Disney-ABC online success expels the myth about cannibalization of online videos on offline viewing and feasibility of direct payment of TV shows

The June 2007 issue of Fast Company reported Disney's success with its online offering of TV shows. Disney was the first media company to sell TV episodes on iTunes in October 2005 at US$1.99 per episode. In summer 2006, ABC is the broadcast network that stream full episodes for free on its web site with advertising. Since offering downloads on iTunes, Disney-ABC earned US41,790,000 with 21 million downloads. Grey's Anatomy, the top-rated TV show of ABC, increased 4.4 million audience after the episodes became available on iTunes and abc.com even though it's the most streamed ABC TV show online. Such numbers show that the myth of digital platforms cannibalizing TV platforms is unsupported. People who watched the show online usually were to catch the show they missed and they were the young consumers, average age is 28, that advertisers treasured most. The article's author attributed this to the presence of Steve Jobs on the board of directors at Disney. The new windows/platforms for an ABC Family Cable Channel show, Kyle XY, premiered last year, began with 1) free promotional video download on iTunes a week prior to the airing, 2) airing of the show on cable, 3) a cameo of the show at ABC broadcast network, 4) full episodes sold online at US$1.99 on iTunes, 5) episodes of the show onVerizon FioTV as ABC Family on demand at $39.99 a month, 6) free streaming on ABC.com with three 30-second commercials, 7) DVD release at US$40 for the entire season just before the start of season 2. This strategy is maximizing the access of the content to the audience. Ownership of products costs the most to the consumer. Direct payment is possible when value of ownership of the shows is established. The ACR business model here is high access, high cost content, and multiple revenue sources with a combination of a branded content model (in ABC.com) and a content aggregator model (in iTunes.com).