The Walt Disney Co. is striving to make its streaming business more like Netflix, according to Chief Executive Bob Iger. However, the company’s recent decision to increase prices may have unintended consequences.
As part of its earnings report on Wednesday, Disney announced significant price hikes for its commercial-free Disney+ and ad-free Hulu subscriptions. Disney+ will see a price increase of 27%, while Hulu will jump by 20%.
These price increases, which were anticipated since May, couldn’t have come at a worse time. Disney has been cutting costs across its operations, including streaming content, and is now facing ongoing Hollywood strikes that will cause delays in releasing new movies and shows.
Price hikes have become commonplace for streaming services, and Iger expressed his desire to mirror Netflix’s success. He acknowledged that Disney’s streaming business is still relatively young, not even four years old yet.
Iger mentioned that Disney would love to achieve the profit margins that Netflix has accomplished over a longer period. He attributed Netflix’s success to its ability to balance investments in programming with pricing and marketing strategies.
Overall, while Disney aspires to rival Netflix in terms of profitability, these recent price hikes may prove to be a setback for its streaming business.
Disney hopes to follow in Netflix’s footsteps in building a successful streaming business. However, their recent decision to increase prices coincides with challenges that may hinder their progress. Only time will tell if Disney can overcome these obstacles and achieve the desired margins similar to those of its streaming rival.
A Look at Disney’s Streaming Strategy
However, while Netflix is already profitable, Disney is still working towards achieving streaming profitability by the end of fiscal 2024. Disney CEO, Bob Iger, acknowledges that the company has a long way to go before reaching Netflix’s profit margins but remains optimistic about improving its margins in the coming years.
However, as AI poses a threat to various industries, including media, Disney must also consider the demands of striking writers. These writers seek to regulate the use of AI in scriptwriting to prevent a decline in content quality.
In conclusion, Disney is making strategic moves in the streaming landscape by adopting strategies employed by Netflix. While there are challenges ahead and profitability is yet to be achieved, Disney remains committed to improving its margins and leveraging technologies like AI to enhance viewer engagement.