As Disney decreased losses for its streaming businesses in the latest quarter, executives on Wednesday’s earnings call disclosed plans to roll out a single app in the U.S. by the end of the year that integrates Hulu content with Disney+.
Not many details were provided but Disney CEO Bob Iger called it a “logical progression of our DTC offerings” adding it “will provide greater opportunities for advertisers while giving bundle subscribers access to more robust and streamlined content, resulting in greater audience engagement and ultimately leading to a more unified streaming experience.”
The move also suggests Disney may be feeling more decisive on wanting to buy out a remaining stake in the Hulu asset, of which Comcast currently owns 33% and Disney has been examining closely. Iger said that while there’s not been a final decision regarding the Comcast stake, he’s had more time to carefully study the business to find the best path for growth.
“It’s clear that a combination of the content that’s on Disney+ with general entertainment… is a very strong combination,” Iger said on the call, including from a subscriber acquisition and retention perspective, as well as for advertisers. Disney wouldn’t be the first to combine separate streaming services, as Warner Bros. Discovery later this month will launch Max – a service that brings together Discovery+ and HBO Max.
“Where we are headed is for one experience that would have general entertainment and Disney+ content together,” he said, adding that “how that ultimately unfolds, is to some extent in the hands of Comcast.”
Iger declined to make any predictions in how things will ultimately pan out, but did say they’ve already had some conversations with Comcast which have been cordial and aimed at being constructive.
While not making comments on the ultimate outcome, he did say “there seems to be real value in having general entertainment combined with Disney+, and ultimately, Hulu is that solution.”
Disney already offers a bundle of Disney+, Hulu and ESPN+ but the new move would bring content of the two former together under one platform. To be clear, all three services will still be offered on a standalone basis. And, as Iger mentioned, the move to offer a combined product plays into advertising ambitions as well.
“Despite the near-term macro headwinds of the overall marketplace today, the advertising potential of this combined platform is incredibly exciting,” Iger said.
He noted that over 40% of Disney’s domestic advertising portfolio is addressable, including streaming, which the company expects to grow over time. Iger also cited focus on the growth opportunity of programmatic advertising. Over the past year Disney’s added more than 1,000 advertisers, for a total of 5,000 across its streaming platforms. Of those, over a third are buying programmatically today, he said.
Disney also plans to launch an ad-supported tier of Disney+ in Europe by the end of the year, helping to drive more inventory and revenue long-term, according to Iger.
“The truth is we have only just begun to scratch the surface of what we can do with advertising on Disney Plus, I'm incredibly bullish,” he commented.
And after seeing only slight subscriber losses after raising the price on the ad-free version of Disney+ by $3 in December, the company also plans to implement another increase on the commercial-free version later this year – both to increase subscriber revenue and to drive users to the lower-priced ad-supported version.
In prepared remarks at the top of the call, the chief executive outlined a few key areas where Disney sees chances to improve the streaming business. Up first, Iger said it’s key to rationalize the amount of content it’s creating and what the company is spending to produce content. He also cited a need to maximize windowing opportunities and find a balance between local and global programming, along with its platform and program marketing. Finally, Iger called out recalibrating investments internationally by looking at the total addressable market and profitability potential.
“All of these factors combined are why we are confident that we're on the right path for streaming’s long term profitability, the strength of our content, the one app experience and the enormous advertising potential that comes with it,” Iger said.
For more on Disney’s second quarter fiscal year 2023 results read here.