Disney’s streaming empire is expanding, with its branded SVOD due next year, ESPN+ already in the market and majority ownership of Hulu around the corner.
Disney CEO Bob Iger said Tuesday that Disney doesn’t want to go to market with an aggregation play that replicates the multichannel environment because the company feels consumers are more interested in assembling their own makeshift bundles of streaming services.
So ESPN+, the Disney streaming service and Hulu—which Disney will own the majority of following the 21st Century Fox deal—will operate somewhat independently and focus on catering to different audiences.
But Iger did say that if a consumer wants all three, Disney sees an opportunity to package them together from a pricing perspective.
Iger’s comments came during a Disney earnings call that was overwhelmingly centered on questions about Disney’s direct-to-consumer streaming strategy.
Iger said that subscriber growth at ESPN+, which launched in April, has exceeded Disney’s expectations but that those expectations were “relatively modest” due in part to the nature of the product offering. He said that ESPN+ conversion rates from free to pay have been quite strong, churn has been manageable and that Disney will continue to look opportunistically at sports rights that might become available.
Iger also said that selling direct-to-consumer products hasn’t complicated Disney’s negotiations with traditional television distributors and that many of those distributors are “very interested” in integrating Disney’s DTC products.
With regards to the Disney-branded streaming service, which is launching in about one year, Iger said the service won’t try to compete with Netflix in terms of content volume.
“We’re going to walk before we run as it relates to volume of content because it takes time to build the kind of content library that ultimately we intend to build,” Iger said.
He said that since the Disney SVOD will feature valuable original and library content from Disney, Pixar, Marvel, National Geographic and Star Wars, Disney feels it doesn’t need anything close to the volume of what Netflix. He also said the price will reflect that lower volume of product, as will the cost of producing and owning all the content.