May 10, 2023 - Economy

Hulu content coming to Disney+ in "one-app experience" by end of year

Photo illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images

Disney chief executive officer Bob Iger said Wednesday the company plans to launch a "one-app experience" for streaming subscribers in the U.S. that combines the family-friendly content of Disney+ with Hulu's general entertainment content.

Why it matters: The move sheds light on Disney's streaming strategy as it stares down a critical deadline that will force it to make sweeping decisions around Hulu's place in its long-term streaming strategy.

  • Beginning next year, Comcast can force Disney to buy its 33% stake in Hulu for a minimum of $27.5 billion or Disney can tell Comcast to sell it.

Details: The company will continue to offer Disney+, ESPN+ and Hulu as standalone subscriptions, but Iger told investors on an earnings call Wednesday that combining Hulu and Disney+ into one unified app will provide greater engagement and advertising opportunities.

  • While Iger admitted that it's not been "fully determined what will happen," he did say that Disney has looked more closely at the growth of its streaming business and "it's clear that a combination of the content that is on Disney+ with general entertainment is a very positive is common is a very strong combination."

Be smart: Disney is under enormous pressure to prove to Wall Street that its streaming efforts will soon be profitable.

  • It lost 4 million subscribers to its flagship service Disney+ last quarter, due mostly to losses of people subscribing to its Disney+ Hotstar offering in India. (Disney lost the right to stream Indian Premier League cricket matches, which has impacted subscriber retention.)

Yes, but: The entertainment giant did prove to Wall Street that its efforts to become more efficient with various cost-cutting measures, including reduced content spent and layoffs, is beginning to pay off.

  • Disney reduced the amount it lost on streaming last quarter by $400 million.
  • Speaking to investors, Disney chief financial officer Christine McCarthy said that moving forward, the company intends to produce lower volumes of content.
  • She added that Disney will remove some content from its streaming platforms, which will result in an impairment charge of $1.5 billion to $1.8 billion. Rival Warner Bros. Discovery has also written off content costs as it looks to become more profitable.

The big picture: Iger also addressed Disney's ongoing political battle with Florida Gov. Ron DeSantis, calling DeSantis' attempts to go after the company "a matter of retaliation."

  • "This is about one thing and one thing only and that's retaliating against us for taking a position about pending legislation. And we believe that in us taking that position we are merely exercising our right to free speech," Iger said.
  • DeSantis has been trying to strip Disney of its special governance powers over the company's decision to oppose the governor's "Don't Say Gay" bill, which he signed into law last year.
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