In the past few years, the Walt Disney Company has drastically shifted priorities to direct to consumer streaming services. It is now operating multiple platforms worldwide, including Disney+, Hulu, ESPN+, Star+ and Disney+ Hotstar.
Disney’s CEO Bob Chapek recently took part in a virtual question-and-answer session at the Goldman Sachs 30th Annual Communacopia Conference and was asked why Disney wasn’t offering just a single streaming service like Netflix.
Well, we really do it on a market-by-market basis depending on consumer preferences, what assets we have, whether we have sports rights. And what we are finding is that consumer choice is the lowest common denominator, if you will, in terms of what drives our decision. We want to be able to give consumers the ability to à la carte if they choose to à la carte, but if they want to bundle, we have plenty of bundling options, but those look completely different in each market, again, because of how important general entertainment is to the mix, how important family entertainment is to the mix, how important sports maybe to the mix and really sort of customize.
The other thing it does, it gives us a lot of testbeds around the world, so that if we want to make changes going forward, we have some experience with how to do that and what the relative value is when you add the second platform or the third platform and how that might affect the price value relationship with consumers. So I think we are really happy with our propositions, how we go-to-market in each of the countries. But that doesn’t mean that there’s not opportunities in the future to change as the situation changes, as the environment changes or as the consumer changes. So we are learning.
Keep in mind, we are only in the first year and a half of this wonderful experience of our direct-to-consumer business and we’re in inning one of this thing. And we’ve got a lot to learn, but we are really pleased with the way it’s gone and how we have gone to market in each of those individual markets.
One key takeaway from Bob Chapek’s answer is that Disney is very much in the testing phase of its streaming business. They are trying out different options in different areas. In India, TV, movies, and sports are merged into one app, Disney+ Hotstar, while they have three different streaming services in the US. While in Latin America, they now have 2 streaming services running.
Bob was very open about how they are listening to the consumer and are willing to make changes as they see fit.
Could this mean we see some more consolidation, such as Disney+ and Hulu merging, or live sports being added to Disney+. Right now, it seems nothing is off the table, and Disney is testing out what people are responding to.
In many countries around the world, Disney+ has the addition of the Star brand, bringing in general entertainment into the mix, such as more mature shows like “Only Murders In The Building” or “American Horror Stories”. Bob Chapek has previously stated that the addition of Star into Disney+ in these countries has reduced the churn of subscribers leaving the service, as there is much more content available.
Bob Chapek has also called the streaming bundle in the United States “not ideal”. This appearance at the Goldman Sachs 30th Annual Communacopia Conference continues to show things could change in the future, which isn’t typical if what they are doing is working.
Until Disney buy out Comcast’s stake in Hulu, there are limitations on what Disney can do in the United States. Still, Bob Chapek has mentioned on many occasions that they are testing consumers in different markets on what is the best option for them and the company, while also indicating that the current system in place, may change in the future.
Do you think Disney is going to merge together its streaming services eventually?