Disney+ Set For Major Upgrade With Live TV, Hulu Features & Improved Recommendations
It’s been years since we saw the launch of Hulu On Disney+, with the ability for Hulu subscribers to watch their favourite content such as “Shogun” or “Only Murders In The Building”, directly within Disney+. Internationally, we’ve seen the Star brand replaced with Hulu, making Hulu the global general entertainment hub for its streaming service.
Over the last few years, Disney has been slowly blurring the lines between its two streaming platforms as it gets ready to bring them together in the US, matching how it already exists internationally.
During a special question-and-answer session at the Goldman Sachs Communacopia + Technology Conference, Disney’s Senior Executive Vice President & Chief Financial Officer, Hugh Johnston, was asked about the integration of Hulu into Disney+, where he said:
If you think about what we are trying to do essentially with all of these improvements, it is to drive engagement and to reduce churn and to increase the fandom. We have, based on the moves we have made over the last year and a half, made good progress on that. We have seen impact in terms of churn reduction. A couple other things that are either in the near term or have already been accomplished, number one is profile linking. We had Hulu profiles, we had Disney+ profiles. We have now created that one fan, one account ecosystem. In addition to that, the things you will likely see are live TV on the Disney+ app, which we know drives engagement in a more substantive way, and those members tend to churn less. In addition to that, we have Hulu add-ons and bundles and things like that.
That will also be further integrated into Disney+. If you look at medium term, what is it we are really trying to do? It is really two things. One, making the recommendation engine sharper and better so that you get more of the content that you want to get, because we know there is a limited amount of time from when a consumer opens your app until they actually will decide not to pursue it because they do not see anything interesting.
In addition to that, really the user experience. So adding things like a cleaner UI. In addition to that, things like BIRT so people can watch on mobile more easily. So those are the types of things that you are going to see on it. In terms of what should investors be watching for, it really is the basics of streaming. It is churn, it is retention, which we know increases lifetime value. At the end of the day, the real metric is enhanced revenue growth.
From this answer, it’s clear Disney wants to take everything that works in Hulu and bring it into Disney+, as offering a single streaming platform is much more cost-effective from a business point of view, but they’ve also got additional revenue sources from Hulu, like Live TV and add-ons, that don’t currently exist on Disney+ internationally, that the company isn’t willing to give up with the merger.
The key things from Hugh’s comments are that Disney+ is going to continue to expand its offerings, but I still wonder if its one-app plan will continue to offer a bundle or tier option to try to get more money out of its customers for a little longer.
While the situation with Comcast owning a third of Hulu until recently, resulted in Disney having to delay its long-term plans by years, it does seem insane that Disney still seems reluctant to finally push the button to incorporate everything together, after years of getting audiences ready for it.
The addition of new bundles and add-ons will also continue to offer more content within Disney+, as the potential to include HBO Max, Paramount+, or Peacock content within a single platform will increase choice for subscribers, though at an additional cost, which helps reduce churn, raise engagement within the app, and more importantly for Disney, increase revenue.
Unfortunately, while we see Disney+ slowly being upgraded, Disney does tend to talk about these improvements for the long term before we actually see them. The addition of a better recommendation system within the app is, without doubt, one massive way to increase engagement within the app, as this homepage improvement will encourage audiences to find content that they are interested in, rather than the current layout, which keeps recommending similar content over and over again.
What do you think of Disney’s plans for Hulu? Let me know on social media!
