FOR DISNEY, INTERACTIVE IS NO LONGER MICKEY MOUSE

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Walt Disney Co. is finally ramping up its interactive unit, but to hear executives tell it, the company has been in this business for years.

Disney Interactive is a partnership of Walt Disney Studios and Disney Consumer Products. The new group incorporates the existing Disney Software unit, which has developed and licensed 75 computer software, videogame and CD-ROM titles since its formation in 1988.

Steve McBeth, newly named president of Disney Interactive, was previously a VP with the consumer products division. He reports to Richard Frank, chairman of Walt Disney Television and Telecommunications.

Disney's suddenly aggressive stance marks a shift in strategy from last year, when Chairman-CEO Michael Eisner played the public role of new-media skeptic.

Mr. Eisner responded last week to those "committed to the opinion that Disney is not a technology company" by arguing that Disney has always been on the cutting edge of technological change, a pioneer in everything from stereophonic film to color TV.

"This doesn't mean we're going to go out tomorrow and buy a cable company or acquire a massive amount of hardware," said Mr. Eisner at a news conference. Creation of Disney Interactive, he added, is consistent with his position that Disney should supply software, not wires or platforms.

Mr. Frank said Disney is in the process of finalizing strategic alliances with BellSouth, Ameritech and SBC Communications to develop programming. He also said Disney is looking at developing navigational software for interactive services.

Disney will continue working with companies like Virgin Interactive and Sony Imagesoft on developing and marketing CD-ROMs and videogames.

"I think you'll see us doing more internally, but we don't have any hard-set rules about it," Mr. Frank said.

Improvements in technology and a growing marketplace for interactive products prompted Disney to formalize the unit, to be staffed initially with 120 employees. The staff will grow to 300 by the end of next year.

Plans call for the release of 15 educational and entertainment products on CD-ROM and floppy disc next year, and up to six videogames. Within three years, Disney Interactive aims to be publishing 60 titles a year.

Disney Interactive is assessing its marketing goals and will soon decide whether to seek an advertising agency, said Steve Fields, Disney senior VP-multimedia. Kresser Stein Robaire, Santa Monica, Calif., handled advertising for Disney's first CD-ROM titles, "Aladdin Activity Center" and "Disney's Animated Storybook: The Lion King." More than 400,000 units were shipped last month.

Mr. Fields said the interactive unit will also look to promotional partners for marketing support, as Disney does for its feature films.

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