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Disney may not be the happiest streamer in the world any longer.
During the May 2023 earnings call on Wednesday, CEO Bob Iger said, “We realized that we made a lot of content that is not necessarily driving sub growth, and we’re getting much more surgical about what it is we make. So as we look to reduce content spend, we’re looking to reduce it in a way that should not have any impact at all on subs.”
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Iger said when Disney+ launched three and a half years ago, the goal was still growing global subscribers and flooding the “digital shelves.” As with the rest of the industry, that has changed to focus on revenue, and it’s led to cost-cutting and finding content that will actually grow subscribers. That includes big tentpole projects, specifically ones that first played in theaters.
One of the challenges Iger noticed was with marketing, and he said that under the old model, they were spreading themselves way too thin and not “allocating enough money to even market them when they came on the service,” and that includes some of the studio’s upcoming biggest theatrical releases like “The Little Mermaid,” “Guardians of the Galaxy Vol. 3” and “Elemental.”
“When you make a lot of content, everything needs to be marketed. You’re spending a lot of money on marketing that are not going to have an impact on the bottom line except negatively due to the marketing costs,” he said. “We believe we actually have an opportunity to lean into those more, put the right marketing dollars against it, allocate more, or basically away from, programming that was not driving any subs at all. This is part of the maturation process as we grow into a business that we had never been in. We’re learning a lot more about it, specifically we’re learning a lot more about how our content behaves on the service and what it is consumers want.”
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CFO Christine McCarthy cited Iger’s vision for “cost-cutting initiatives”…
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