Disney Admits It Needs Netflix's Tech Capability To Make Its Streaming Wishes Come True

The world’s biggest entertainment company admitted the superiority of Netflix Inc NFLX on the streaming front. During an interview last week, The Walt Disney Company DIS CEO Bob Iger admitted that despite the success of Disney+ in surpassing 100 million subscribers in a short period of time and now gathering 150 million, Disney is behind Netflix when it comes to technology. When it comes to streaming, Disney is at a disadvantage with higher marketing expenses, along with customer acquistion and retention costs due to not having the technological capabilities of Netflix.

Disney Is On Track To Reach Streaming Profitability But There’s A Bigger Picture

Disney expects its streaming business that includes Disney+, Hulu and ESPN+ will reach the profitable shore by the end of the September fiscal quarter. However, the bigger picture is that streaming needs to grow to become a significant growth driver for the entertainment giant. Besides Disney+, Hulu is also an important part of the company’s streaming vision. Disney is in the process of finalizing its buyout of the 33% stake in Hulu from NBCUniversal. Despite not being global like Disney+, Hulu became a good brand with good content. There’s also ESPN+ with which Disney got sports covered. Last month, Disney made an agreement with Fox Corporation FOXA and Warner Bros Discovery WBD to put all their sports programming under a single broadband roof. According to Variety, Disney, Fox and WBD together control about 85% of the U.S. sports rights market. Together, Disney, Fox and Warner Bros will undoubtedly shake things up in the world of TV sports by concentrating their sports programs under one roof. The structure of the deal resembles to that NBCUniversal and predecessor company to Fox made when they launched Hulu. 

Technology Is The Reason Why Netflix Has Significantly Higher Margins Than Disney 

While speaking at at the 2024 Morgan Stanley Technology, Media & Telecom Conference, Iger stated that Disney needs the technological capability that Netlifx has in order to lower customer acquisition and retention cost, as well as churn rates by increasing engagement. Last but certainly not least, Disney needs to grow its streaming margins by reducing marketing expenses. 

Disney's Businesses Are All Over The Place

As Iger emphasized, Disney is a complex company to run with its business spanning across experience parks, cruise ships, movies, TV and streaming. It is also stepping in the gaming universe as it unveiled in February it will be investing $1.5 billion in “Fortnite” developer Epic Games.  With this strategic partnership, Disney will be making its own gaming universe. 

But before stepping into the future, Disney has a lot of fixing up to do, which is why Iger is back at the helm. To restore the kingdom to its former glory, Disney needs to get its streaming platforms on technical par with Netflix.

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