Hulu will be fully combined into Disney+ next year, execs say

Hulu and Disney+ are officially combining into a single standalone app Disney, CEO Bob Iger announced during the company’s Q3 earnings call Wednesday.

The combined app, which will roll out next year, comes after Disney acquired full control of Hulu from Comcast in June, and it marks the latest move from Disney to streamline its operations amid intense competition in the streaming business. It’s unclear if Hulu will remain available as a standalone app going forward.

“By creating a differentiated streaming offering, we will be providing subscribers tremendous choice, convenience, quality and enhanced personalization, while at the same time continuing to grow profitability and margins in our entertainment streaming business through expected higher engagement, lower churn, operational efficiencies, and greater advertising revenue potential,” Iger told investors.

The news comes as the company’s DTC division, which houses Disney+, ESPN+, and Hulu, saw a 6% quarterly increase in revenue, along with continued subscriber growth. Core Disney+ subscribers reached 128 million in Q3, up 1.8 million from the prior quarter, and average monthly revenue per paid subscriber from Disney+’s domestic business also grew slightly, from $8.06 to $8.09.

Hulu’s subscriber base also added 800,000 subscribers, bringing subscriber total to 55.5 million in Q3; SVOD-only average revenue per subscriber increased from $12.36 to $12.40. ESPN+, meanwhile, stayed stagnant at 24.1 million subscribers, and ARPU decreased from $6.58 to $6.40.

In an earnings release, the company wrote that it expects subscribers to Disney+ and Hulu to increase by over 10 million in Q4, but Disney will, like Netflix, no longer report streaming subscriber data each quarter, said Hugh Johnston, senior EVP and CFO.

Disney’s overall revenue, which also includes its TV business and its theme-park business, of $23.7 billion, up 2% from a year ago.

Touchdown: As it prepares for the August 21 debut of its $29.99-a-month ESPN streaming app, ESPN is acquiring the NFL Network and NFL RedZone, as well as the NFL’s fantasy sports product, the network announced Tuesday. (As part of the deal, the NFL will get a 10% stake in ESPN.)

Thanks to the deal, Disney will bundle the NFL’s streaming service, NFL+ Premium, with ESPN and its other owned streaming properties, and ESPN will get access to an additional three NFL games each season for linear TV and streaming.

“I’ve talked about it being one of the most important steps ESPN has taken really since they went from half a season to a full season of the NFL back in 1987,” Iger said about the acquisition.

Camera-ready: Disney had a slew of (mostly) successful movies and TV shows in Q3. While Pixar’s kids’ flick Elio saw the company’s lowest opening weekend in history, Lilo & Stitch crossed the $1 billion mark at the box office. Disney has Zootopia 2 and Avatar: Fire and Ash coming up on its film slate. On the TV side, Disney had four of the top five streaming shows in the US in the first half of the year, according to Nielsen, including Bluey, Grey’s Anatomy, Family Guy, and Bob’s Burgers. In the pipeline at Disney+ are Marvel titles like Wonder Man and the sophomore season of Daredevil: Born Again.

From a content spend perspective, Disney plans to increase focus on its international markets, Johnston said.

“As we grow engagement and reduce churn in the US that presents opportunities from a marketing spend perspective, some of which can be basically re-invested into international content,” he said. “Our intent is to do that through a rifle-shot approach with…a number of markets around the world.”

Switch it up: Disney is also augmenting its Disney+ app homepage, with the aim of boosting engagement in markets where it’s been lagging, Iger said. That includes the addition of streams offering specific content around the clock, like an ABC News stream.

Overall, it’s focused on trying to meet viewers where they are, Iger stressed.

“We’re at a point, given the way we’re operating our businesses, where we don’t really look at being in the linear business and the streaming business,” he said. “We’re in the television business.”