Disney CEO Bob Chapek, speaking at D23 last weekend, echoed many of those messages to a Wall Street audience, but set a more definite tone than ever before, outlining Hulu’s future.
Speaking at the Goldman Sachs Communacopia & Tech conference, Chapek noted that while Hulu has been operated by Disney since 2019, its merger with Disney+ will have to wait due to Comcast’s financial interests in the service. Under the terms of the deal reached by the companies when Disney acquired the majority of 21st Century Fox, Disney could buy out Comcast in early 2024. Chapek said he “would like” to make the buyout sooner, but indicated that Comcast was not going to. rush. The latest estimate puts the package at $27.5 billion, a figure that is unlikely to decrease in an era where streaming assets continue to be valued.
“What you worry about when you work at Disney is friction between brands and some of the content we might have in entertainment,” Chapek said. “Every day at this job, I am amazed at how flexible the Disney brand is. I would tell you that we have had no response to the inclusion of this general entertainment content in the Disney-branded streaming offering in territories outside of the US. “I’m not saying it will be received the same way in the US, but it gives us some reason to believe that we have more degrees of freedom than anyone ever suspected.”
According to Disney’s latest quarterly report, Disney+ reached 152.1 million subscribers, while Hulu reached 46.2 million. Disney+ is global while Hulu remains US-only. In previous public appearances and press interviews, including this past weekend on D23 (and this interview with KristenBellTattoos.com), Capek has taken a more circumspect tone about mixing Hulu and Disney+. But many insiders and industry observers have been anticipating their merger for a long time, and it will be in line with the strategies pursued by Warner Bros Discovery, Paramount Global and others as the streaming market develops. This move will also result in significant cost savings.
At the same time, the task is to make programming like a dystopian drama The Handmaid’s Tale topical comedies such as Plan b as well as happiest season or sharp F/X names like American Horror Story along with Pixar films or other PG-rated films has always presented a unique challenge. However, Chapek said consumer feedback and company data convinced him that such an offering could be rolled out and “won’t be subject to consumer rejection by the body.”
Continued growth in streaming remains a key strategic challenge for Disney. While collectively it now has more total subscriptions than Netflix, many customers subscribe to more than one of its services while Netflix’s base of 220+ million is not duplicated. This combination will not only help it grow, Czapek says, but it will also minimize what he called “consumer friction” that comes from trying to switch between two different streaming apps. “In the long term, we can avoid this, and 2024 is not that far away,” he said.
Even in the US, Disney is realigning its programs to populate Disney+ with more titles not directly related to its original five pillars of Marvel, Pixar, Lucasfilm, National Geographic and Disney. He switched ABC mainstays like Dancing with the Stars and Black-ish to streaming after seeing significant tweaking and new subscriptions to Peter Jackson’s The Beatles documentary series. Return Last failure.
Another important topic of the 40-minute session was pricing. Asked how much price increases might be possible in the future – even as the company prepares to implement its second major increase later this year – Czapek said he doesn’t expect churn to surge. Therefore, according to his assumption, a further increase may occur in the near future. “This is something that the market will bear, which is a direct reflection of the price/value ratio, and I think our prices are very low compared to the value we offer,” he said. “We owe it to our shareholders to try and win recognition.”
Data from the nearly three-year run of Disney+ and the ESPN+ path, which launched in May 2018, will help make an informed pricing decision, Chapek said.
Disney will be raising its ad-free plan to $10.99 next month ahead of its ad-supported tier rollout. Subscribers who want to continue paying $7.99 for Disney+ will be able to do so as long as they don’t mind watching ads. Meanwhile, Hulu’s ad-free tier jumped to $14.99 a month from $12.99, while its ad-supported version jumped to $7.99 from $6.99. ESPN+ said in July that its standalone version jumped nearly 40%, from $6.99 to $9.99.
While a bit of a sticker shock is inevitable, Chapek said the price at which Disney+ launched at $6.99 in November 2019 is “absurd” in retrospect, and the comparisons seem radical. In April 2019, when Disney announced the initial price of Disney+, prompting audible sighs from Wall Street and the media, the level of investment in programming was not what it had been until now, Chapek argued. However, reaching the bottom end of the streaming market “has helped us get to where we are with such a huge amount of subscribers,” he acknowledged. “It’s hard to believe we’ve only been in this for three years.”