Walt Disney Co - Disney Revises Its Internet And Portal Strategy, 2000-2001

By early 2000 it was clear that Go.com would not be able to compete with dominant portals such as America Online and Yahoo!. The company reported a loss of more than $1 billion in 1999 from its Internet properties. Adding to Disney's Internet losses was its venture into electronic commerce through a $45 million investment in Toysmart.com in 1999. As was the case with the Go Network, Toysmart.com ran into serious competition when Amazon.com formed an alliance with brick-and-click retailer Toys "R" Us. Toysmart.com officially went out of business in May 2000.

During 2000 Disney attempted to redesign the Go Network portal to concentrate it more on Disney's traditional family-and-fun content, building a self-contained search engine for all of Disney's Internet properties. In August Go.com was renamed the Walt Disney Internet Group (WDIG). Later in the year Compaq Computer Corp. became the WDIG's preferred technology provider through a $100 million agreement. The redesigned Go.com Web site was re-launched in September 2000. The new design featured Disney's individual Web sites more prominently. While it kept the InfoSeek search engine, the new Go.com site was designed as a place to find entertainment news and vacation information.

In January 2001 the WDIG and Walt Disney Parks and Resorts formed an online operation called Walt Disney Parks and Resorts Online that expanded Disney's presence on the Internet. In the face of a general economic slowdown and a slowdown in the Internet economy, Disney made deep cuts in its Internet operations in early 2001. The company announced plans to close down the Go Network and the Go.com Web site. In the interim Disney said it would operate a streamlined version of Go.com while it moved services and registered users to other sites. As part of the cutback Disney eliminated 400 jobs and folded the WDIG back into the company. All outstanding shares of WDIG common stock were converted into Disney common stock effective March 20, 2001. In had become clear that the tracking stock company was not providing enough revenue for additional investments or acquisitions or to retain employees. The management of WDIG would continue to be in charge of Disney's remaining Internet properties.

While Disney was not able to create an industry-leading portal, the company's other Internet properties remained leaders in their categories. Its experience with InfoSeek and Starwave enabled Disney to create a single, scalable platform for its Internet businesses. For the future, the company planned to continue to create and operate innovative, highly popular content sites. During 2001 the company was also involved in initiatives to bring online content to automobiles and wireless devices.