Bob Iger believes. On a call with investors on Wednesday, the Disney CEO said that the company’s goal is to make its streaming business profitable by the end of next year. A big component of that: a new service that combines Disney+ and Hulu, set to launch next spring.
This is a goal Disney has been working on for a while, ever since it launched its Netflix competitor, Disney+, in 2019. The company has poured millions of dollars into acquiring subscribers, experimenting with ad-supported tiers and service bundles—various combinations of Disney+, Hulu, and ESPN+—and changing prices in a quest to lure viewers and keep them.
If Wednesday’s call is any indication, the plans are working. Disney+ added 7 million new subscribers in the past three months, most of them on ad-supported tiers, bringing the total worldwide subscriber base to 112 million. That may seem small compared to the 247 million customers Netflix boasts, but the gains look pretty good when considering Netflix added 9 million subscribers while Max (formerly HBO Max) lost 700,000 in the same amount of time.
Citing successes like The Kardashians and the Star Wars series Ahsoka, Iger said he was confident that Disney’s streaming offerings could hit profitability by the end of 2024, and “our recent performances solidifies that we’re on that path.”
Going into the investor call, Disney was facing a headwind. In August, the last time the Mouse House detailed quarterly earnings, it reported a loss of more than 11 million Disney+ subscribers worldwide. It had shed subscribers the quarter before, too. Overall, the streaming service lost $512 million that quarter, bringing total losses to $11 billion since the launch of Disney+ in 2019. At the time, the company said it would pivot from the expensive work of trying to attract new subscribers and focus on more lucrative pricing structures.
That’s why, on October 12, the cost of its ad-free plan jumped from $11 per month to $14. At the same time, Hulu’s prices rose from $15 per month to $18. Other streamers have made similar shifts. Last month, Netflix announced price hikes while showing subscriber growth amid password-sharing crackdowns. Apple TV+ also increased prices. Max has kept its prices pretty consistent but hasn’t seen much in the way of subscriber gains.
The new service combining Disney+ and Hulu will launch in beta next month, Iger said, to give parents a chance to figure out which configuration works best for their household, and will roll out fully in March. It’s the result of Disney’s reported $8.6 billion move last week to acquire the third of Hulu formerly owned by Comcast, putting Hulu solely in Disney’s control. The deal is expected to close by the end of the year.
Iger didn’t reveal the pricing structure for the new combined service, but it seems likely there will be premium and less expensive ad-supported models, the latter of which have been a boon to streamers. “Consumers are showing a willingness to downgrade to cheaper ad-supported tiers of streaming services” versus leaving them altogether, says Sarah Henschel, a principal analyst at research firm Omdia who watches the streaming market closely. The influx of new Disney+ subscribers opting for ad-supported streaming reflects that.
Iger also spoke of plans to beef up Disney’s ESPN offerings to shift the focus of its film and TV output. “At the time the pandemic hit,” he said, “we were leaning into a huge increase in how much we were making, and I’ve always felt that quantity can be actually a negative when it comes to quality.” (Translation: Maybe a few less Marvel or Star Wars shows.)
The Disney CEO also, somewhat surprisingly, said that the company is licensing some content to Netflix and will continue to—though, he added, the company will never part with its marquee IP. “Disney, Pixar, Marvel, Star Wars, for instance, are all doing very well on our platform,” he said, “and I don’t see why, just to basically chase bucks, we should do that when they are really important building blocks to the current and future of our streaming business.”
