Dramatically scaling back its Internet ambitions, Walt Disney Co. said Thursday that it will no longer compete as an all-purpose Web portal with Yahoo Inc. and America Online Inc., and will refocus its lagging Go.com site on entertainment and leisure.
The strategy shift, which comes one year after Go.com was launched, reflects the difficulties Disney and other traditional media companies have encountered competing with more nimble rivals focused exclusively on the Internet.
Analysts said Disney is wise to back away from a battle it was unlikely to win.
"A year and a half ago there was all of this jockeying to see which portals would be in the top three or four," said John Geirland, a new media consultant in Studio City. "But there's probably only room for two, and those slots are already taken by AOL and Yahoo."
Disney has failed to narrow the gap with those sites despite spending about $500 million assembling its online properties, and advertising Go.com heavily by plastering its green traffic light logo throughout the company's movie, television and theme park empire.
According to recent figures from online research firm Media Metrix, Disney's assorted Web sites ranked sixth with 21.3 million visitors in December. That was far behind AOL's 53.8 million, Yahoo's 42.4 million and Microsoft's 40.5 million.
But Disney executives said the move is not a capitulation of the Internet space to the likes of Yahoo and AOL, but merely a decision to retool the site to emphasize the company's strengths.
Nevertheless, the decision came after a new team of Disney online executives concluded that the company's broad Internet strategy was unlikely to unseat more established portal sites.
"We will continue to be a broad portal on the Internet," said Steve Wadsworth, president of Disney's Go Network of Internet properties. "But it is our belief that all portals will become known for being really good at certain things, and it will be impossible for them to be the best at everything."
Disney continues to operate many of the most popular sites on the Internet. Disney.com, ABCNews.com and ESPN.com, for instance, are among the top sites in their respective entertainment, news and sports categories.
Go.com was launched last January to serve as the center of Disney's network of sites, and a gateway to the entire Internet for computer users. But the site has struggled to find a unique identity online, and many industry analysts regard it as an inferior imitation of Yahoo and other portal sites.
"[Disney's] branding efforts were basically slapping the Go.com logo all over the Disney assets without saying what Go.com stood for," said Charlene Li, a senior analyst at Forrester Research. "They tried to be all things to all people and they ended up being nothing to anybody."
Disney also found itself trying to strike a delicate balance between using Go.com to promote its other businesses and Web sites, and avoiding the perception that it favors its content at the expense of the rest of the Internet.
Disney executives declined to discuss the particular changes in store for Go.com, saying they are still working out the details.
Their Go.com site will continue to provide search capabilities, free e-mail, chat and other services, Wadsworth said. But the revamped site will focus on "entertainment, recreation, leisure and lifestyle"--areas tied to Disney's core movie, television, theme park and travel businesses.
Disney is not the only entertainment conglomerate that has struggled online. After years of stumbling with its online efforts, Time Warner recently agreed to be acquired by America Online.
A year ago, at a party celebrating the launch of the Go.com site in New York, Chairman Michael Eisner said Disney was committed to thriving in the Internet Age. "We are hellbent on not being a railroad car as jets fly over us," he said.
Last fall, Eisner tapped Steve Bornstein, an executive who helped to create the ESPN cable sports network, to lead a new executive team that has spent the past few months assessing the strategy of the struggling Go.com site.
"For us, being No. 6 in aggregated content on the Internet is not good enough," Wadsworth said. "Did we find things that we're going to scrap? No, I don't think so. We found that we needed to have clear focus in product, execution and marketing."
In November, Disney created a separate tracking stock--the ticker symbol is GO--for its Internet properties, a move partly designed to give Disney currency to make acquisitions and offer options to new employees.
In a vote of confidence for the new management team, Eisner bought 78,000 shares of Go.com stock with money out of his own pocket in two separate purchases in November and December, according to SEC filings.
Shares of Go.com closed at $29.69 on Thursday, up $1 in trading on the New York Stock Exchange. It is down from its high of $37.69.
In a separate development Thursday, the U.S. Court of Appeals for the 9th Circuit ruled that Disney must stop using its circular green traffic light logo to promote Go Network. Goto.com, a Pasadena-based Internet search engine firm, sued in February because it said Disney's Go logo was "confusingly similar" to a circular green logo Goto.com began using more than a year earlier. The ruling by the appeals court reinstates a preliminary injunction issued by a federal judge in November.