In a move that throws the gauntlet to its rivals, especially Netflix, Disney has announced that its DTC services Disney+, ESPN+ and Hulu are to be available in a bundle priced at just $12.99.
The announcement came as Disney revealed a strong third quarter of 2019 where it showed major gains in its direct-to-consumer business as well as in broadcast and media and networks business lines.
For the for its third fiscal quarter ended 29 June 2019 – reflecting the consolidation of the acquisition of Twenty-First Century Fox (21CF) and activities related to the Hulu OTT service whose share of ownership it increased — the company posted revenues of $20,245 billion, up 33% annually, driving net income of $1.437 billion down 51% compared with the period a year ago.
Direct-to-consumer and international revenues for the quarter exploded, increasing from $827 million in Q3 2018 to $3.858 billion yet segment operating loss increased from $168 million to $553 million. The increase in operating loss was due to the consolidation of Hulu the ramp up of investment in ESPN+, which was launched in April 2018 and costs associated with the upcoming launches of Disney+.
Media networks revenues for the quarter increased 21% to $6.7 billion and segment operating income increased 7% to $2.1 billion. Cable Networks revenues for the quarter was up 24% year-on-year to $4.5 billion and operating increased 15% to $1.6 billion, due to the consolidation of 21CF businesses (primarily the FX and National Geographic networks) and an increase at ESPN. Broadcasting revenues for the quarter increased 16% to $2.2 billion but operating income decreased 17% annually to $307 million.
On the analysts’ call for the announcement, Iger confirmed that the £12.99 DTC bundle would launch on 12 November 2019, ,making it cheaper or approximately the same price as the expected rivals in the category.