Disney said Wednesday it would add Hulu content to its Disney+ streaming application, while likewise reporting it would raise the value of its without promotion web-based feature not long from now.
Chief Sway Iger said the organization would before long start offering a “one application experience” in the U.S. that integrates Hulu content into its lead real time feature, Disney+. All independent choices for Disney’s foundation, including ESPN+, will remain.
“This is a logical progression of our DTC offerings that 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,” Iger said during Wednesday’s earnings call.
Iger said that the “advertising potential for the combined platform” was the reason for the move toward a single app location for both Disney+ and Hulu content. Disney+ introduced the less expensive tier last year, while Hulu has provided subscribers with an ad-supported option for some time.
Last year, Disney and rivals like Netflix began offering cheaper, ad-supported options as businesses began to concentrate on making streaming profitable and subscriber growth began to slow. On Wednesday, Iger stated that the company viewed its ad-supported streaming service as yet another means of achieving profitability.
Iger claimed that the rise in subscription prices was not to blame for the loss of 4 million Disney+ subscribers in the second quarter. As a result, the business believes that streaming has “pricing elasticity.” Iger stated that price increases and pushing customers toward the ad-supported option “are among the things we’re doing to get to profitability.”
Iger added that, in contrast to the ad-free version of Disney+, he does not anticipate raising the price of the ad-supported version anytime soon.
Iger stated that Disney would provide additional details at a later time and that the company would begin distributing the one-app offering by the end of the year.
The move comes as Disney considers whether to acquire Hulu in its entirety. Comcast owns the remaining 66% of Hulu, while Disney currently owns 66%.
In 2019, the two parties came to an agreement that allows Comcast to compel Disney to buy the remaining stake in January 2024 at a guaranteed minimum total equity value of $27.5 billion, or roughly $9.2 billion for the stake. Disney can also compel Comcast to sell the stake.
Although Iger stated in a February CNBC interview that “everything was on the table,” the Disney CEO appeared to change his tune on Wednesday. In that interview, Iger indicated that he was open to selling Disney’s stake in Hulu.
Iger mentioned that there have been “cordial and constructive” discussions with Comcast.
Iger stated, “I can’t say where they will end up, but there seems to be real value in having general entertainment combined with Disney+.”
“I had another three months to study this carefully, and the best path to grow this business. The content on Disney+ with general entertainment is a very strong combination from a subscriber acquisition and subscriber retention perspective, and for advertisers,” Iger said Wednesday. “So where we’re headed is a one-app experience that will have Disney+ and general entertainment content.”
This is also a departure from Iger’s previous remarks regarding content for general entertainment. He said that general entertainment, especially on pay-TV, wasn’t a “differentiator,” and gave the impression in February that Disney would gravitate toward franchise content. He stated on Wednesday that his previous comment was “a little harsh.”
On Wednesday, Disney also announced its fiscal second quarter earnings. The company reported revenue of $21.82 billion, which was higher than estimates and was up 13% from the same time last year.
It said its streaming misfortunes had limited year over year, even as it lost supporters during the latest time frame.