The Walt Disney Co. CEO Bob Iger said that, as the company continues to incur losses to its TV sectors, he plans to cut marketing budgets for Disney Plus, which he believes are “too high,” in favor of investing in streaming technology.
“As we got into the streaming business in a very, very aggressive way, we tried to tell too many stories,” explained Iger, speaking Wednesday at the MoffetNathanson Media, Internet and Communications Conference in New York. “Basically, we invested too much, way ahead of possible returns. It’s what led to streaming ending up as a $4 billion loss, for instance.”
Among new technology features Iger discussed Wednesday is one that allows Disney streaming platforms to send “highly customized messages to consumers when we suspect they’re at risk [of losing interest],” providing content that might rekindle their engagement.
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“That first great experience has to be dynamic,” Iger said. “Every time they open the app it has to be something different. This is where AI will be a hugely important tool to do all this.”
Iger also said the media giant plans to “pretty dramatically” cut its investments in linear television due to the sustained audience erosion.
“Spending more resulted in volume, not quality,” Iger explained. “Traditional media is not going to be a growth business, but it could become an important component to our ability to engage with the consumer.”
During the Q&A, Iger highlighted Disney’s strategy of combining linear and streaming distribution models in order to “aggregate greater audiences.”
“We put something on ABC — Grey’s Anatomy, Abbot Elementary — and it goes on Hulu pretty quickly,” explained Iger. “We’re using the marketing of the traditional network … We’re using those networks efficiently and effectively.”
The CEO pointed to ABC’s “older” demographic compared to the relatively younger viewer base on Hulu, which allows Disney to tap multiple audiences without increasing marketing spend.
Iger also said that the direct-to-consumer launch of ESPN next year could “increase engagement to an extraordinary level," but also warned that he expects to still see some “losses in streaming” in the upcoming quarter.
“We're going to continue to see erosion in terms of subs for those businesses,” said Iger. “But we're going to actually continue to drive profitability because we're managing our costs so effectively. So we feel comfortable with our hand right now.”
Disney stock fell 2.5% Wednesday.
