Disney CEO Bob Iger Reveals How They Are Planning On Increasing Disney+ Engagement
Later this year, it’ll mark the fifth anniversary of the launch of Disney+ and over that time, we’ve seen many changes to the streaming service and to the whole entertainment business as a whole. Disney+ was able to launch and hit Disney’s initial subscriber number target within the first year, but the pandemic caused a major disruption, which then resulted in a major shift within the industry as Wall Street pushed streaming to become profitable.
This past week, Disney CEO Bob Iger spoke at the MoffettNathanson’s Media, Internet & Communications Conference, where he took part in a question and answer session, where he spoke about a number of different topics including ESPN, theme parks and also about the challenges of running a streaming business.
One of the things Bob Iger spoke about was about how the company is now trying to increase the engagement of people using Disney+. For years, Disney+ offered a selection of content from its core brands like Disney, National Geographic, Pixar, Marvel and Star Wars.
So, what we see happening now is — and look, when we launched Disney+, it was a good news, bad news to that. The good news was we signed up 10 million subs in 24 hours, and we hit 100 million faster than anybody imagined was even possible. Our guidance for — when we launched it was 60 million to 90 million subs in five years, I think we had 100 million subs in 15 to 18 months. It was an incredible accomplishment.
But it was when Disney launched a sixth brand internationally, Star, which included all Disney’s general entertainment content from 20th Century Studios, ABC, FX and Onyx Collective, that things changed drastically, as Disney saw the advantages of offering a more rounded offering.
Bob explained how they’re looking at increasing that engagement in the United States with more general entertainment and sports content:
We’re learning a little bit — a lot more actually in terms of how do we turn streaming into a growth business. And it’s clear that in order for us to lower churn rates, which is obviously a major factor in our ability to increase margins and ultimately create growth, you have to have enough engagement by the audience.
How many times does a subscriber open an app? How many times do they open an app and actually watch something? And by monitoring that in a very granular fashion, first, it gives you an opportunity to be in touch directly with that consumer, but you can obviously then measure, do you have enough engagement? Are you causing people to open the app more often and use it because if they don’t, on a monthly subscription basis, they’re going to disconnect.
Really with not that much content and not that much that would create the kind of engagement that would keep churn rates low. We were neophytes at this, by the way. We didn’t — we had — we wanted to launch it. We want to launch it, look and make sure that it was navigable and elegant looking and then there was quality there and then it represented our company and its brands well.
Bob went to speak a little more about how the initial growth of Disney+ at the start was great, but now they need to do more, which is why the launch of Hulu On Disney+ is so important.
But — and we wanted the video to be stable at scale, meaning — and we needed that because of how much how many subs we signed up quickly. We got all that. We didn’t know about other — all the other factors that contribute to turning it into a real positive business like Netflix has done, and I’ve said in our earnings call last week, they are the gold standard.
So, it was clear that we needed — we had the quality and we had the library, but we needed more engagement. And by the way, Series Television provide that. So, we now hit a nice rhythm with Disney+ in terms of engagement, but we’ve added to that engagement by combining it with Hulu. And I won’t get into too many details there, but if you are a Disney+ subscriber for an extra $2, you can get Hulu advertiser supported.
And then that experience is a seamless experience with your Disney+ content. The combination of those two is an engagement play more than anything else. And we’re seeing some nice trends there without getting into too many details because it’s still relatively new.
Later this year, Disney is making the next shift for its streaming strategy, by bringing sports content into Disney+, with a launch of ESPN hub in the United States in December. Disney+ will also be launching an ESPN hub in Latin America in June and expanding offering some sports within some European countries, indicating that sports content is going to become even more important, especially as other streaming services also start incorporating more sports.
And then ultimately, we mentioned on our earnings call last week that there’ll be an ESPN tile as there is a Hulu tile on the app. And starting in December, there’ll be — it will start with, I’ll call it, ESPN lite and ultimately, when our so-called flagship product of the full ESPN suite of services launches in 2025, that will be there, too. And if you look at Disney+ and Hulu and ESPN, you increase engagement to an extraordinary level. That is probably, in terms of all the things we have to do to turn it into a profitable business, is the first and biggest step.
Following the launch of Hulu On Disney+ and the upcoming launch of ESPN on Disney+, it’s clear Bob Iger has an idea of how to fix some of the issues with Disney+, as it lacks that killer content for adults to watch and relying on Marvel and Star Wars wasn’t going to work in the long haul.
Roger’s POV: With the deal with Comcast almost over, Disney is finally able to take full advantage of its full suite of studios and go after Netflix properly. For the past few years, Disney has been distracted by running multiple streaming services, which splits its audiences and attention. It’s very clear that Bob Iger knows that the idea of running multiple streaming services just isn’t going to work as they originally intended, with consolation across the board and consumers only willing to subscribe to so many platforms at once, It does feel like Disney+ in a years time, is going to be very different to how it is right now. Disney has always had the content, but now it just needs to combine it.
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