Bob Iger (Shutterstock photo)
Disney CEO Bob Iger: We Need to Be at Netflix’s Level
March 5, 2024
Since coming back to The Walt Disney Co. as CEO in November 2022, Bob Iger has pushed through $7.5 billion in cost savings (and 7,000 layoffs) companywide, some of which has come out of the direct-to-consumer streaming business. With the DTC segment projected to be profitable by the fourth quarter, Iger said management’s goal remains to reduce subscriber churn (members not renewing service) and increase platform scale globally.
“The task at hand was a little bit more significant or more challenging than I expected it would be,” Iger said March 5 as keynote speaker at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. “Fifteen months later, I feel great about where we are.”
Iger said that upon his return to Disney, one of his first steps was to put streaming under new management, including naming longtime studio bosses Alan Bergman and Dana Walden as co-chairs of Disney Entertainment. Last April, Hulu executive Joe Earley replaced Michael Paull as head of all DTC businesses.
Iger said that since the launch of Disney+ in 2019, the company rushed to get the service up to get scale, despite lacking the requisite technology to reduce subscriber churn, and reduce marketing expenses, among other challenges.
“We are now in the processes of 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,” Iger said.
Indeed, Netflix generated $5.4 billion in profit on revenue of $33.7 billion in 2023. By comparison, Disney’s DTC business segment generated a fiscal-year loss of $1.7 billion on revenue of $21.6 billion.
Tech prowess not only enhances DTC functionality, it also improves margins and churn rates, both of which Iger admitted Netflix remains the market leader in doing.
“[Netflix] has that technology, so our marketing expenses are significantly higher, [and] our churn rates are higher than they need to be,” Iger said.
In addition to technology, the CEO said DTC success revolves around consumer engagement and lowering distribution expenses, which is why Disney went all in acquiring ownership and control of Hulu (from minority owner Comcast), which is called Star outside of the United States.
Hulu is currently set to be included in the Disney+ app after exiting beta testing this month.
“We are not only increasing the volume of content on the platform, but with that comes significantly more [user] engagement,” Iger said, adding that greater access to Disney, Pixar, “Star Wars” and Marvel movies, in addition to bundling Hulu with Disney+, reduces churn significantly.
“That’s a path to profitability,” he said.
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