Technology and media conferences offer a fantastic chance to hear updates about big media companies directly from top executives. Disney CEO Bob Iger emerged from his C-suite to attend the 2024 Morgan Stanley Technology, Media and Telecom conference this week and was all smiles regarding the progress of Hulu’s integration with Disney+ into a “one-app experience,” which will soon exit its beta testing phase and become a permanent fixture of the company’s flagship streamer.

• Iger revealed that around 50% of new Hulu subscribers are now bundling the streamer with Disney+.
• Bundled subscribers have a lower churn rate than those who subscribe to Disney services individually.
• The CEO also called his company’s carriage deal with Spectrum a “win-win,” and intimated similar deals with other cable distributors could be forthcoming.

Disney first began integrating content from Hulu into Disney+ in December, which the company described as a large-scale beta test for customers who subscribe to both services. That allowed Disney+ to test out things like its parental controls, ensuring they were strong enough to keep kids away from more mature Hulu content that’s full of violence, adult language, or sexual situations. Iger said Tuesday that the data coming from the beta test was “really encouraging” in this regard and that the full experience will be “much more integrated” when it leaves the beta phase.

Disney’s CEO also discussed how good the semi-merging of Disney+ and Hulu has been for keeping customers engaged. He revealed that “about 50% or more” of new Hulu subscribers were bundling the streamer with Disney+, which customers can do for as little as $2.99 per month more if they pick ad-supported plans of each service. While Hulu’s content is now available as part of Disney+, the one-app experience does not offer all of the titles that are available on Hulu due to various licensing agreements. That is not expected to change once the experiment exits the beta phase.

Customers who bundle are less likely to churn away from their chosen streaming services, according to Iger, so the number of new customers who are deciding to package Disney+ and Hulu must be encouraging. According to data from Antenna, Disney+ has the second-lowest churn rate among top streaming services, but Hulu’s is slightly above the industry-wide average, so getting more churn-reluctant customers on both services is an undoubted win for Disney.

Will Disney Enter More Carriage Deals Like its Pact with Spectrum TV?

Iger was also given the opportunity to speak about his company’s carriage deal with Charter Communications, which operates the Spectrum TV cable service. That deal allows Spectrum TV customers to access Disney+ with their cable subscription at no additional monthly charge, while Disney collects a wholesale rate from Charter for all of the cable customers who take advantage of this freebie. Disney initially resisted the deal, wanting to keep its streaming content from being associated with traditional cable, but its thinking on the arrangement has apparently turned around in the months following the agreement.

Iger didn’t mince words about the deal, calling it a “win-win” and saying there were “no cons” involved, other than the relatively minor point that wholesale customers paid Disney less than customers who subscribed to Disney+ on their own. But he also pointed to the additional barriers between Disney and these customers which prevent the Mouse House from engaging directly with the viewer if they’re about to cancel their service; many streamers offer subscribers who are on the verge of canceling a special discount to try to keep them signed up, for example.

“We need to have access to consumers,” Iger said. “We need to know when they might be potentially a consumer that’s about to lapse. We need to have the ability to engage with them directly to basically keep them as subscribers and essentially not lean into churn.”

From his words, it sounds as if Iger is open to more carriage deals similar to his company’s pact with Charter, especially if Disney has a way to engage directly with these viewers if they are about to cancel their service. That means that free access to Disney+ could be coming to a cable provider near you, as Disney tries to weather the transition from a cable-first TV business to a digital-first one.

“I think almost everything has to be turned into a digital platform these days,” Iger remarked. “And while linear isn’t going away immediately, we know that linear is suffering from the effects of disruption and is just generally speaking, not a growth business for the industry. So we’re trying to create essentially a smooth transition.”