Disney Shifts Prime Time to Online

April 10, 2006 — -- The future of network television got a little closer today, and it's all about when you want it, where you want it.

The ABC Television Group -- the parent company of ABC News -- has announced that full-length versions of its hit shows will be available on the Web just a day after they air on its traditional broadcast and cable networks beginning within the next month.

The unprecedented move allows network television viewers, for the first time, to use broadband connections at home and work to view traditional programming without paying a fee and outside the shows' normal time slots. Programs available will include ABC hits such as "Lost" and "Desperate Housewives."

"There is a big part of the prime demographic -- that key 18- to 49-year-old market -- that is hungry to sample this model," said Jeffrey Logsdon, senior analyst for Harris Nesbitt. "Not everyone can do appointment viewing when ABC decides to put a hit program on. So the convenience factor is becoming a driving force in the filmed entertainment business right now. This is going to get Disney a great sample of what people want, and if they're willing to pay for it."

Trial Service Starts Next Month

A two-month trial for the new service will begin in May, with episodes of ABC hits "Lost," "Desperate Housewives," "Commander in Chief," and "Alias" available on a redesigned ABC.com Web site. The company also announced on-demand Web programming from its Disney Channel, Jetix and SOAPnet channel starting as early as mid-April.

The programming will be accompanied by ads from eight traditional consumer brands, including Ford, AT&T and Procter & Gamble. Disney says ads will be "interactive" and take many different forms within the programs.

Disney-ABC was the first partner for Apple's video iTunes service, where consumers could pay to download commercial-free versions of some television shows for as little as $1.99 per episode.

The new endeavor continues to push ABC to the forefront of traditional broadcasters as the industry pushes into the digital future. But analysts suggest that one of the problems with ABC's plan is that it bypasses one of television's most important constituents -- the local affiliate. Affiliate stations have been grumbling over the Apple deal, suggesting that they should be given a portion of the revenues generated from direct sales to consumers. So far Disney has seen more than 4 million paid downloads on the iTunes service.

"Our ultimate goal is to find an effective online model, one in which our affiliates can take part," said Alex Wallau, president of operations and administration at ABC, in a prepared statement. "To that end, we'll be sharing information from this two-month test in our discussions going forward, and working on ways for them to participate in this new method of delivering ABC programming."

Whether that's enough to keep affiliates happy is unclear.

"The stations make their money on the first-run of these shows, so anything that detracts from the audience or the show's perceived value is going to be a problem," said Dennis McAlpine, principal at McAlpine Associates. "What's driving this for ABC is serving its advertisers -- which is where they make their money -- and grabbing a young, Net-savvy audience. Advertisers are likely going to love it, so it will move forward. Affiliates will probably be compensated by seeing a reduction in their costs."

Disney-ABC's competitors have not yet announced a free-for-broadband service, but both NBC and CBS offer some of their entertainment programming for sale on the Web and via iTunes.

Analysts say that Disney's move is likely to spur announcements from the other major television networks and firms working on technology that can move streaming video content from the computer in the den to the TV in the living room.