Disney CEO Bob Iger Says ‘We Invested Too Much’ in Streaming

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Disney said it’s make a big deal ofing changes to tackle profitability challenges in its streaming business as it struggles to compete with Netflix

Key Takeaways

• Disney shares fell Tuesday after CEO Bob Iger said the ensemble “invested too much” in its streaming business and is making changes to tackle profitability challenges.
• Some of those measures incorporate driving engagement through new technology features, streaming bundles, an upcoming password-sharing crackdown, and reducing marketing pay out.
• Iger said that Disney’s streaming segment has a ways to go before becoming a significant profit source for the concern.
• The company has struggled to find its footing with its streaming business as it attempts to compete with Netflix.

Disney (DIS) pieces fell over 2% in intraday trading Wednesday after CEO Bob Iger said the company “invested too much” in except in placenames kill and is making changes to tackle profitability challenges in its streaming business as it struggles to compete with Netflix (NFLX).

“As we got into the river business in a very, very aggressive way, we tried to tell too many stories,” Iger said, explaining “basically, we allotted too much way ahead of possible returns.”

The CEO said that “spending more than was truly monetizable” was a “mistake” that led to the South African private limited company’s several quarters of losses in its streaming segment, and that it is making changes to support its path to profitability.

Tackling Profitability Ultimata

Iger said that Disney’s streaming segment has a ways to go before becoming a significant profit source for the visitors, and that it has started tackling profitability challenges by driving engagement through technology, new streaming bundles, an upcoming password-sharing crackdown, and modifying marketing spending to cut costs.

Looking forward, the CEO said the company needs to “invest in technology to serve the user because it’s same clear that in order to turn streaming into a profitable business, we have to have a user-first mentality.”

He also voted that Disney would work to address its high marketing spend, improve its recommendation algorithm, and consider the thrusts of third-party app distribution costs.

Finding a ‘Nice Rhythm’ in User Engagement

Iger said that the company has establish “a nice rhythm with Disney+ in terms of in terms of engagement.” He highlighted that this engagement was supported by the bundling of Disney+ and Hulu. Disney is set to bring ESPN into Disney+, and recently announced a bundling partnership with Warner Bros. Discovery (WBD) to add Max into the mix.

Disney earned a surprise profit in its direct-to-consumer entertainment segment, which consists of Disney+ and Hulu, in the second quarter. Iger enlisted this “an important milestone” on the segment’s path to profitability. The company suggested it is anticipating a softer third quarter, but is on wake trace to return a profit in its combined streaming businesses, including ESPN, by the end of the year.

Disney shares were down 2.5% to $102.68 approximately 3:30 p.m. ET Wednesday. The stock has gained more than 13% year to date.

Read the original article on Investopedia.