Does Disney CEO Bob Iger Think His Streamers Can Compete with Netflix Some Day?
During a shareholders call this week, Iger said that Disney had the chance to become the ‘ultimate streaming destination for consumers.’
Disney CEO Bob Iger appears to be feeling fairly confident these days. If that’s the case there’s good reason for it; Iger won another proxy fight against activist investor Nelson Peltz this week, securing enough votes to keep his candidates on the Disney board while he seeks a successor. On Thursday, Iger sat down with CNBC to discuss his victory and future vision for the company, unsurprisingly, Disney’s streaming fortunes came up in the course of the interview. Speaking with David Faber, Iger laid out his plan for Disney+ and Hulu and teased a future in which his company could compete directly with Netflix’s impressive streaming profit margins.
- Iger reiterated that Disney expects its streaming business to be profitable by the company’s fourth fiscal quarter.
- The CEO also said that it would be “great” for Disney to see profit margins on par with Netflix’s someday.
- Iger also said there were “possibilities” in bundling Disney’s streaming services with other entertainment platforms going forward.
Disney+ has faced a protracted struggle in the past year, but it appears to be emerging from its darkest period. The company’s streaming losses in its most recent quarter totaled around $130 million, which is not ideal but is a far cry from the $4 billion per year Iger estimates the company was losing on streaming when he returned to the CEO position in 2022.
Disney expects its streamers to turn a profit by the end of its fiscal fourth quarter this year. But Iger is already looking beyond the achievement of that milestone, and is pondering the best ways to make streaming a “growth” business for Disney, one that provides profit margins that the company and its shareholders “would really be proud of.”
When asked if he eventually foresaw Disney+ and Hulu offering the same profit margins as Netflix, Iger stopped short of giving a definitive yes. Calling Netflix “the gold standard in streaming,” he pointed to the strong hand of content that Disney has as a reason why it could potentially stand toe-to-toe with Netflix’s financial success.
“Pixar and Marvel and Lucasfilm and Disney and the array of content that we have – the acquisition of 20th Century Fox looms large in this process because we get control of Hulu, we get significantly more content, including, you know, ‘Family Guy’ and ‘The Simpsons’ and ‘Avatar’ and I could go on and on,” Iger said. “We get great talent that came with it as well, and a global footprint that is broader and deeper in the number of markets. So I think we have the goods and now we’ve got to execute.”
How Could Disney Wind Up with a Streaming Business as Successful as Netflix?
Iger has a clearly plotted roadmap for getting Disney to a high-profit-margin streaming business. First, he pointed to the need for Disney to boost engagement on its streaming services, which will help it bring down its churn rate. Disney+ and Hulu already have churn rates that are right around or slightly below the industry average, in part because of the value baked into the Disney Bundle. The integration of Hulu content onto Disney+ will also help, giving bundle subscribers more reasons to spend time exploring all the shows and movies available on a single platform. Iger said that thus far, Hulu on Disney+ is doing “extremely well” and promised more information in the company’s next quarterly earnings call.
The CEO also talked about technological improvements the company could continue making, such as its recommendation engines. Indeed, Disney engineers are already trying to improve its streaming platforms in this aspect; when moving Hulu titles onto Disney+, the company made big revisions to its back-end metadata, with the goal of making searches more effective and enhancing content curation and personalization.
The topic of international markets also arose during the discussion. Iger said that the company needed to do a better job of picking its opportunities internationally and that local programming was a big part of the puzzle.
“I think we have to program more smartly, particularly outside the United States, which is to pick the markets where we could really move the needle with really strong local programming,” he said. “We’ve had some success there. We need more success.”
Disney recently sold a majority stake in its Indian linear and streaming operations to a local media conglomerate. The company never quite figured out how to make India a profitable streaming market, particularly when it lost the streaming rights to Indian Premier League cricket matches, which are must-see TV in the country.
It’s not all about competing with Netflix, however. Indeed, Iger sees a possible future in which his company joins with other entertainment-based streamers in joint ventures similar to the sports platform coming from his company, Fox and Warner Bros. Discovery this fall.
However, Iger’s answer seems to indicate more of an openness to ideas than an indication that a big bundling deal announcement is in the offing.
“Yes, I think there are possibilities there. Sure,” Iger said when asked if he could see a day when Disney+ bundled with Max or Netflix.
The long and winding road to streaming success has had its share of bumps for Disney, but 2024 looks to be a pivotal year for the company’s streaming fortunes. Hulu content is now available on Disney+, the company is still on track to see a profit from its streamers in its fiscal Q4, and the path Iger has set the company on could put it in a position to compete with even Netflix’s profit margins some day.
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.”