Bob Iger, CEO of The Walt Disney Company, realized something Star Wars and Marvel fans have known for a long time. The Disney+ streaming service could offer much less new content at higher prices and fans of those two franchises wouldn’t cancel their subscriptions.
Basically, Walt Disney (dis) – Get a free report It needs enough new content in the two main franchises to maintain a cadence of release where it doesn’t make sense for customers to cancel and wait for something new to come out. That’s a slower release schedule than almost every major Star Wars remake, or the Marvel Disney+ version that maintained through its first few years.
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You could argue that Disney already has enough archived content on Disney+ that anyone with young children should subscribe. Pixar’s and Disney’s classic animation library alone justifies the cost, so effectively, Disney just has to serve its teen and adult customers in order to maintain its subscriber base.
This means Disney can slow down content spending, eliminate fringe, lesser-known programming, and really focus on serving its core audience. And it can do these things while raising prices.
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Disney CEO Sees Disney+ Price Increase
Disney has already raised the prices of Disney+ since the service launched, but Iger made clear more was coming during his comments at the company Second quarter earnings call.
“The pricing changes we’ve implemented have already proven successful. We plan to set a higher price for the ad-free tier later this year to better reflect the value of our content offering,” he said.
Iger believes the ad-free tier could be priced at a premium because he sees a huge opportunity in selling more ads. It’s a market he thinks Disney will be able to capture as it moves from having separate apps for Disney+, Hulu, and ESPN to offering a single app experience,
“Despite the near-term macro headwinds for the overall market today, the advertising potential of this combined platform is incredibly exciting,” he said. “And when you dig into the details, you can see why. More than 40% of our native ad pool is addressable, including broadcast, which we expect will continue to grow over time.”
Disney’s streaming services will get less new content
While Iger didn’t say directly that Disney would cut content spending, this was happening. The CEO addressed the problem indirectly.
“It is critical that we justify how much content we create and what we spend to produce our content,” he said.
Iger also explained that Disney can take advantage of ABC, cable channels and other distributions to spread out its content expenses. He’s been doing this because some Disney+ exclusives have been broadcast on cable.
He added, “Secondly, our legacy platforms enable us to broaden our audience and often increase our potential broadcast success while, at the same time, allowing us to amortize our content costs across multiple windows.”
Not that Disney won’t spend billions on streaming, it’s just that it’s going to get a lot more careful than it has been. Maybe that’s good news for tent shows and big-name characters, but bad news for say, a second season of “She-Hulk,” or more Star Wars standalone shows.
“We’re confident we’re on track for long-term broadcast profitability: the strength of our content, the one-app experience, and the massive advertising potential that comes with it, rationalizing the amount of content we make and what we spend. Maximizing window opportunities, realigning our investments internationally. , perfecting our pricing model, and unifying our global streaming business,” said the CEO.
