• The move is to enhance subscriber growth, retention and advertising
  • Disney+ currently owns 66% of Hulu, while the rest is owned by Comcast
  • Disney+ lost 4 million subscribers in the first three months of the year

Disney+ is reportedly planning to add Hulu content to its streaming platform later this year in an attempt to compete against rival Netflix.

CEO Robert Iger said Wednesday the company would offer a "one-app experience" in the U.S., with Hulu content added to the flagship streaming service. While Hulu content will be incorporated into Disney+ for bundled subscribers, the streaming platform's services, along with ESPN+, will remain standalone for now, CNBC reported.

"We're bullish about an app that goes beyond (family-friendly programming on) Disney+ that includes quality curated general entertainment," Iger said, noting that a broader mix of programming will enhance subscriber growth, retention and advertising for the streaming platform.

Disney+, which streams a variety of Disney content along with Marvel and Star Wars movies and series, has been attempting to attract more viewers beyond families with young kids.

Meanwhile, Hulu offers a mix of adult-centric original content and older titles from Disney's film and TV library. With around 48 million subscribers in North America, Hulu, unfortunately, has virtually no international presence.

"This is a logical progression of our DTC offerings that will provide greater opportunities for advertisers, while giving bundle subscribers access to more robust and streamlined content resulting in greater audience engagement and ultimately leading to a more unified streaming experience," Iger said during Wednesday's earnings call.

While Iger has not provided a date for the incorporation, he added there will be an unspecified price increase for the ad-free version of Disney+. The move is aimed at driving more people to sign up for the cheaper version with ads. The company previously added $3 to its ad-free streaming tier's monthly fee in December. Once the service's prices surge, the free and ad-supported tiers are expected to cost more than $11 and $8 respectively.

Disney has also been mulling buying all of Hulu. Currently, it owns 66% of Hulu, while the rest belongs to Comcast, the parent of NBCUniversal, which has its own streaming service--Peacock. In 2019, the two companies agreed on a deal under which Disney can buy Hulu's stake at $5.8 billion (or Disney could sell its stake to Comcast for at least $27.5 billion) by January 2024.

Iger said discussions are underway between the two companies, adding, "I can't really say when and how that relationship ends up, but there seems to be real value in having general entertainment combined with Disney+."

In its fiscal second-quarter earnings, also released Wednesday, the company reported $21.82 billion in revenue, narrowing its losses by $400 million.

The flagship streaming service also lost 4 million subscribers in the first three months of the year in the wake of a cost-cutting drive, after witnessing a 2.4 million decline in subscribers in the final quarter of 2022.

Disney+ currently has 157.8 million subscribers worldwide, second to Netflix.

Netflix, on the other hand, added 1.75 million new subscribers in the first quarter of 2023, compared to a massive 7.66 million in the final quarter of 2022. The streaming giant saw a 100,000 rise in paid members in the U.S. and Canada alone. Last year, the company undertook measures to expand its customer base, including limiting password sharing and launching an ad-supported tier of service.

This comes at a time when Disney is dealing with a turf war with Florida Governor Ron DeSantis, a writers' strike and company-wide layoffs reaching 7,000 globally.

Addressing Disney's ongoing political battle with DeSantis, Iger called the DeSantis' efforts 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 as taking that position we are merely exercising our right to free speech," Iger said.

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