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Chief Executive Officer Bob Iger on Wednesday cited technology investments as a way for The Walt Disney Company to turn streaming into a revenue stream.
“What we really need to do now is invest in the technology that serves our users. To turn streaming into a profitable business, we have to have a user-first mentality. That’s very clear,” he said at MoffettNathanson. Media and Communication Summit.
Combined with its Disney+, Hulu, and ESPN+ streaming businesses, Disney’s second-quarter operating loss was just $18 million, putting it on the verge of profitability. Operating profit from Hulu and Disney+, which make up the company’s entertainment streaming business, was $47 million.
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Speaking at the conference, Iger said marketing costs for Disney’s streaming business are “too high” because the entertainment giant “has the ability to send very highly customized messages to our users, not just algorithms.” “This is because the technology was not incorporated.” Subscribers who you think might cancel their membership.
Brazil – 2023/07/13: In this photo illustration, the Disney+ logo can be seen displayed on a smartphone. (Photo illustration by Rafael Henrique/SOPA Images/LightRocket, Getty Images) (Rafael Enrique/SOPA Images/LightRocket via Getty Images/Getty Images)
Iger said Netflix, one of Disney’s biggest streaming rivals, is “superior in this regard.” He previously described Netflix as representing the “gold standard” and said Disney needs to bring its streaming service’s technological capabilities on par with its competitors.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| DIS | walt disney company | 102.77 | -2.58 | -2.45% |
Investments in technology will help Disney spend less on marketing, Iger said.
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Entertainment giants need to invest in technology. “It’s basically about creating more things to serve your users and serve your customers. It’s a very subtle thing, but it’s very important. The first screen experience. “It needs to be very customizable and dynamic,” the Disney CEO also said. “Every time a subscriber uses the Disney+ platform, it’s constantly changing.”
HOLLYWOOD, CA – JUNE 9: Bob Iger attends Searchlight Pictures’ “Flamin’ Hot” Los Angeles Special Screening at Hollywood Post 43 – American Legion on June 9, 2023 in Hollywood, California Attend a meeting. (Photo credit: Axel/Bauer Griffin/FilmMagic) (Axel/Bauer Griffin/FilmMagic/Getty Images)
Iger said artificial intelligence will play a key role in that.
Other factors that the Disney CEO highlighted as “important” efforts the company is taking to return its streaming business to profitability include engagement and curbing password sharing between users.
The entertainment giant recently incorporated Hulu into Disney+ for some users, and aims to similarly incorporate ESPN+ into the platform later this year. We aim for more involvement in both movements.
Attendees are seen in the Disney+ logo at the Walt Disney D23 Expo on September 9, 2022 in Anaheim, California. (Patrick T. Fallon/AFP via Getty Images/Getty Images)
Meanwhile, Disney+ users in some markets will see the company’s password crackdown begin in June. The planned tactic has drawn comparisons to Netflix, which pioneered the curbing of password sharing with its own efforts last year.
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Engagement helps address churn, an issue Disney and other streamers are grappling with.
Disney said it expects its combined streaming business to become more profitable in the fourth quarter, ultimately leading to double-digit profit margins over the long term.
At the end of the second quarter, the company had 228.6 million subscribers across its platforms.
