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Disney Brands Broadband in Japan With NTT

Walt Disney Co. is taking a stroll down the aisle by marrying its content with a major broadband Internet service provider: Japan's NTT.

The global media giant said it will market its brands to parents of both young and older children in the Japanese market for a series of premium, entertainment-oriented services.

Disney is working with Japan's Nippon Telegraph and Telephone Corp. on the venture called "DisneyBB," a broadband Internet service to be launched on July 22. The high-speed Internet service in Japan and will feature Disney characters and brands for a range of games, music and video clip content.

The deal marks another step forward in Disney's Internet strategy after it had to retrench in the past few years from its ambition to launch branded content portals. In 2001, for example, Disney took a non-cash charge of $800 million after it shuttered Web portal Go.com

As Disney tries to rebuild its Internet division in the aftermath of the dot-com shakeout and other issues, the company is clearly focused on big corporate alliances with major global players this time around. Disney recently struck a pact with Microsoft Corp. to market a "family-friendly" version of MSN, which includes parental controls and features recognizable Disney names, including Donald Duck, Mickey Mouse and animated movie and video characters.

Subscribers to Microsoft's MSN 8 are able to see, hear and consume media from Disney's content properties, including video clips of film like "Monsters Inc.," and other material from ABC broadcast TV network, ABC News, ESPN cable TV sports channel, and Radio Disney.

Now, with NTT, Disney is leveraging its entertainment brands and tagging them onto NTT's existing high-speed Internet service known as FLET'S.

NTT has 3.5 million subscribers to the service, and Disney will try to garner premium online entertainment services from those existing customers. The two companies are expected to share revenues from the venture, but specific financial arrangements were not disclosed.

NTT recently predicted that close to 60 million Japanese will become broadband subscribers by 2007. If the prediction proves prove correct, that would be a trebling of the Japanese broadband market in less than five years, from its current level of 20 million. NTT's main competitor for high-speed Internet customers in the Japanese market is Softbank Corp, both companies are said to have close to 30 percent of the market, with smaller providers slicing up the rest of the Japanese broadband service market.

Yahoo is also developing a substantive presence in the Japanese market and could be challenged by the new Disney service. However, Yahoo already has a popular Internet telephone service and says it will launch its Yahoo BB Games online gaming portal on July 25.

Disney said it will be offering some added-value games, which will generate additional revenues. One game is called Disney Wonderland will include a software starter kit costing $83, and a monthly fee of $10. A Disney press release called Wonderland ?a learning service for broadband users which targets families with children between 3 and 6 years old. Created by D Wonderland, a Disney licensee, this rich media service offers games and activities, specially designed to nurture children's curiosity and develop new skills such as reading and counting.

Another game is called Toontown, which Disney said is slated to roll out in January 2004. That has not yet been priced.

Disney's deal is with two units of NTT, known as NTT East and NTT West. In a company statement, the partners said "DisneyBB on FLET'S is an interactive online content service, exclusively available via a broadband connection, through which children and their parents can experience a broad range of media-rich Disney entertainment and learning activities in a safe environment. Its programming, based on both classic and new Disney characters, will be split into four distinct sections -- Watch, Play, Learn and Listen.

Disney said the content on the NTT broadband Internet service will feature a wide selection of regularly refreshed broadband rogramming, including: animated shorts, interviews, sneak previews and behind-the-scenes footage from Disney films; a wide range of games, including educational games and activities with a strong emphasis on younger kids and families; and, music from classic films and new Disney releases.

On Monday, Walt Disney Internet Group said it will be expanding its DIG Motion video application into several of its media properties. The company said it will launch DIG Motion video on ABC.com and Movies.com on July 16.

The technology was originally launched on ESPN.com, another Disney intellectual property, back in February. Since its launch, "ESPN Motion has been activated by more than 1.8 million site visitors and it averages 800,000 views daily.

"DIG Motion, created through proprietary and patent-pending technology, allows broadband users to view high-quality video, embedded in standard Web pages, without impacting narrowband users' experience. The free application airs editorial and entertainment content and allows advertisers to run television commercials online with the same video and audio quality of broadcast television," Disney said in a press release.

After a one-time activation process, DIG Motion technology automatically launches full-motion video clips, typically lasting one to three minutes, when a consumer visits a participating site. Video is pre-downloaded directly to users' computers so there is no buffering, streaming or waiting.

Because the video is embedded directly in web pages, a secondary video window or media player window is not required, Disney said.