Parents watching the latest rerun of High School Musical on the Disney Channel might be surprised to note, they won't see any commercials during the breaks -- at least not for cereal, toys, or college savings funds. Disney is the rare cable network not to take paid advertisements, and instead runs promos for its own programming to feed itself.
This is revolutionary, given the stakes. Television and cable are filled with the implicit bargain of viewers getting something for almost free -- in Disney's case, the cable subscription really costs about 80 cents per month -- in exchange for watching ads for products they may or may not want. By passing up this advertising market, Disney shows big restraint. Its audience is huge. The Jan. 20, 2006 premiere of High School Musical drew a 5.7 household rating and was viewed by 7.73 million people. Average daily ratings hover around 3MM viewers. Consider that the Cartoon Network took in $398 million last year in ad revenue, and TNT $1.05 billion, and you gotta admire Walt.
Instead, Disney pushes its own programs, DVDs, and merchandising tie-ins -- and then uses the stay-tuned platform to launch its future revenue streams via stars such as Zac Efron, Vanessa Anne Hudgens, Miley Cyrus, and whoever else will become the next Britney Spears. High School Musicals 1 & 2 are today promoted in 34 nations (Poland, China and India), and all these young Zacs drive the cross-sales, music, concerts and movies for the Disney of tomorrow.
It's a brilliant case study of Disney giving up the short-term view of today's ad dollars to build a marketing funnel for the next 10 years of pop profit. Advertisers may want in -- and occasionally a Kellogg's or Yoplait sneaks aboard as a Disney Channel sponsor. But for the rest of us, Disney is keeping the kids all for themselves.
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