With low barriers to entry on the Internet, rivals to Netflix “are going to use technology to offer varied product” making the competition for viewers “more of a marathon than a sprint,” Disney CEO Bob Iger told investors this morning at the Goldman Sachs Communacopia Conference. “It will be very hard for them to monopolize the marketplace.” That’s probably what you’d expect to hear from a company that’s also a major investor in Hulu, a Netflix rival. But his upbeat views of a highly competitive Internet world stood in stark contrast to his equally optimistic description of the benefits of maintaining a traditional pay TV business where consumers have little choice. “The $75 [a month], 100-channel expanded basic package is a really good bargain,” Iger says. “The consumer is getting a good deal.” He also sees no problem as companies including Disney ratchet up their programming fees. Could price inflation lead to cord cutting, or young people choosing not to subscribe at all? “We don’t see evidence of that occurring.” And consumers may see no impact because pay TV distributors “may have to accept lower margins on their video business.” That could make sense because video is “very important” to help them sell lucrative broadband and phone services.
Iger urged distributors to step up their rollout of TV Everywhere, enabling subscribers to watch shows anywhere via broadband on tablets and smartphones. The growth of mobile viewing is “the most dramatic change in the 40 years I’ve been in the media business.” Disney can benefit by collecting higher fees from cable and satellite companies that offer mobile access to programming, selling targeted ads, and using consumer data to “ultimately offer them products that are more customized and personalized.” Cable and satellite also should watch out: Disney may have alternatives if companies such as Intel or Sony offer cable-like programming over the Internet. If they’re willing to accept “deals and packages that are similar to what we’re doing in the traditional world” then Disney is “completely open to selling to them….We’re typically one of the first calls that’s made by a new platform owner. You almost have to have our product.”
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