The television and film world has become a series of challenges for any company trying to keep up with the rapid changes.
Walt Disney (DIS) has to face the massive decline in the movie business, the slow death of cable television, and the challenge of making money through streaming. The Mouse House has properties people want to see, but it faces major issues in how to deliver content in a way that best monetizes it for the company.
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The company had the top-three movies of 2024, but that's the biggest slice of a shrinking pie. Consumers will, it seems, come out to theaters for massive event films, but that bar has moved much higher.
It used to be that any film with an Avenger in it or carrying the Star Wars, or Pixar names was worth $1 billion at the box office. That has clearly changed as only "Inside Out 2," "Moana 2," and "Deadpool & Wolverine" topped that number, while a number of releases outright failed.
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Walt Disney has done a solid job of navigating the changing marketplace, but it faces some massive challenges in the streaming space. That's an area where Disney+ has turned the corner to profitability, but CEO Bob Iger needs much more from the streaming division.
Iger flagged a major problem that will impact both the digital future of ESPN, Hulu, and Disney+ during his comments during Walt Disney's first quarter earnings call.
Image source: Walt Disney
Iger shares a Disney streaming challenge
One of the bigger challenges Disney faces is whether to use a property for a theatrical release or making it Disney+ streaming content. That's something the company has been navigating well recently with Star Wars being a major driver for Disney+ when it had cooled at the box office.
Iger understands, however, that in a challenging streaming environment where consumers can easily make the decision to leave, that engagement is important. Basically, he knows that it's enough to get people to join Disney+, they also need to use it.
He shared the problem during the earnings call.
"Using technology more and more for personalization and essentially upping our game from an algorithm perspective, getting less out of our control or curation and more basically into the business of serving the consumer, what the consumer wants," he shared.
Iger noted that Disney has more work to fo when it comes to how people interact with its streaming services and the ad experience.
"We've got some work to do internationally, particularly on the ad tier. Ad tech is also something that we're working on, a variety of different AI initiatives going on," he added.
Iger shares key to streaming experience
Iger realizes that the company's streaming interface needs to evolve.
"I'd say that of all of them, one of the things that we are very, very mindful of is that home screen or front screen or the first experience that consumers have has to be more dynamic," he said. "Ours was elegant looking, but fairly static in nature."
He believes that what once worked is no longer good enough.
"The more dynamic it is, the more people are drawn into it, the more people use it, and the more people don't, basically close the app out and go elsewhere. That's a big deal," he added.
Iger was confident that Disney could solve this problem.
"We're still building his team out. And I'd say that by the end of the year, there will be significant progress made, but we've already made some progress. We've made some progress already," he shared.
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Iger also addressed that Disney faces a challenge with getting people to move from cable ESPN to a streaming version.
"Some will want to consume it just through an app, some will want to consume it as part of, I'll call it, the more traditional expanded basic bundle. Some will migrate in the direction of skinnier bundles or sports bundles only. I can't predict whether the emergence of these skinnier bundles is going to have a material impact on cord-cutting or not, except to say that we plan to take advantage of the emergence of these bundles because it is a great way to distribute ESPN," he shared.
Disney closed Friday at $113.80, up 2.2% on the day. The shares are up 2.2% so far in 2025 (barely changed in February) after rising 23.3% in 2024.
