The Iger+ Streaming Strategy
Chapek was fired as CEO of Disney's streaming business. The company has more than 164 million subscribers. Direct-to-consumer revenue declined from $5.1 billion in the previous quarter to $4.9 billion. Operating expenses jumped from $0.8 billion to $1.5 billion as Disney pushed to bring all its titles back in-house. It cost the company $200 million in Q1 alone. Average revenue per user decreased in various regions. It's unknown how usage and average revenueper user breaks down across all three platforms in its core market.
Bob Chapek was fired as C.E.O. He was responsible for the growth of Disney streaming. Bob Iger bought BAMTech, the streaming tech company, and launched Disney+ in 2019. Disney has 164 million subscribers and has enjoyed significant growth on ESPN+ and Hulu. Direct-to-consumer revenue declined from $5.1 billion in the previous quarter to $4.9 billion. Operating expenses jumped from $0.8 billion to $1.5 billion, in part because Disney brought all its titles back in-house.
Disney+ is the flagship streaming house. Chapek wanted to introduce more adult content to Disney+. Iger always envisioned Disney+ as an extension of everything that defines the brand: affordable, accessible, family-oriented, and multigenerational. Disney's audience growth is slowing in the U.S., with just 1.9 million subscribers added in Q4. Netflix has 73 million U.,S. and Canada subscribers. If Disney doesn't adjust its D+ strategy, its subscriber growth expectations will need to be tempered.
Hulu is the second pillar of the Disney house. Hulu is expected to be acquired by Disney in full as early as 2024. It's the third most-valued video subscription service by consumers. About 87 percent of users are satisfied or very satisfied with Hulu. Bob Iger should make it easier to open Hulu and ESPN+ from within Disney+ to improve interoperability within their own platforms. The perceived value of Disney streaming services may increase if they are integrated. The Disney Bundle is essentially three services (Disney, Hulu, and Disney+. for the price of two).
Dan Loeb wants Disney to spin off ESPN. Bob Iger has long championed the network. Sports rights are getting more expensive. ESPN's linear base has declined from more than 100 million households in 2011 to less than 75 million in 2021. Ige is retiring in 2020. He will not be able to fix everything that ails Disney in the first place. He is only serving a two-year term. Disney’s linear assets will remain valuable into the near future. But streaming is the future of entertainment. It is not clear if Disney will be successful in this market.
