Disney Hit Proves YouTube Isn't Only Way to Target Teens

Net Turns to Libraries, Little League to Push 'HSM2'

By Claude Brodesser-Akner

Published: August 06, 2007

Facebook? Forget it.

MySpace? YouTube? Um, like, nuh-uh! Or as Sharpay Evans would say, "Toodles!"

Kids may spend most every waking hour online, but when it came to marketing the sequel to "High School Musical," Disney Channel had little choice but to go decidedly old-school.

'High School Musical' has generated $1 billion in profits and $26 billion in retail sales. The sequel makes its debut Aug. 17.

Photo Credit: Fred Hayes

"We need to be careful about where this shows up," said Richard Loomis, senior VP-marketing and creative for Disney Channel, and the man entrusted with marketing Zac Efron's wholesome grin and post-pubescent baritone to an audience that's largely between the ages of 9 and 14.

"There's the piracy issue, but there's also responsibility -- we have to make sure our content is showing up in safe and appropriate places."

Maintaining trust
Gary Marsh, president-entertainment at Disney Channel, puts it even more starkly: "Nothing is more important than the trust parents have in the Disney brand."

In other words, any official "High School Musical 2" material can't risk being seen within a thousand clicks of, say, a Brazilian supermodel having sex on a public beach. (The widely disseminated clip of Daniela Cicarelli cavorting on YouTube landed Google in a South American court last June.) No, too much is at stake to risk the ultimate fast-spreading infection: outraged parents.

Analysts estimate that the squeaky-clean "High School Musical" has generated $1 billion in operating profits to Disney in the past two financial years -- and at far lower cost and risk than CGI extravaganzas such as "Pirates of the Caribbean." In June, Disney trumpeted that overall licensing revenue would increase 13% for the fiscal year that ends next month, thanks in part to some 2,000 productions of actual high-school productions of "High School Musical" being licensed.

Analysts, such as Bank of America's Jonathan Jacoby, expect big things from the Mouse House's tiniest division, Disney Consumer Products: Disney will experience record-breaking retail sales of $26 billion worldwide in fiscal 2007, thanks in no small part to "High School Musical"-branded gear.

Premiere
And so, with viral marketing a nonstarter,"HSM2" makes its debut on Disney Channel on Aug. 17, having relied on far more traditional means to reach tweens.

Mr. Loomis, who arrived at Disney Channel after a six-year run at Comedy Central's marketing and brand-strategy department, said: "Lesson No. 1 was making sure we knew where our audience was."

He promptly set about creating far-reaching "High School Musical" outreach programs at popular bricks-and-mortar venues such as YMCA's and local libraries, where kids might be mouse-less, but not Mouse House-less: This summer, there will be some 1,500 pool parties at YMCA's across the nation, where tweens will watch "High School Musical 2" while drip-drying. Even burying your nose in a book will be no excuse not to see the sequel. Some 3,000 libraries across the country are slipping "HSM2" bookmarks into every children's book.

(The one initiative for "HSM2" that is distinctly techie was already in place, part of a larger, long-arranged Disney deal with Sprint to provide video-on-demand promotions of coming Disney films and shows.)

Handing out tchotckes
Mindful of the fact that Disney Channel's audience is 60% female, and eager to play up the baseball-jocks-vs.-theater-queens storyline of the franchise, Mr. Loomis also set partnerships with Major League Baseball. At Major League ballparks last weekend a musical number from "HSM2" called "I Don't Dance," aired on Jumbotrons. Meanwhile, at Little League tournaments across America, Disney is handing out tchotchkes and other "HSM2" gear.

Parents are also being targeted: "Got Milk?" campaigns feature the cast in print ads, and Wal-Mart and Macy's are getting exclusive access to certain "HSM2" consumer products.

Mr. Marsh is upbeat about his sequel, which used DisneyChannel.com to solicit suggestions about what kids wanted to see in the sequel. About 47 million kids responded.

"I'm foolishly optimistic that we've got a hit."

Link to AdAge Article

Disney Buys Ad-Free Club Penguin for $350 Million

Kid-Focused Virtual World Key to Video Games, Media Networks

By Abbey Klaassen and Andrew Hampp

Published: August 01, 2007

NEW YORK (AdAge.com) -- Move over, Donald, there's a new favorite bird at Disney. Walt Disney has snapped up the snow-covered virtual world/social-networking portal Club Penguin for $350 million -- and promises to pay another $350 million through 2009, depending on the growth of Club Penguin's earnings. The acquisition will be part of Disney Internet Group.

Club Penguin is an online portal whose young members assume the identities of penguin avatars living in a frozen penguin world where they can even furnish virtual igloos.

New name
Geared toward children aged 6 to 14, the site lets users adopt penguin avatars, talk to each other, play games and furnish virtual igloos. Although the URL will remain the same, the company will be renamed Disney Club Penguin and will be expanded internationally, Disney execs said on the earnings call just minutes after announcing the acquisition. The company will also use Disney Channel, Radio Disney and Disney.com to help promote the site.

The company said the price was based on the economics of growing the site's subscribers domestically and expanding outside the U.S., but "we'll see opportunities to exploit Club Penguin on other properties," said Disney CEO Bob Iger, citing video games, consumer products, possible presences in theme parks and opportunities on media networks.

"Our vision has been to create online destination where kids around the world can interact with each other and play games alongside their favorite Disney characters," he said. Disney already has ventured into the virtual world with Disney Fairies, where children can create fairy avatars. Disney Fairies will relaunch in 2008 as a more robust virtual world based around the Tinker Bell character. Later this year, Disney will release Pirates of the Caribbean Online, a project that has been in development for several years.

Dominating the under-12 set
Disney's acquisition of Club Penguin should help the company aggregate its dominance of the under-12 set online. But the tween-focused Disney brands have bought space on other popular virtual sites. Cartoon Doll Emporium, a year-old site targeting girls 6 to 16, has partnered with Disney's "Hannah Montana" and "High School Musical," with tie-ins to each show's respective musical extensions as well. The site averaged 4 million unique visitors last month.

Club Penguin earns revenue through paid subscriptions. It has 12 million activated users with access to a more limited version of the world and 700,000 paid members who have access to the full world and can increase their status. Earlier acquisition rumors reported by TechCrunch said Sony was looking at Club Penguin for a $500 million-plus price tag. Disney said the margins at Club Penguin are "significant."

So far Club Penguin has shunned advertising -- its three co-founders call that a safety decision and have said they're tired of marketing aimed at young children. (Cue irony here.)

Club Penguin competitors include Webkinz, Stardoll, Gaia, Habbo Hotel and Viacom-owned Neopets.

Link to AdAge Article