Disney Deems Free TV on Web a Success

Prime-time ABC television shows were viewed more than 11 million times on the Web in the first month of a test by the Walt Disney Co. (DIS) of whether consumers will watch ads online if the shows are free.

An online exit survey posted the first week of the two-month trial showed that 87 percent of respondents could recall the advertisers that sponsored the episodes they watched.

That compares with typical ad recall of about 40 percent for commercials viewed on television, industry sources said.

A retooled version of the free site, which incorporates data gathered during the test, will be launched in the fall, Disney Media Network Co-Chair Anne Sweeney said.

The look of the ABC.com interface will remain similar to the test page, but the shows offered will change over time, Sweeney said.

Sweeney described the preliminary results of the test as "very heartening" and said it appeared that Disney would have no trouble attracting advertisers for shows offered on ABC.com.

The ABC.com pilot program in one month outperformed the results Disney had seen in its nine-month partnership with Apple Computer Inc.'s (AAPL) iTunes to offer episodes of its hit television shows for download, without commercials, for $1.99 each.

Since last October, Disney has sold more than 6 million downloads of shows like "Desperate Housewives," "Lost," and "Alias" on Apple's iTunes Web site.

Albert Cheng, executive vice president of digital media for Disney-ABC Television Group, said iTunes sales of ABC shows have remained consistent throughout the trial.

The test also showed that making the episodes available on online platforms is not decreasing the amount of traditional television viewing of those shows.

"It provided us with a great deal of information about our viewers," Sweeney told Reuters. "This technology has proved to be additive to linear television."

For example, Disney Channel's online broadband player, which offers episodes of the cable network's most popular childrens' series, racked up 26.7 million streams between June 2 and June 11, but television viewership also rose.

Disney Channel premiered episodes of "The Suite Life of Zack & Cody" online several hours before the program appeared on television, yet saw TV viewership for those episodes soar to number one in its time period for viewers ages 2 and older.

Cheng said Disney will halt the trial on June 30, as scheduled, while it examines the research data it collected from the site and from consumer focus groups.

The company, which was the first to offer free, ad-supported prime-time television shows online, must now figure out how to set advertising rates for the online episodes, he said.