Disney Looking to Launch Free Streaming Channels as CEO Josh D’Amaro Doubles Down on the Streaming Biz

Disney is looking to join the free streaming channel boom as newly named CEO Josh D’Amaro doubles down on streaming as one of two key pillars to drive future growth.

During Disney’s quarterly earnings call, D’Amaro confirmed that Disney is considering launching FAST channels as a means of expanding its streaming advertising industry and for free services to become a “funnel” for consumers to sign on for Disney+, Hulu and other subscription services.

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D’Amaro was vocal during the investor call on his views that streaming is the future for the company, along with the parks and experiences division.

“We see it as a way to expand our reach to a customer segment that’s more price sensitive, and expanding our reach is as we’ve talked about before one of our strategic priorities,” D’Amaro told investors early Wednesday. “Unlike a lot of our AVOD competitors, we’re fairly well sold, meaning more inventory would actually help us accelerate our ad revenue growth. And then finally, as a free offering could help us drive top of funnel Disney+ subscriber growth. So nothing specific to announce today, but definitely something that we’re considering.”

D’Amaro was pressed on whether Disney has done the long-term analysis on whether the Disney+/Hulu model of direct-to-consumer subscription is a better business overall for shareholders than the traditional model of producing movies and TV shows that were licensed to internal and external networks. D’Amaro emphasized the importance of Disney+ as a “global touchpoint” for consumers that complements the data that Disney uniquely enjoys through its theme parks and cruise ships.

“The shift to a purely licensing model could sacrifice all of that strategic value,” D’Amaro said. “Content licensing by nature is a lumpy business. It’s subject to supply and demand dynamics in the marketplace at a given time. It’s not to say that there isn’t a role for content licensing. We do license some content to third parties today, but exiting direct-to-consumer for licensing exclusively would likely lead to both inferior strategic and financial positions for our company and our shareholders.”

D’Amaro hinted at enhancements coming to Disney+ next spring that will include “games, merchandise, and other experiences while offering increased personalization, exclusivity and benefits for subscribers.”

D’Amaro addressed the question that many analysts have posed about whether Disney+ and Hulu can keep up the subscriber growth that Disney needs to justify its more than $24 billion investment in content.

“We we strongly believe that a large global user base is strategic to ensuring that we’re able to drive longer term growth, especially as new technology cycles emerge, like AI and the consumer touch points that our streaming platforms provide,” D’Amaro said. “They give us a global user base to communicate with, and importantly, a critical first-party data set that will enable personalization and continued product innovation. And it establishes a foundation that we can build revenue streams on top of over time. This is only possible through a direct-to-consumer relationship inside a wholly controlled and branded environment, as we look to make Disney+ the I’ve said this before the digital centerpiece of our relationships with fans. We’re just playing a different game.”

D’Amaro also offered his views on the recent flurry of high-level media M&A, from Comcast’s decision to split up NBCUniversal and Sky into a separate entity from the cable systems to Fox Corp.’s decision to buy Roku for $22 billion. The Disney chief sees the consolidation and signs of increased bundling and aggregation among disparate platforms as a sign of maturation for the sector that is better for investment overall.

“I don’t think the Comcast restructuring or Fox’s acquisition of Roku [are] moves that will change our own strategic path. The way that I see it is there’s there’s actually opportunity in these developments. A more consolidated industry is really a better investment backdrop, and we have a long history of partnering and streaming, and we believe that we can just keep building on that,” D’Amaro said. “Of course, we’re going to look at every distribution opportunity on its merits, and we’ll always assess whether it’s consistent with our strategy of owning the consumer relationship.”