Disney Aims to Bridge Technological Gap with Netflix, Enhances Streaming Services
Disney’s Chief Executive Officer has acknowledged that the company lags behind its streaming competitor, Netflix, in technological advancements.
In a conversation at the Morgan Stanley Technology, Media & Telecom Conference, Bob Iger remarked that despite Disney’s rapid growth to 100 million subscribers and its current standing at approximately 150 million, the firm is challenged by inadequate technology that increases the costs associated with acquiring and retaining customers.
“We’re now in the process of creating and developing all of that technology. And obviously, the gold standard there is Netflix. We need to be at their level in terms of technology capability. One of the reasons why their margins are so much more significant than ours is that they have that technology. So, our marketing expenses are significantly higher, and our churn rates are higher than they need to be.”
Iger also mentioned that there were solutions to improving retention rates besides enhancing technology. He highlighted the evolution of Hulu, a US streaming service expected to exit its beta phase in the US shortly and will fulfill the role played by the Star brand on an international level. Iger observed that augmenting content volume has led to greater customer involvement.
“It also gives the ability to put that content into a Disney+ experience without putting the brand at risk. It gives us the wall that we need, and it gives us the ability to give the consumer basically a choice in terms of parental controls, and that is really working. That data that we’re seeing of the Hulu on Disney+ is really encouraging for us.”
Iger clarified that transforming Hulu into a global entity was unlikely due to Star’s success, though the two services would share many similarities, except for localized content.
Discussing the recently announced sports joint venture between Disney, Fox Corp., and Warner Bros. Discovery, which aims to integrate ESPN+‘s offerings with traditional linear sports broadcasting, Iger expressed optimism about the venture’s consumer-friendly nature. “You’ve got a lot of young people who have not subscribed to the multichannel fat bundle, and you have a lot of people who used to be subscribers who lapsed. We want them in. We’re trying to provide them with a less expensive, more focused opportunity,” Iger said.
This new venture, which has yet to be named, will be offered as an additional feature to Disney+, Hulu, and Max subscribers.
Ragul Thangavel
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