayer children's game "Toontown Online," in which the virtual world's characters team up to play practical jokes on humorless robots.
Now is a good time for more Internet investment, analysts said — as long as it is better managed than the more than $800 million Disney blew during the dot-com bubble on the failed Web portal Go.com.
As for the concept of controlled creativity, probably the clearest precedent for the new Disney.com is "Toontown," Wadsworth said.
Children who play there can chat with each other with pre-approved phrases, unless they show that they know each other in real life. In that case, they can converse normally.
"It's a good analogy, and we've been quite successful even though 'Toontown' is not a major franchise," Wadsworth said.
Imagine, he suggested, what could happen with an immersive environment stemming from hit movies such as "Pirates of the Caribbean," which will spawn a multiplayer online game on Disney.com within a few months.
Although hardly a threat to the largest multiplayer games such as EverQuest, Toontown thrives in its niche, said analyst Li. She said other Disney.com miniworlds could please kids, too.
"If they can write anything they want on the homepage and if the interactions themselves have a safe environment, I think it will work pretty well," Li said. "It definitely draws an affinity to the brand, and branding in the end produces commerce."
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