All systems 'GO' at Disney

Massive cross-promotion scheme has Disney execs brimming with confidence.

Jake Winebaum, Disney's online chief, was sitting at a sports bar watching ESPN recently with another Internet executive. Winebaum bet the executive $20 that Disney's new GO Network logo would appear on the Disney-controlled sports channel within two minutes. It did.

Then Winebaum upped the ante; if the GO image showed up again within two minutes, he would win $100.

Bingo. Sure enough, the logo popped up quickly, thus fattening Winebaum's wallet -- and illustrating why the entertainment giant believes it can turn GO into an Internet portal powerhouse.

Two months after the launch of Disney's (NYSE:DIS) newest brand, the entire company is visibly mobilizing to support it. The primary strategy: massive cross-marketing.

The GO Network "has been very very visible, especially on ABC and ESPN," says Mark Mooradian, analyst with Jupiter Communications. "They're always sticking it in there."

But an MSNBC interview with Winebaum this week illustrates that building the GO Network is far more challenging for Disney than simply cross-promoting it.

During a wide-ranging discussion at his office in North Hollywood, Winebaum spoke about the disadvantages of building an Internet venture from within a traditional company. He said that some of the Magic Kingdom's biggest online achievements have come in the unlikely area of software development and Web design.

Blasts records
In addition, Winebaum revealed that the Disney Blast kids service has hit a new subscription record, and he explained why he thinks ESPN has expanded its lead on CBS Sportsline. He also noted that a new round of promotion for the GO Network -- even more aggressive than the current one -- is just around the corner.

At the end of 1998, there was no portal called GO, and Disney's online effort consisted of a widely dispersed collection of largely independent Web sites. ESPN SportsZone, MrShowbiz and ABCnews.com each operated mostly separate from each other.

Today, the GO traffic-light logo -- along with a handy search window -- appears at the top or bottom of virtually every Web page generated on sites such as ESPN SportsZone and ABCnews.com. Go.com debuted in January (the most recently available figures) as the No. 4 site on the Web, according to Media Metrix. And even if that ranking is a bit deceptive (it's mostly just a lumping of pre-existing sites together in one rating unit), it illustrates Disney's prominent position in the online world. (Microsoft, which is a partner in MSNBC, operates rival portal MSN.)

Old media baggage
Oddly, Disney's plethora of brands and its vast revenues don't always favor the company in the topsy-turvy world of Internet media. Because its stock is tightly tied to sales and profits, for instance, Disney doesn't have as elevated a currency in the stock market to make acquisitions. That's one reason why the company had to settle for a decidedly non-Disneyesque joint venture with Infoseek last year; Disney holds about 43 percent of Infoseek and has the option to gain majority control after three years. The two companies launched the GO Network in partnership with each other.

Meanwhile, Winebaum has to sit out many of the merger games that its rivals -- like Excite and Yahoo! -- are playing.

"We were not active bidders on GeoCities or on the companies that Lycos has acquired," Winebaum says. The executive insists, however, that Disney hasn't yet pined away for an online target it couldn't afford in today's markets.

Still, he admits that "We are both blessed and cursed with our assets." Among other things, the conglomeration of assets from both inside and outside the Disney company means "I don't think we'll ever be as nimble as an [independent] Internet company."

Winebaum and the analyst community stress, however, that Disney's real-world properties help far more than they hurt.

Sports fight
Consider ESPN.com, for instance. Always the leader in online sports, according to Internet ratings services, ESPN's SportsZone faced a tight challenge from upstart CBS Sportsline back in April 1998. The two sites were only about one percentage share point apart in reach across the Web. But during last summer, ESPN surged ahead, and today it has almost doubled its lead to more than two percentage points - 7.7 percent to 5.5 percent.

The reason? Analysts point to prominent mentions on ESPN TV programs. But Winebaum says the surge also traces to improved integration among the various sports sites once run by Starwave. In addition to ESPN, the company controls NFL.com, NBA.com and many others; but until last year, the various sites failed to master the cross-navigation potential. Today, though, NFL.com pages come with "ESPN Network" links listed across the top.

Software design looms large in other areas of the GO Network strategy as well. Winebaum is particularly proud of the way the Disney portal integrates its various offerings, and he contends that Web surfers find themselves moving more seamlessly from one pursuit to the next within GO than they can elsewhere.

If a user is reading a baseball article from the Sports section of the GO portal, for instance, and then clicks on the Shop tab, an array of baseball products from the Sports Superstore appear on screen. At most other portals, linking to a shopping section from a baseball article takes the user to the "front door" rather than to the baseball section of the shopping service.

It's not immediately clear just how big an advantage such navigation is -- or even whether it's preferable to consumers. But Winebaum touts it as a coup.

"It is really hard to do this well," he says, asserting that clever software like this will help GO pull ahead of the crowd.

Building the brand
Virtually every week, in its all-out pursuit of matching (and surpassing) rival portals, GO announces new services and new partners. This week it's Games, enhanced by content from partners TEN and Mplayer.com. Within the next few months, Disney is expected to step up its portal marketing even further. While today's interstitial mentions on-air are meant to build the GO brand recognition from nowhere, within a few months Disney will begin airing spots that highlight the GO Network's purported advantages over other portals.

Winebaum won't disclose the timing or the amount of spending expected. But he says that the coming campaign will "really give meaning to the brand."

And while the company works on recognition and market share, it also is concentrating on new revenue streams. Subscription services hold substantial promise, Winebaum contends. And he revealed to MSNBC that Disney's subscription-based Blast service for kids has now hit 160,000 subscribers, each of whom pay $5.95 a month.

Second in subscriptions
That figure may place Disney's Blast second on the Web in subscription services behind the Wall Street Journal, which has more than 265,000 paying users.

"The subscription model is a great one to have," Winebaum says. "What's going to happen to this industry when we go into recession?" Historically in the publishing industry, he notes, economic downturns tend to hurt advertising sales, but not subscription revenues.

"I'm really proud that we didn't ditch it early," he says, recalling the days a couple years ago when heavy software downloads and glitchey software resulted in a large customer churn at Blast.

Looking ahead, Winebaum contends that the Blast, as well as Disney's wealth of video content, will give it a great advantage over non-traditional media companies such as Yahoo!. "It'll be tougher and tougher for the independents," he says.

Analysts aren't so sure.

"The battle for the portal space," says Bill Bass, analyst with Forrester Research, "is for No. 3." AOL and Yahoo!, Bass believes, are too far out in front for the likes of GO, MSN, Lycos and Excite to catch. Still, he says, "GO is my personal favorite to end up in third place."