Disney boosted by stellar streaming growth, with beta combined Hulu/Disney+ to launch in December

Source: Disney

Disney is now clearly “on the path” to build a profitable streaming business by the end of next year after a very strong final fiscal quarter of subscriber growth, according to CEO Bob Iger.

Reflecting on a very strong end to its fiscal year, with growth in both streaming and parks and experiences, Iger also said revealed that Disney would introduce a combined Hulu and Disney+ offering in beta version before the end of this year, in time for users to accustom themselves to it ahead of the Christmas period.

A one-app experience will be rolled out domestically combining Hulu and Disney+ on a trial basis, which Iger said would result in increased engagement and lower acquisition costs.

“We will launch a beta version…in December,” he said, with an official launch to follow in spring next year.

Iger said that the company would also move forward with plans to tackle account sharing, although he said that the financial impact would not be felt until 2025.

Iger said that the growth of Disney+ reflected the strong content released in the period. He noted that the ad-supported version grew to 5.2 million with over half of new US Q4 subs choosing an ad-supported product.

He said that Disney would turn ESPN into the “preeminent sports platform” and said the company was exploring strategic partnerships to take this vision forward. He said that ESPN grew in revenue and income over the year and had delivered its best viewership in over four years. A gambling offering, ESPN Bet, will launch next week.

Iger said that a combined Disney+, Hulu and ESPN streamer in the future would deliver great results for the company.

Iger said that it was “inevitable” that ESPN would become a streaming service but said that it would be available both as part of a bundle and à la carte.

“While we still have work to do…our progress has moved beyond the phase of fixing,” said Iger, with growth now in sight.

Iger said “all three of our businesses” – entertainment, sports and experiences – had delivered, with the restructuring of the company delivering greater cost savings.

Answering analyst questions on cutting content spend, Iger said that Disney had “lost focus” in the past and would now focus on “quality” rather than “quantity” in producing content.

Streaming profitability by end-2024

Disney+ added close to seven million core subscribers in the fourth quarter, and Disney says it expects its combined streaming businesses to be profitable by the fourth quarter of next year. ARPU increased on price increases and higher ad revenue.

Growth in Disney+ subs came from international markets, which (excluding Disney+ Hotstar in India) delivered 11% quarter-on-quarter growth, taking the international total to 112.6 million.

The domestic US Disney+ base grew by only 1% to 46.5 million, while Disney+ Hotstar saw its base decline by 7% to 37.6 million. Iger said the company was looking at its options but wants to stay in the Indian market. “We are looking to see if we can strengthen our hand,” he said.

Hulu, which will be wholly owned by Disney when it acquires the 33% stake held by Comcast for US$8.61 billion, was flat quarter-on-quarter, however with growth in combined live and SVOD customers offsetting a modest dip in SVOD-only subs. Hulu’s total base at the end of September stood at 48.5 million, including 4.6 million combined live TV and SVOD customers.

Overall Disney revenues for the full year grew by 7% to US$89 billion, while operating income was up 6% at US$12.9 billion.