Despite the recent struggles of Disney+, Disney CEO Bob Iger affirmed during the company’s quarterly earnings call on Wednesday that while streaming remains his top priority at this time, the company needs to change the way it approaches this ever-changing aspect of the business. While Disney’s streaming strategy in the past has been to maximize its number of global subscribers, the newly returned Iger expressed what many onlookers have been noting for nearly a year, that the focus needs to be on generating revenue, not bulky subscriber totals.
Despite being the second largest streamer in terms of subscriber numbers behind only Netflix, Disney+ is not immune to the ups and downs of the industry. The company reported that its flagship streaming service had lost 2.4 million subscribers in the first fiscal quarter of 2023, including its first drop in international subscribers ever. Much of this was likely tied to Disney’s decision not to renew its streaming rights for the incredibly popular Indian Premier Cricket league, and instead secure the local broadcast rights. Given the extremely low subscription cost in India, this move is aimed at generating more revenue for the company, even if it leads to pullbacks in streaming.
This drop in subscribers, combined with the slow start to its ad-supported subscriber tier, comes don’t he heels of Disney losing $1.5 billion in the previous quarter, ultimately leading to Iger being brought back to replace now-former CEO Bob Chapek. Because of this new economic outlook for the company, a pullback on its general entertainment budget, including even potentially selling Hulu, seems like an inevitable move.
But even among this recent deluge of bad news for the streamer, Iger remains confident that it can get through these issues. The executive, who returned to his role as Disney CEO in November, seems determined to sail the good ship Disney+ in another direction. He said in the earnings call that streaming is his “No. 1 priority” and that he’s “drilled down into every facet of our streaming business.” It seems that his initial findings have him believing that one of the main issues with Disney’s streaming strategy has been its focus on constantly growing its subscriber base.
“First of all, we were as a company in a global arms race for subscribers,” he said. “And it was — the number of subscribers that have become kind of the primary measurement of success not only here in the company, but among in the investment community. And in our zeal to go after subscribers, I think we might have gotten a bit too aggressive in terms of our promotion and we are going to take a look at that.”
Iger attributes some of Disney’s focus on gaining subscribers to the “arms race” nature of the streaming industry. When there are so many platforms competing for users’ attention, grabbing as large a percentage of the audience as possible can seem like the clearest way to achieve financial success. In reality, however, things like Disney’s content and specific pricing may be more to blame for their financial woes. In addition to rethinking its approach to marketing, Iger also mentioned wanting to reassess the pricing of the service. If the streamer were to price itself more accurately, it would be able to make up some of its lost revenue. Iger mentioned that raising the price of the service in the past — including as recently as last December — didn’t result in a significant number of lost subscribers, so another price hike may be coming sooner than many would expect if the company can find no other ways to recover some of its financial losses.
As part of this shift from a subscriber-focused approach, Disney+ will become one of the many companies to stop providing subscriber forecasts. While this is certainly a loss for those interested in seeing transparent reports of where streamers think they are headed, it is a move that ultimately doesn’t harm the average consumer very much.
While Disney+ may be in a rut right now, it has billions of dollars in resources and Bob Iger on its team. Iger is known for reigning over some of the biggest boom periods in Disney’s history, so he’s likely the man for this very crucial time for the company. Disney isn’t used to being in financial trouble in the recent past, so it needs to be willing to make changes if it wants to turn things around for itself. And with a new/returned CEO and new strategies for streaming, it seems like the Disney ship just might be ready to turn around.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”