In Disney’s Push for Streaming Profitability, More Price Hikes Are Imminent

Hulu added 100,000 subscribers to reach 48.3 million, and ESPN+ lost 100,000 subs to fall to 25.2 million. As a way to increase subscriptions and profitability, Disney announced it is exploring ways to address password sharing, with new monetization tactics rolling out in 2024.

A non-linear growth path

Iger made headlines in July for telling CNBC that Disney’s linear TV networks, including ABC and FX, “may not be core” to the company’s business. Since then, speculation about the company selling the linear networks has run rampant; however, the CEO also noted that DTC would be taken into consideration before any future changes are made.

“Clearly, if we are to do anything significant in terms of strategic direction for the linear nets, we have to keep in mind the need for content ultimately fuels our DTC businesses,” Iger said, pointing to Hulu as an example. “So anything that has to be done would be done with an eye toward maintaining a rich flow of content to fuel our growth business, and that will be streaming.”

The CEO went on to note that there would also be complexity in “decoupling the linear nets from ESPN,” but added that it wouldn’t be something the company couldn’t “contend with.”

In terms of bringing ESPN’s flagship channels to the DTC business, Iger said it “is not a matter of if but when.”

Iger gets upfront

Elsewhere on the call, Iger noted that the company is fresh off of closing its upfront season, where streaming was a star.

More than 40% of the total upfront dollars committed this year went toward streaming and digital, with Disney+, ESPN+ and Hulu leading the way, which is similar to the company’s performance last year.

Overall commitments were “in line” with the prior year, according to the company. In 2022, Disney had its strongest upfront to date, receiving $9 billion in commitments.

Iger also made a note of addressing the writers and actors strikes. The CEO recently drew backlash for comments that were dismissive of the union actions, telling CNBC that strikers weren’t “realistic” with their expectations.

During the call, Iger said “nothing is more important” to the company than its relationships with the creative community, adding, “It is my fervent hope that we quickly find solutions to the issues that have kept us apart these past few months. And I am personally committed to working to achieve this result.”

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