Disney (DIS) will offer a subscription bundle that includes Disney+, ESPN+ and ad-supported Hulu for $12.99 per month, CEO Bob Iger announced on the company's Tuesday earnings call. News of the bundle came as a bright spot in a quarterly report that overall fell short of expectations.
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Disney+ is set to launch in November, and Disney had been expected to offer some form of a bundling option with the launch of the new direct-to-consumer service. Iger said the bundle will be available on the Nov. 12 launch date of Disney+, which will cost $6.99 per month as a standalone service.
At $12.99 per month, the planned bundle will be the same price as the most popular standard tier of Netflix (NFLX) in the U.S. If paid for separately, Disney+, ESPN+ ($4.99/month) and ad-supported Hulu ($5.99/month) would cost roughly $18 per month.
Disney shares fell after-hours on Tuesday and were trading down 5% to $134.80 in pre-market trading on Wednesday after reporting quarterly earnings and revenues that missed analyst estimates due to weaker-than-expected results in the broadcast TV and movie studio divisions.
With its extensive library of family-friendly content, Disney's DTC efforts are expected to be a formidable competitor to Netflix, which recently posted a quarter in which its number of subscriber additions was significantly less than expected, and included its first-ever loss in U.S. subscribers.
Disney+ will launch initially in the U.S., and thereafter in various international markets, and Iger explained Disney's strategy in making the service as appealing to as many consumers as possible.
"Our play in the digital OTT space, ultimately globally but starting in the U.S., is general entertainment in Hulu, more family-like entertainment in Disney+, and sports in ESPN+," he said. "That bundle where you can buy all three ... offers tremendous volume, quality and variety."
Disney+ will be anchored by content from Disney's slate of intellectual property, including Walt Disney Pictures, Pixar, Marvel Studios, Lucasfilm, 20th Century Fox, and National Geographic, alongside other original content. At a recent investor conference, Iger touted some of the competitive advantages it holds over Netflix, such as the global appeal of many of its brands and its sprawling marketing machine.
Iger described Disney+ on the call as "the most important product Disney has launched" during his tenure. (Iger took the reins as CEO in 2005, and previously served as President and COO.)
"Disney+ marketing is going to start to hit in later this month, later in August....you will see marketing, both in traditional and nontraditional directions, basically digital and analog," he said. "And of course, all the touchpoints that the company has, whether it's people staying at our hotels, people who have our co-branded credit card, people who are members of D23, annual pass holders."
The details of the Disney+ rollout were an important focal point of the earnings call, in which Iger described as "one of our more complicated ones" due to the closing of Disney's $71 billion acquisition of 21st Century Fox in March.
"This is a transition quarter for Disney, as they onboard Fox assets and spend capital to invest in the three direct to consumer products. The overall results by segment were satisfactory," said Trip Miller of Gullane Capital partners. "It seems the market is overreacting to the top/bottom line miss that masks strong performance at the various segments."
Year to date, Disney shares are up 27%.
Disney is a key holding in Jim Cramer's Action Alerts PLUS charitable trust.