Disney’s CEO has admitted the company is behind streaming rival Netflix when it comes to technology.
During an interview at the Morgan Stanley Technology, Media & Telecom Conference, Bob Iger said that while the House of Mouse was able to reach 100 million subscribers in a very short space of time – it now has around 150 million – the company lacked the technology to lower customer acquisition and retention costs.
“We’re now in the process of creating all 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. And one of the reasons why their margins are so much more significant than ours is because they have that technology. So, our marketing expenses are significantly higher, our churn rates are higher than they need to be.”
Iger continued that it wasn’t just technology needed to improve churn rates, explaining that US streaming service Hulu will come out of Beta in the US this month, and take on the role the Star brand has internationally. Iger said the increase in the volume of content was rewarded with an increase in customer engagement.
“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 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 said it was unlikely that Hulu would be turned into a global brand because of the success of Star, but that the two would largely mirror each other outside of localisation.
Speaking on the Disney, Fox Corp. and Warner Bros. Discovery sports JV announced last month, which would create a sports platform combining ESPN+ with the networks linear sports output, Iger said the proposals would create a bundle that was “pro consumer”.
“You’ve got a lot of young people who have not subscribed to the multichannel fat bundle, and you have a lot of people that used to be subscribers that lapsed,” Iger said. “We want them in… We’re trying to provide them a less expensive, more focused opportunity.”
The JV’s as yet unnamed product would be marketed as an add on to Disney+, Hulu and Max.
