As it's already done with Hulu, Disney+ is adding an ESPN 'tile' on December 4 that integrates the ESPN+ service for bundled customers and 'select' ESPN fare to all Disney+ subs.
The Disney+ streaming service is getting into a sporting mood.
In conjunction with fiscal Q4 results, Disney announced Thursday that the company's marquee streaming offering, Disney+, will add an ESPN "tile" on December 4. That will effectively extend access to the ESPN+ premium streaming service. Disney+ made a similar move in March when it added a Hulu tile that enabled access to Hulu's subscription video-on-demand (SVoD) service.
Notably, the integration will also provide "select" ESPN content, including some live sporting events and games, series and documentaries, to all Disney+ subscribers.
The integration aim will benefit customers that take the discounted Disney+/ESPN+/Hulu SVoD bundle, which Disney is using in part to retain its streaming subscriber base and help to drive profitability across its broader streaming business.
"This will provide Trio Bundle subscribers full access to all of the ESPN+ sports content they love while inside Disney+, similar to the experience we offer bundle subscribers with Hulu on Disney+, Disney CEO Bob Iger and CFO Hugh Johnston said in a joint statement.
The addition of the ESPN tile on Disney+ also brings the company a "step closer to bringing a full sports offering to Disney+ in the US," they said. "[W]hen we launch ESPN's flagship DTC offering in early Fall 2025, those who subscribe to the Flagship product and Disney+ will have access to the full suite of ESPN and ESPN+ content within Disney+."
Disney's coming launch of the flagship ESPN service under the direct-to-consumer (DTC) model is emerging as Disney and other major media companies look for ways to counter a growing cord-cutting trend that has wreaked havoc on the traditional pay-TV market.
In addition to regular sports programming, the coming ESPN app will integrate other features such as fantasy sports, online betting and "enhanced statistics," the execs noted.
Streaming in profits
Disney's latest moves arrive as the media company looks to make its streaming business increasingly profitable.
Disney's DTC business generated fiscal Q4 operating income of $253 million versus a year-ago loss of $420 million. Disney's streaming business turned a first-time profit in the prior quarter.
The DTC unit pulled in revenues of $5.78 billion, up 15% year-over-year.
By comparison, Disney's linear TV business, which is being battered by cord-cutting, saw revenues decline 6% to $2.46 billion.
Disney ended the period with 56 million Disney+ subs in the US and in Canada, up 2% from the prior quarter. Disney+'s global base (excluding Disney+ Hotstar, a service offered in India, Malaysia and Thailand) ended Q4 at 66.7 million subs.
Hulu ended the quarter with 52 million subs, comprising 4.6 million Hulu + Live TV subs and 47.4 million SVoD-only customers.
Disney's ad-vantage
On today's earnings call, Iger revealed that about 37% of new Disney+ subs in the US take the service's relatively new ad-supported tier, and 30% take it globally. About 60% of all new US Disney+ subs are taking the ad-supported tier, he said. Disney+ introduced its ad-supported tier nearly two years ago.
It's possible that Iger revealed those numbers prematurely as the exec could be heard saying later in the call: "I don't know if I was supposed to disclose those AVOD numbers."
Netflix, which also launched its ad-supported offering about two years ago, announced this week that the ad offering has reached 70 million monthly active users, with more than 50% of new sign-ups taking the ad-supported plan where it's available.
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