30
Jul
10

Disney bets on Social Media

By MarketWatch

NEW YORK (MarketWatch) — You’ve got to hand it to Walt Disney Chief Executive Robert Iger. He is not afraid to shake up a corporate culture when he spies an opportunity to achieve a higher rate of return for his stockholders.

Disney (DIS 33.77, +0.06, +0.18%) is essentially swapping the movie business — by selling off Miramax for some $660 million — for the bright lights of … social media, by agreeing earlier this week to acquire Playdom, a social-gaming destination on the Internet, for about $563 million.

Presto! Disney said Friday it would sell Miramax to businessman Ron Tutor and his partners, and a new culture is born at Iger’s shop. And it is a good idea, too. The movie business is as volatile as ever. Someone smart like Iger concludes that there is no good reason for a media behemoth to roll the dice time after time on a big-budget extravaganza which fails to make a profit. 

The new media present opportunities and challenges for executives everywhere. In the entertainment industry, brand names matter. More than ever. There are so many platforms available to present content. “Snow White” will be as vital — and potentially lucrative — on some youngster’s iPad (AAPL 258.31, +0.20, +0.08%) as it ever was in a movie theater or on home television.

Social media are increasingly the most exciting developments in the communications industry. Facebook can influence the population’s culture, the economy and politics. Twitter has clout, too.

Disney is shrewd to flex its muscle in this area. Hooray for … social media.

— Jon Friedman

http://www.marketwatch.com/story/disney-swaps-hollywood-for-social-media-2010-07-30


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