Is Disney about to recreate the Pay TV bundle?

During the last quarter earnings call, Bob Iger confirmed that Disney remains “on track to roll out a more unified one-app experience domestically, making extensive general entertainment content available to bundle subscribers via Disney+.” A beta version of such a unified app should be available next month in the US. This announcement follows long-awaited Disney’s decision to acquire Comcast’s shares in Hulu, to take full ownership of the platform. If Disney’s long-term strategy for its combination of streaming services remains unclear, should it be in terms of branding, distribution, or international expansion, let’s still try to shed some light on the immediate benefits of such a move. Improving churn and D2C operating results as key objectives Following the deal with Comcast, Disney has a choice between maintaining distinct standalone services, yet offered in a bundle, or launching an app that would unify the content and the streaming experience from those platforms. The in-between solution would consist in doing a bit of both, which will probably be the case at first: to launch the unified app softly and progressively, starting with the existing customers of the Disney bundle – Hulu, Disney+ and ESPN – at a domestic US level. As stated by Disney’s CEO, the underlying objectives of this merger lay in “increased engagement, greater advertising opportunities, lower churn, and reduced customer acquisition costs.” Over the last months, the key metrics to determine the success of a given streaming platform have shifted from subscribers' growth to the reduction of both churn and more importantly D2C financial losses. For the latter, Disney had already undertaken cost-cutting measures at the beginning of the year, by laying off employees, reducing the huge content spending to save an estimated $3 billion in programming costs, pulling old movies and series from the platforms, and raising subscription prices. Fueling the advertising promises Serving consumers with a broader content offer without having to switch from one platform to another one, from one streaming experience to a different one, should unarguably help to boost their stickiness, at least to some extent. Offering different targeted catalogs at cheaper prices seems indeed efficient to mitigate churn, as long as the combined services do not concern too different segments of consumers, both in terms of content and price expectations. Moreover, the improved churn should reflect positively on the advertising promises too. Indeed, a more loyal subscriber base offers more guarantees to advertisers, first by increasing the ad-supported tier’s overall audience, and second by preventing this audience from vanishing and shifting to another platform once they are done watching what they might have subscribed only for. A majority of Hulu’s 48 million subscribers are on the ad-supported plan, and the one of Disney...